Should People Be Able To Purchase Groceries Online?

by drjim on November 27, 2017

Competition in online grocery stores is starting to heat up

Competition in online grocery stores is starting to heat up
Image Credit: I-5 Design & Manufacture

For most of us, going to the grocery store is a once-a-week or so activity. We make a list of what we think we’ll need, get in the car, do our shopping, come home and then put everything away. However, since we now live in the 21st Century it turns out that there is a different way to go about doing grocery shopping – do it online. Wal-mart and Kroger have been doing this for a while and all of a sudden Amazon has decided to get involved. Looks like things are starting to heat up online for product managers in the grocery business!

What’s The Big Deal With Online Grocery Stores?

It was only a few years back that the Wal-mart product managers decided that Wal-mart had to start selling the same products that grocery stores did. This turned out to be a very wise move – today Wal-mart is a major player in the grocery business. However, things are changing and customers are living lives that are even busier than ever.

The reluctance of the major grocery chains to invest in online offerings has opened a door for the Amazon product managers to step into this market. Amazon has plans to build actual bricks and mortar convenience stores that will sell fresh foods and allow shoppers to order what are called “shelf stable” goods for delivery.

It turns out that online sales of grocery products currently represents a very small portion of the overall grocery market. E-commerce was responsible for US$1B in sales last year. However, you need to realize that the total market size is $670B and so e-commerce currently only makes up 0.16% of the total market. However, the firms that are selling groceries online were able to sell $6.3B in food and beverages last year which was up 20% from the year before – now that’s something that would look good on a product manager resume!

How Do Customers Want To Get Their Groceries?

This new way of getting your groceries has now led to new competition in the online grocery marketplace. Everyone who is involved is looking for a way to gain an advantage over the other players. Product managers are pulling out all of their tricks. Some firms are offering one hour delivery. Other firms have gone to the trouble to design eye-catching apps that customers can use to place their orders.

The most expensive form of the online grocery business is home delivery. The second most expensive form is what is called “click-and-collect”. This service targets busy consumers and offers them curbside delivery service. The goal for each of the players in this market is to offer a wider array of shopping formats for different customers.

Wal-mart is rapidly adding curb-side pick-up services to its stores. By the end of the year it will be offering this service at 1,000 of its 4,600 stores. This service especially appeals to busy parents who don’t want to take the time to unbuckle their children from their cars in order to wander large stores. Kroger is offering a similar service at more than 450 of its store locations. Amazon’s entry into this market is designed to capture busy parents who want to pick up groceries on the way home without having to go shopping for them.

What All Of This Means For You

Even as the modern era has transformed our lives and made everything digital, one area that has resisted this change has been the chore of going grocery shopping. However, even that is now starting to change. The product managers at the large players, Wal-mart and Kroger have grudgingly taken a look at their product manager job description and started to offer a form of online shopping for groceries. However, since they have been moving so slowly, the product managers at Amazon have seen an opportunity and are now moving in.

It turns out that if done incorrectly, offering groceries online can be a very expensive business. Wal-mart studied their U.K. operations and found out how hard it was to make money offering home delivery services. Instead, in the U.S. the major players and Amazon are planning on offering click-and-connect services where customers can order their groceries online and then drive to the store to pick them up.

Clearly the grocery business is undergoing some significant changes. The established product managers are trying to determine how they can change their product development definition in order to compete with the new market entrants like Amazon. In the end it will be the customer who will be making the final decision as to who’s version of online grocery shopping provides them with the greatest ease and convenience.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: Do you think that the grocery stores should try to combine online grocery shopping with some other service?

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What We’ll Be Talking About Next Time

So here’s an interesting question for you. If I was to ask you where people spend the most amount of time when they are on the Internet, where would you say that they go? Google? Yahoo? A sports site like ESPN? Those are all good guesses, but you’d be wrong. The correct answer, not all that surprisingly, is Facebook. A lot of people go to Facebook each and every day and they spend a lot of time there. What this means is that if you are in the business of trying to provide news to people, Facebook is very important to you.

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