Ecommerce is coming to food fast, prompting players across supply chain to act faster

By Elizabeth Crawford contact

- Last updated on GMT

Ecommerce is coming to food fast -- time to make a plan

Related tags: Marketing

Ecommerce may account for only a small portion of food and beverage sales for now, but that is changing quickly and manufacturers and retailers need to develop a game plan now for how they will leverage the change to their advantage, suggests an analyst with Rabobank.

“Ecommerce … has taken the world of retail by storm,”​ and while online sales of food and beverage accounts for less than 2% of sales across channels, it is growing at a compound annual growth rate of 9.8% and should not be ignored, Paula Savanti, a senior analyst focused on consumer foods at Rabobank, told attendees at the bank’s annual meeting earlier this month.

The early potential of ecommerce for grocery can be seen in consumers' plans for shopping during this year’s holiday season, in which 19% of shoppers indicated that they expect to order some grocery items online, according to Acosta data. The full service marketing provider recently surveyed shoppers and found 34% of consumers with children will buy food online during the holidays, as will 40% of generation Z and millennials and 25% of those with household incomes of $50,000 or more.

In direct comparison, 72% of shoppers expect to buy gifts online during the holidays, Acosta adds for context -- illustrating how much farther the category can go.

Three trends driving ecommerce of food

Looking at the difference in ecommerce sales of food and other products, Savanti acknowledged that ecommerce sales of food is “hard and has many obstacles,”​ such as requiring cold chain to protect perishables and earning the trust of consumers, many of whom don’t believe others can choose their fruits and vegetables. But, she added, it also has three major trends that will overcome these hurdles.

The first is consumer desire for convenience, Savanti said, explaining: “Our lives are even more fast-paced than usual. Our eating is more snacking and on-the-go than actual sit-down three meals a day, and given our dependence on cell phones, we are so used to getting everything at our fingertips whether it is just information or purchasing anything,”​ including food.

“The second trend that is addressed by ecommerce is the search for novelty and personalization and customization,”​ Savanti said. “We have all embraced getting content that is personalized to us … and increasingly it is the same with our requirements for food and for shopping in general.”

The third driver is consumers’ thirst for information and transparency, she said. “Consumers, especially in the case of food, are becoming much more educated and demanding in terms of what the food is, how it is made, who is the company making it and they demand a lot of this information easily.”

Ecommerce can satisfy all three of these demands, Savanti said.

As such, she said, “ecommerce is coming in food. … So, whatever your business is, whether you are retailer, manufacturer or producer, you need to think about how you could position your business to succeed in this space and claim your spot. Whether it is private design and packaging for better delivery, whether it has to do with how you are going to spend your online marketing dollars or your relationship with retailers and the Amazons of the world.”

New innovations fueling online purchasing

Many companies in the food and beverage industry already are heeding this call to action, Savanti acknowledged.

“We have seen a mushrooming of companies in the past few years come up with ways to address consumer demand for convenience,”​ such as meal kits that come to the door, grocery shopping services like Instacart, or retailers offering click-and-collect services, she said.

Most recently, Peapod, a grocery delivery service, launched Dec. 12 its first text-to-order grocery application that will allow shoppers to use their phones’ text applications to type, speak or use emojis to update their Peapod carts.

The Chat-to-Cart service can be shared by multiple family members and can sync with voice activated assistants in an effort to make shopping online for groceries even easier, according to the company. 

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