Are You Equipped for the Rapid Growth in Online Grocery Orders?
As customers order groceries online in historic numbers, ask yourself these 3 questions to keep up with demand and ahead of the curve.
May 14, 2020
Online grocery has grown steadily for years. Between 2016 and 2018, we saw the market value double. Then, in 2019, while overall grocery sales went stagnant, online sales grew 15% year-over-year.
That growth is now skyrocketing.
In the last month alone, almost a third of U.S. consumers purchased their groceries online, with about 41% trying it for the first time – the major hurdle to long-term adoption.
Grocers are doing their best to manage the spike in volumes with the help of temporary solutions. These include options like:
- Hiring thousands of temporary associates to pick orders and restock shelves
- Adding available time slots
- Designating exclusive pickup times for seniors, healthcare professionals and other high-risk individuals
Consumers, however, may not see these solutions as temporary. As soon as they experience the benefits of a pickup or delivery service to collect their groceries, their behavior will likely change for the long-term.
If this surge in online ordering is more than a passing phase, will your grocery operation be able to handle sustained demand? Start asking these three questions to prepare for continued online growth.
“How am I addressing the order picking bottleneck?”
Most order picking today is manual, with personal shoppers collecting customer orders by hand.
Manual picking, however, isn’t sustainable. It requires extra staff to handle peak order volumes and ensure consistent quality. Employing more staff to pick orders then causes congestion in the aisles of the store. This makes social distancing difficult, and dampens the overall in-store customer experience.
To limit this picking congestion, some grocers, such as Kroger and Amazon, are prioritizing online demands by turning some locations to pickup-only, or “dark stores.” By eliminating in-store shopping, these dark stores solely fulfill customer orders.
Grocers are also partnering with automated fulfillment technology companies like Ocado, Takeoff Technologies, and Alert Innovation as an alternative to manual picking. These robotic order fulfillment centers help grocers turbo-charge their online business by maximizing their supply chain.
To limit issues that come with manual picking, look to your supply chain. When streamlined, it can handle order fulfillment volumes at better cost. What’s more, it can meet customer expectations for speed, order accuracy, product assortment, and freshness.
“Is my current pickup and delivery model scalable?”
Grocers have always worked to provide customers with a quick, convenient pickup experience. To meet customer demands today, that looks like manual curbside pickup or delivery for online orders. But with adoption rates seen last year, and especially within the last couple of months, how much longer can this manual process last?
The current model isn’t sustainable.
Unprecedented labor issues. Physical retail space lost, replaced by a backlog of customer’s online orders. These “bottleneck points” affect a grocer’s ability to expand pickup and delivery time slots. Worse, it then creates an unpredictable customer experience, ranging from a quick pickup without error, to a long wait with order errors.
An unpredictable experience impact delivery drivers, also. 3rd party companies like Deliv have even ended partnerships over it because their drivers had to wait up to 40 minutes to collect a customer’s grocery order.
Manual pickup and delivery of today is a stopgap solution. As demand for online grocery grows, look for alternative programs and processes that can scale with it.
“Have I started looking into automation?”
Every industry reaches a tipping point where introducing automation helps scale an operation cost-effectively. We are at that tipping point with online grocery ordering.
A number of automated solutions can help streamline the pickup and storage process for grocers, customers, and delivery drivers alike. Everything from temperature-controlled locker systems, serving 25-50 customer pickups a day, to five portal drive-up solutions like the one Walmart deployed in Sherman, TX that serves more than 200 customers daily.
So how does automation help grocers be better equipped for the rapid growth in online grocery?
- Enables 24-hour access – With automated self-service pickup, customers can pick up their orders when it work best for them.
- Eliminates storage issues – An entire order is scanned and inducted into one automated system, cutting spread across multiple locations for ambient, refrigerated or frozen items.
- Improves the customer experience – Once a customer arrives to pick up their order, they just scan a barcode and retrieve their order.
- Eliminates manual sorting – After an associate inducts an order, the system automatically sorts and stores it.
- Reduces labor – Implementing unattended pickup normalizes labor needs, especially during peak order periods.
The growth of online grocery is explosive, and the curve will only get steeper in the post-pandemic world. Grocers can’t solve the problem long-term with just more people and time. Start rethinking your picking, pickup, and delivery programs now so you can succeed when online grocery becomes the norm, not the substitute.