How Walmart’s Makeover Will Get You Buying Groceries Online

Grocery e-commerce is having its moment following Amazon’s Whole Foods acquisition in June. So, it was about time that Walmart hopped on the bandwagon with some big guns. Jolt upright, the retail behemoth is readying to battle Amazon in the war to attract hungry online shoppers. As Food Dive puts it, “A fundamental shift is happening in the [grocery] industry, and no company is immune to these fluctuating market forces.”

That means global grocers are rethinking their business plans. Even before Amazon’s bombshell purchase of Whole Foods Market, the trend toward e-grocery was apparent. Industry experts predicted online grocery shopping could grow five-fold to $100 billion by 2025. In addition,  online grocery shopping was on track to grow from 4% in 2016 of total U.S. food and beverage sales ($20.5 billion) to as much as a 20% share ($100 billion).

 

Retail giants acquire e-commerce expertise

 

The promise of such significant online growth led Walmart and Amazon to prioritize strengthening their e-grocery arsenal. Now both companies are battling for younger, urban adults who are most likely to buy groceries online. One study found 66% of adults under the age of 40 now shop online weekly for groceries. In response, Amazon purchased Whole Foods. Meanwhile, Walmart acquired online consumer goods company Jet.com and New York City-based Parcel for same-day grocery delivery.

Even beyond grocery, Walmart acquired several apparel brands – Bonobos, Modcloth and Shoebuy. These deals further prove Walmart is targeting younger, urban shoppers with higher incomes. By attracting these shoppers to its online store, Walmart intends to keep them coming back to buy groceries, too.

 

Walmart’s e-grocery strategy

 

Walmart is using its stores to win in e-commerce, including e-grocery. Walmart’s abundance of brick-and-mortar stores is a strategic advantage that Amazon lacks.

Walmart has expanded its buy online pickup in store (BOPIS) service to more physical stores. The service has successfully attracted customers who had not shopped at Walmart before.
Walmart also simplified the return process for shoppers using its smartphone app, to reduce the average time it takes to process a return from about 5 minutes to 30 seconds.

In addition, private label – Jet.com’s Uniquely J line of CPG products – helps Walmart control supply chain costs, agility and efficiency. Private label also helps Walmart adapt to consumer trends faster. About 60% of the Uniquely J products have organic certification, which consumers say matters more than price and quality.

 

E-commerce investments pay off – for both rivals

 

Walmart’s e-commerce business saw gross merchandise volume – measuring all online sales, including Jet.com’s – soar 54% Q3 2017. This result suggests Walmart is eroding Amazon’s dominance. Total revenue climbed 4% to $123 billion and grocery accounts for more than half of Walmart’s U.S. revenue. Due in large part to Walmart’s e-commerce strategy, its shares have gained nearly 23% in the last six months compared to almost 19% for Amazon.

Currently, Amazon is top retailer for online food & beverage sales (18% of market share); Walmart is 2nd at 9%. Amazon’s strengths include logistics, data mastery and top-of-mind brand status for e-commerce.

Amazon differentiates its offerings with data-driven marketing. AI software monitoring keeps the retailer on top of competitors’ prices. It also adjusts Amazon’s prices with real-time dynamic pricing to win with consumers. Acquiring Whole Foods gave Amazon hundreds of physical stores and popular 365 private brand products to give online shoppers omnichannel service and variety.

 

E-grocery opportunities and challenges

 

Consumers win with online grocery shopping by gaining the convenience and ease of fast, and often free, delivery. They save time, money and effort.  (Why wait in a checkout line when you can just answer your doorbell?)

To delight online shoppers, Walmart, Amazon and other grocers must contend with shipping concerns. For instance, groceries reflect three distinct food temperatures:

  1. Room temperature for shelf-stable centre store products like granola bars
  2. Refrigerated products like salads, meat and milk
  3. Frozen foods like ice cream and frozen chicken nuggets

These conditions pose a business challenge, as about a quarter of shoppers who use grocery delivery say frozen food items do not meet their quality standards. Maintaining freshness and proper temperatures across the supply chain to the consumer’s home pose a problem.

Timing also matters. Let’s say a consumer lives in a condominium and isn’t home to receive a delivery. Their building likely does not have refrigerated and frozen areas in the lobby to keep foods fresh until they come home. That’s why Walmart has an advantage with its BOPIS service in physical stores to protect groceries’ freshness.

Looking ahead, Walmart’s priorities include investing in data for competitive pricing and assortment insights, and personalized marketing. Logistics investments can also help Walmart conquer Amazon by delivering groceries to consumers’ doorstep.

This rapid retail evolution suggests online grocery shopping is poised to skyrocket soon. Walmart’s omnichannel strategy acquires essential competencies to attract younger, tech-savvy shoppers. Most importantly, Walmart wisely uses its competitive advantage with brick-and-mortar stores. The retailer gives online grocery shoppers omnichannel delivery options for the superior customer experience they crave.

Assortment Planning – The Holy Grail of Merchandising

With retail transitioning into a consumer-driven business faster than ever, issues like determining the best product mix and inventory size are of strategic importance to a retailer looking to cash in at the e-commerce platforms. Assortment planning perhaps plays an even bigger role today than ever with ever-shortening lead times and year-round discounts.

Which begs the million-dollar question:

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Grocery E-Commerce Set to Surge

Although the overwhelming majority of grocery shopping currently takes place in physical stores, experts suggest this pattern will change in the next decade, as grocery e-commerce is poised to boom in the next decade.

In the U.S., online grocery shopping could grow five-fold to $100 billion by 2025, according to new research by Food Marketing Institute and Nielsen.[i] Online grocery spending could grow from 4% in 2016 of total U.S. food and beverage sales ($20.5 billion) to as much as a 20% share ($100 billion).[ii]

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9 Common eCommerce Fulfillment Problems and How to Fix Them

Want to infuriate your customers, destroy your reputation, and lose money? Of course you don’t. Ecommerce fulfillment problems are one of the fastest — and most common — routes to lost business, particularly among large brands with massive inventories. So what are the most common glitches? And how can you fix them? Continue reading “9 Common eCommerce Fulfillment Problems and How to Fix Them”

8 Ways to Create an Unstoppable eCommerce Marketing Strategy

Whereas businesses with a brick-and-mortar location naturally centralize their marketing efforts on their physical presence, the world of eCommerce faces an entirely different set of challenges. As much as having an online retail business provides significant flexibility, it also means that a business essentially lives or dies by how much it connects with consumers; a feat made far more complex given the ubiquitous role of eCommerce in everyday life. However, with the right planning and detailed eCommerce marketing strategy, an eCommerce business can break through and reach its target audience. Continue reading “8 Ways to Create an Unstoppable eCommerce Marketing Strategy”

Model vs. Mannequin: Which Produces More Sales?

A model can make even a lackluster piece of clothing look gorgeous by highlighting its silhouette, showing how the garment fits with other pieces, and encouraging an aspirational approach to buying. Of course, almost no one can afford the best models, and few small business owners can afford professionals. This leaves most businesses to choose between mannequins (or other displays, such as fancy hangers) and amateur or part-time models. Continue reading “Model vs. Mannequin: Which Produces More Sales?”

10 Secrets to Success with Shopify

In just the past few years, the eCommerce space has developed by such leaps and bounds that online retailers now have countless tools at their disposal to streamline the process for consumers, allowing them to remain competitive in the face of a wildly growing industry. Among the most popular resources for eCommerce sites is Shopify.

Since its founding in 2004, the company has created increasingly sophisticated software designed specifically with online retailers in mind. It’s a tremendous tool that more eCommerce businesses should be utilizing to strengthen their products’ reach. Continue reading “10 Secrets to Success with Shopify”

10 Startup Marketing Ideas to Bootstrap Your Ecommerce Store

In the world of eCommerce, many new stores struggle to get even a small piece of the market. When you are running an eCommerce store, marketing is the biggest part of your job, and it has the most direct impact on your bottom line. As any seasoned eCommerce veteran will tell you, your online store needs a sustainable, long-term marketing strategy in place, instead of short-term growth hacks. With this in mind, here are 10 solid startup marketing ideas to bootstrap your ecommerce store.

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How to Take Advantage of Ecommerce Fulfillment Pricing

With each passing year, eCommerce sites are becoming more and more established as consumers’ preferred way to shop. Thanks to the convenience involved in online shopping and the wider variety of products that sites can offer, the customer experience offered online is both rising in prominence as well as shaping the retail landscape in general.

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What Your Store Can Learn from Uber’s Surge Pricing Method

The retail world of today is radically different from what the industry looked like just a few years ago, thanks in large part to the increasing prevalence of eCommerce as many consumers’ preferred way to shop. So many innovative approaches to marketing products and services have arisen that it is more essential than ever before for your business to take note of what works and what does not. Take, for instance, the current dilemma that Uber is contending with over its signature policy of surge pricing. Within this example alone lies a vital lesson about how to make the most out of a fresh way to serve your customers.

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