The acquisition of Whole Foods by Amazon gives the ecommerce giant 465 retail locations across North America that can act as local delivery centers and leverage the incredible number of innovations Amazon has developed in creating Amazon Fresh and Amazon GO, the prototype store that allows customers to checkout without "checking out."

But that is only one of the forces at work in the grocery aisle. Nearly 1/4 of U.S. shoppers are already doing some of their grocery shopping through ecommerce, CPG's like Mondelez, Unilever and P&G are moving (carefully) into the direct-to-consumer space online, large grocers are - in Europe especially - battling each other in speed of delivery, and in general, the way customers shop is being disrupted as Millennials who grew up digital and embrace all that's new become adults with families.

In response to these changes, we've created a point of view on the state of affairs, as well as common points of implementation failure, and best practices that Grocers managing this change should be cognizant of. The digital maturity of grocers remains somewhat inconsistent across the industry, with some brands pushing quickly into the space, and others lagging behind.

In an industry with razor-thin margins, the investment in digitization may have seemed like a risky nice-to-have, but we've reached a point where Grocers who haven't mastered ecommerce are behind the 8 ball, and there's still time to adapt.

Key takeaways include: 

  • Nearly a quarter of U.S. households shop for groceries via digital channels, and Nielsen expects the category to mature digitally faster than any other, reaching 70% consumer participation in the next 10 years.
  • Giants such as Walmart and Amazon are aggressively positioning to dominate the space.
  • Grocers should explore approaches like click & collect and delivery, in addition to personalization, digital catalogs, mobile-first experiences, loyalty programs, CRM, and subscription services.
  • Primary barriers to customer adoption for ecommerce grocery shopping are executional, including availability of services, price of service, delivery time, and poor quality of executional fundamentals in UX and the “last mile” with unexpected substitutions, freshness, and delivery and pickup delays and errors.
  • Critical success factors for organizational execution are executive vision and buy-in, autonomous digital teams with agile technology practices, and training that extends to the shopping floor.
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Tags: ecommerce, Grocery, Amazon, Digital transformation, Strategy and Intelligence