E-Commerce Offers Plethora of Opportunities for Suppliers and Retailers

The coronavirus pandemic hastened the growth rate of e-commerce for the grocery industry, which has accelerated change for retailers and marketers and points to an exciting future.

That was one of the takeaways from the educational session that explored “What Lies Ahead for E-Commerce” during the mid-September Organic Produce Summit (OPS) held in Monterey, CA. The session, moderated by former retailer Steve Junqueiro, featured Michael Schutt of Raley’s, marketer Micah Shea of Taylor Farms, and marketing consultant David Bishop of Brick Meets Click.

Steve Junqueiro, Chief Executive Officer, Steve Junqueiro Associates

The trio of speakers agreed that e-commerce is here to stay, will continue to attract more and more grocery shoppers, and will offer many opportunities for marketers to further cement relationships with the ultimate end user—the consumer.

Bishop started the session off with some impressive statistics about the growth of e-commerce in the past two years. Pre-pandemic, he said annual online grocery sales totaled $2 billion. After COVID hit, there was an initial surge in sales in the first couple of months, with online purchases seeing a fourfold increase in activity. By August 2020, the situation had calmed calmed down a bit, and online grocery sales saw sustained growth of threefold on a monthly basis over the previous year. A year later in August 2021, year-over-year online sales showed that the 3x increase was still being maintained over 2019, with an additional 5 percent increase over 2020.

The trio of speakers agreed that e-commerce is here to stay, will continue to attract more and more grocery shoppers, and will offer many opportunities for marketers to further cement relationships with the ultimate end user—the consumer.

Bishop noted that the 5 percent figure represents an increase over an elevated base and is a similar significant growth rate to what was occurring prior to the pandemic. Online purchases currently make up about a 12-percent share of total grocery purchases, a massive increase from a 1.5-percent share in August of 2019. Bishop revealed that 50 percent of all households have purchased a grocery item online in the past month and that only about 22 percent of households have never bought a grocery item online. The digital expert said about half of that latter group don’t have access to or just don’t use the internet at all. Bishop defined an online grocery purchase as the buying of any item that is typically sold in brick-and-mortar grocery stores.

David Bishop, Partner, Brick Meets Click

With such a continued online presence by US shoppers, Bishop said moving forward retailers have to have an online strategy. “COVID changed the way people buy products, so retailers need to change the way they sell products.”

Bishop added that if a retailer does not have an online strategy for the future, you really need to question if that retailer has a future. He said research shows that 80 percent of future growth in the retail grocery space will come from the online arena.

“COVID changed the way people buy products, so retailers need to change the way they sell products.” – David Bishop

From his experience as the top produce executive at Raley’s, Schutt confirmed that online sales are making deep inroads, causing that company to examine its future schematic and work on ways to enhance the experience for both online customers and in-store shoppers. These, in fact, are the same shoppers, according to Bishop. He noted consumers do not pick a new retailer when they try purchasing online. They pick the store they typically frequent and shop online with the same motivators (price, presentation etc.) driving their purchases.

Schutt called Raley’s a “customer experience company,” and the chain is testing ways to upgrade that experience for all its different shoppers. In this past year, it has experimented with both “dark stores” and “central hubs” to fulfill online orders. He revealed that the company’s online platform added 92,000 customers in the last year, which averages out to about 1,000 new customers for each store that participates in online shopping. 

Michael Schutt, Director of Produce & Floral, Raley's Family of Fine Stores

For those online shoppers, Schutt wants to replicate the experience that they get in-store with that online shopping experience. He sees it as an advantage over other online competitors that he already “owns the relationship with those customers” through their in-store experience.

Schutt called Raley’s a “customer experience company,” and the chain is testing ways to upgrade that experience for all its different shoppers.

Shea of Taylor Farms sees online shopping as a great opportunity to make a deeper connection with the shoppers who are buying his product, which largely consist of value-added items like packaged salads. He called it a “wonderful opportunity” to tell a more complete story to the consumer. “We have a ton of information about our products … how we grow them … how we clean them.” He said it is a difficult proposition to tell that story to the in-store shopper who is looking at a wall of packaged salads. But online, the opportunity is there to engage.

Micah Shea, Vice President of Sales, Taylor Farms

In fact, Shea said Taylor Farms is likely to redesign the packaging, the delivery system, and even the content of the salad to cater to these online shoppers. He indicated that different and fresher ingredients can be used if the delivery time from farm to fork is reduced.

Shea of Taylor Farms sees online shopping as a great opportunity to make a deeper connection with the shoppers who are buying his product, which largely consist of value-added items like packaged salads. He called it a “wonderful opportunity” to tell a more complete story to the consumer.

When asked to predict where e-commerce will be in one year, all of the panelists painted a rosy picture. Schutt believes there will be improvements in the efficiency and profitability of getting products to the e-commerce consumer, with wait times reduced.

Michael Schutt, Director of Produce & Floral, Raley's Family of Fine Stores

Shea reiterated that every aspect of the connection between the supplier and the e-commerce consumer will be impacted, saying that the size and shape of the consumer packaging could be altered and that the price point could be adjusted to reflect the realities of online fulfillment.

Bishop agreed, noting that the digital connection will be amplified as technology is used to enhance the shopping experience of the online consumer. Ultimately, he believes the connection between e-commerce customers and their retailers will be strengthened through the opportunities presented by internet connectivity.