Due in no small part to the pressure applied by Amazon purchasing Whole Foods earlier this year, major food manufacturers and retailers are beginning to understand the importance of creating forward-thinking ecommerce grocery strategies. With estimates projecting up to 20% of grocery sales to occur online by 2025, brands are being forced to reckon with a significant shift in the way people purchase their food.
Amazon’s Ongoing Attempt to Disrupt Brick and Mortar
For now, brick and mortar grocery stores aren’t going anywhere, and Amazon is attempting to be a disruptor in the field by lowering prices at their newly-acquired grocery chain. 70% of consumers in one poll said they don’t shop at Whole Foods because it is too expensive, so Amazon reduced prices by as much as 40% on certain items, and as a result traffic at the stores surged by 25% following the announcements.
However, prices have slowly climbed back up to nearly the place they were pre-merger, making it seem that Amazon’s attempt to shed Whole Food’s “whole paycheck” reputation wasn’t much more than a gimmick to get people through the doors.
Skip the Store with Amazon Pantry, Amazon Fresh, and Amazon Now
Though their experiment with Whole Foods is definitely worth watching moving forward, it’s Amazon’s foray into grocery delivery that is currently subverting the dominant food paradigm. Amazon Fresh lets Prime members order perishable foods like meats, produce, and dairy, at competitive prices, and have it delivered at a time you choose. It even offers items from local businesses; in Seattle, you can get fresh seafood from Pike Place Market, growlers of Rachel’s Ginger Beer, and more.
Amazon Prime Pantry covers everything else you might need from the store, including, “Groceries and household products in everyday sizes, such as a single box of cereal.” A similar service, Amazon Now, “Offers tens of thousands of items across dozens of categories, including household items, groceries, electronics, gifts, seasonal items, and more.” They deliver early in the morning until late at night, 7 days a week, with delivery charges based on order size and free 2-hour delivery for many items.
In certain cities, Amazon Now also will deliver you food from a handful of restaurants. For busy and/or lazy people, these services are a game-changer. “Skip the trip to the grocery store and let us do the heavy lifting.” Who doesn’t want that?
Challenges for Grocery Brands
For grocery brands, getting products that have historically gone into metal shopping carts into digital ones presents a new set of challenges. The digital shelf is smaller than the shelves inside physical supermarkets, and getting products in front of potential customers requires a specific digital strategy.
Amazon Fresh and Pantry items are currently not eligible for Amazon Marketing Services, but brands targeting outside of those areas can still use AMS effectively. Most grocery and health and personal care purchases come at the bottom of the “sales funnel,” when customers are ready to buy.
By focusing on pay-per-click Sponsored Product Ads, brands can make their items appear not only in specific search engine results but also next to their competitor’s products. It’s sort of like a regular grocery store: You might have thought you wanted Cheerios, but then you saw the Frosted Mini-Wheats and changed your mind.
Turning Clicks into Conversions
With the right AMS strategy, brands can get their products showing up exactly where they want in Amazon searches and on existing product pages. But once a customer clicks on the link, the product page they land on needs to have high-quality content to finish the sale. Brands that offer a dynamic shopping experience with well-written and concise titles, bullets, descriptions, and multiple high-resolution shots of the product are more likely to turn clicks into conversions. Does your brand’s ecommerce grocery strategy stack up?
Creating New Ecommerce Grocery Strategies to Stay Relevant
As it becomes clearer and clearer that grocery is no longer going to be business-as-usual, companies are slowly starting to give more credence to improving their ecommerce grocery strategies. Pepsi recently announced a 200-person business unit to focus specifically on ecommerce, as its online sales nearly doubled this year. Kroger, the second-largest grocery store chain in the US, recently proposed a $9 billion initiative to expand their ecommerce and omnichannel reach over the next three years.
New brands that are just establishing themselves are taking a digital-first approach and seeing positive results. Up-and-coming beverage company Bai used Amazon Marketing Services to help build brand awareness by combining focused AMS ad campaigns with larger national advertising efforts.
And then there’s Walmart. Struggling to stay relevant with Amazon, Walmart is now testing their version of Amazon Now, which is virtually the same but with a creepy twist no one really wants: not only will the service deliver your groceries, but the delivery person will go inside your home while you’re not there and put the items in your fridge. Customers will need specific smart locks and security cameras to use the service, which doesn’t seem likely to make it out of the testing phase. I suppose you can’t blame them for trying though. In the ever-changing ecommerce grocery landscape, everyone is looking for the next big idea that will help them compete with Amazon.