Embracing Online Grocery Shopping

April 2, 2020


Panic buying due to COVID-19 as well as grocery stores remaining open during this crisis has brought forth great stress on the grocery supply chain. Replenishment of such staples of toilet paper, hand sanitizer, bread and meats struggle to keep up with demand.

E-commerce arms of physical stores, as well as from Amazon, are also feeling the pain as more people are at home and opt for online deliveries. Amazon, Walmart, Kroger and more have announced each were hiring more employees to meet the growing demands of online grocery orders. In addition, Amazon and Walmart are adding additional time slots for delivery and pickup.

Expansion of Online Grocery Shopping Locations and Services

According to Business Insider, last week, Amazon expanded delivery from Whole Foods to new cities, including Toledo, Ohio, West Des Moines, Iowa, and Wichita, Kansas. The company also added more grocery pickup capacity in areas including Boston; Dallas/Ft. Worth; San Francisco, Stamford, Connecticut; New Jersey's Gateway region; Springfield, Virginia; Chicago; and Minneapolis.

Meanwhile Walmart increased its grocery pickup and delivery hours to help meet demand. In addition, the company shortened its advance ordering window from one week to two days in an effort to more accurately reflect in-stock levels to customers.

Kroger is stepping up its online orders by expanding its open pickup appointment from three days to seven days. It has also converted a store in Ohio to an online-only location that will serve only pickup orders. The company hasn't said whether it plans to expand the test to additional stores.

Online Grocery Shopping Soars

Prior to the coronavirus outbreak, U.S. online grocery shopping represented less than 5% of total grocery sales. In 2019, market research firm, Coresight Research reported that nearly one-third of 2,500 grocery shoppers surveyed bought “almost none” of their groceries online, while 41% reported making only a “small amount” of such purchases online and 16%, said they bought “some” grocery items online while only 12% said they bought “most or almost all” online.

However, things have changed quickly. A Gordon Hasket Research Advisors survey published last month found that one-third of shoppers purchased food online over the past week, with a significant share of those (41%) being first-time online food and grocery shoppers.

A Credit Suisse analyst predicts, “We see this unfortunate period accelerating structural changes in consumer shopping,” and online grocery will be first.

We expect to see growth in online grocery shopping to continue and increase its percentage of total grocery spend over the next few months and years. Grocers that offer last mile delivery services will need to be cautious on partner selections as well as costs associated with each selection. There are numerous options available and it’s just a matter of finding the right fit to extend the customer experience to consumers’ front doors.


ABOUT SPEND MANAGEMENT EXPERTS

Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting and forecasting accuracy and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered.

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Embracing Online Grocery Shopping

April 2, 2020


Panic buying due to COVID-19 as well as grocery stores remaining open during this crisis has brought forth great stress on the grocery supply chain. Replenishment of such staples of toilet paper, hand sanitizer, bread and meats struggle to keep up with demand. E-commerce arms of physical stores, as well as from Amazon, are also feeling the pain as more people are at home and opt for online deliveries. Amazon, Walmart, Kroger and more have announced each were hiring more employees to meet the growing demands of online grocery orders. In addition, Amazon and Walmart are adding additional time slots for delivery and pickup.

Expansion of Online Grocery Shopping Locations and Services

According to Business Insider, last week, Amazon expanded delivery from Whole Foods to new cities, including Toledo, Ohio, West Des Moines, Iowa, and Wichita, Kansas. The company also added more grocery pickup capacity in areas including Boston; Dallas/Ft. Worth; San Francisco, Stamford, Connecticut; New Jersey's Gateway region; Springfield, Virginia; Chicago; and Minneapolis. Meanwhile Walmart increased its grocery pickup and delivery hours to help meet demand. In addition, the company shortened its advance ordering window from one week to two days in an effort to more accurately reflect in-stock levels to customers. Kroger is stepping up its online orders by expanding its open pickup appointment from three days to seven days. It has also converted a store in Ohio to an online-only location that will serve only pickup orders. The company hasn't said whether it plans to expand the test to additional stores.

Online Grocery Shopping Soars

Prior to the coronavirus outbreak, U.S. online grocery shopping represented less than 5% of total grocery sales. In 2019, market research firm, Coresight Research reported that nearly one-third of 2,500 grocery shoppers surveyed bought “almost none” of their groceries online, while 41% reported making only a “small amount” of such purchases online and 16%, said they bought “some” grocery items online while only 12% said they bought “most or almost all” online. However, things have changed quickly. A Gordon Hasket Research Advisors survey published last month found that one-third of shoppers purchased food online over the past week, with a significant share of those (41%) being first-time online food and grocery shoppers. A Credit Suisse analyst predicts, “We see this unfortunate period accelerating structural changes in consumer shopping,” and online grocery will be first. We expect to see growth in online grocery shopping to continue and increase its percentage of total grocery spend over the next few months and years. Grocers that offer last mile delivery services will need to be cautious on partner selections as well as costs associated with each selection. There are numerous options available and it’s just a matter of finding the right fit to extend the customer experience to consumers’ front doors.
ABOUT SPEND MANAGEMENT EXPERTS Spend Management Experts provides strategic guidance to optimize your supply chain. Using cost modeling technology and market intelligence, we help companies with their transportation, distribution and fulfillment spend. Often large shippers can reduce their spend across the supply chain by 20% or more. We specialize in reducing distribution costs, increasing efficiencies, dynamic reporting, greater budgeting and forecasting accuracy and optimizing supply chain execution. We leverage our proprietary models to identify savings and build negotiation strategies based on data and business cases. As industry experts, our fresh approach provides clients with straightforward details on exactly how savings are derived. Spend Management Experts is your competitive edge, delivered.

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