Blog Description

Food Ecommerce: What Awaits the Food, Beverage, and CPG Industry

Food Ecommerce

Consumer Goods and Retail | Feb, 2023

Food Ecommerce and CPG Industry has witnessed an unprecedented growth in the past few years. In 2021, the food and beverage sales accounted for nearly 11.67% of the total retail e-commerce sales in the United States. The share is projected to grow over 21% by 2027, owing to the shifting consumer sentiments change towards online shopping and increase in smartphone users and internet penetration. The upward trend is predicted to continue as customers have come to rely on online shopping more than ever! Consumers find food eCommerce to be convenient, time-saving, and cost-effective and thus they prefer online channels more than brick-and-mortar stores.

Global brands like Amazon and other grocery chains are introducing new models to change the way people shop for their everyday necessities and making everything available at the consumer’s doorsteps at prices that put offline grocery retailers in a fix. Hence, the evolving expectations of consumers and technological advancements are pushing players in the food & beverage and CPG industry to innovate and create strategies centered around providing consumers with best services.

Four primary eCommerce channels for food & beverage includes Click and Collect, Retail Grocery Delivery, Concierge Services, and Direct-to-Consumer.

Click and Collect

When consumer purchases items from retailer apps/websites rather than selecting them at the brick-and-mortar stores, the service is known as Click and Collect. Also known As Buy Online, Pickup in Stores (BOPIS), this method is preferable for customers who want to save on the cost of delivery and enjoy the speed and convenience of picking up their orders when it suits them.

Retail Grocery Delivery

This services includes just ordering food & beverage, groceries from an application and the items are delivered at the doorstep during the suitable time frame. Many quick grocery delivery apps have emerged in recent years, which have led to fierce competition among market players to entice customers with exciting offers.

Concierge Services

These are third-party delivery operators that allow consumers to choose groceries from different banners. Concierge services do not restrict the shopper to choose from a single retailer as the delivery partner collects all the items from different locations and provide shoppers everything quickly and conveniently at their doorstep.

Direct-to-Consumer

Direct-to-consumer brands are companies that sell directly to customers online rather than going through wholesalers or retailers. It is a bolder channel choice for F&B manufacturers as it requires huge investment for marketing to support growth. Several large F&B manufacturers such as Pepsi, Kraft Heinz, Sysco, etc. have launched DTC websites to sell their products and find additional revenue opportunities.

Here are the five trends expected to dominate the food eCommerce in future.

Competitive Pricing for Price-Sensitive Digital Consumers

Price is an overriding consideration for consumers when they buy a product. The rise of competition from new entrants are making the players adopt discount-heavy business models. Consumers preferences have reinforced the trend, “Best value at lowest prices”. Many chains are making huge investments to slash prices as pressure intensifies in the dynamically changing price environment. This is putting a greater effect on company financials and operating margins. Hence, food eCommerce players need to leverage AI tools for pricing intelligence to offer best deals to potential customers without compromising on the product margins. Generally, physical stores have more or less static prices for days or even weeks, but online shopping channels keep on changing prices, depending on the need of the customers and market trends. AI-driven dynamic and competitive pricing solutions can help eCommerce players to optimize pricing and keep price-sensitive shoppers satisfied. Amazon has continued to be a market leader in eCommerce due to its sophisticated dynamic pricing algorithms to continuously evaluate, review, and update the prices of millions of its products throughout the day.

E-Commerce Personalization

Online food retailers are building ties with their customers by turning their shopping experiencing into a personalized experience. Harnessing the power of data analytics, e-retailers can offer experiences to customers, built around their needs and preferences. Many consumers are sued to the personal touch that they would get in the neighborhood stores they frequently visited multiple times a week. Loyalty programs and rewards can create a sense of recognition and engagement that would allow customers to replicate their purchases. Another interest among online retailers in developing personalized customer relationships is that shoppers have unprecedented ability to compare prices, which puts pressure on retailers to follow their competitors and ensure their customization strategies remain relevant.

Buy Now, Pay Later Option to Gain Traction in Food eCommerce

Rising inflation has led to surge in commodity prices, resulting in less spending by consumers. However, consumers are increasingly opting to pay for their foods and other essential items with BNPL options. BNPL companies like Four, Splitit, Zip, Klarna, Afterpay, Sezzle, among others are allowing customers to make extended payments in the form of installments to make purchases. Since customers do not need to pay the amount all at once, food retailers can encourage customers to build larger carts. Once a customer uses BOP at the checkout, marketers can use the information to personalize subsequent messaging and ads. The most significant advantage of food retailers to offer BNPL is earning customer’s loyalty. Giving consumers the feeling that they can have everything they want without breaking the bank can increase customer loyalty and willingness to purchase.

Curating Assortments Analysing Consumer Purchasing Patterns

While one segment of consumers has turned into healthy and whole foods, the other larger segment went for comfort foods. Many eCommerce retailers are cashing in on the trend by pushing relevant advertising and keeping the high products in stock. Food retailers can leverage AI for product assortment planning, but its effectiveness lies in the methodology and approach. Predictive search results, visual cues, voice search, relevant historic data, etc. need to be leveraged to form product assortment for consumers.

Rise of Dark Stores

Dark stores, designed to fulfill the unprecedented demand from customers have proved to be successful in playing a vital role in supply chains. Customers want retailers to be involved, omnipresent, and responsive across all business platforms. Most retailers are adopting dark stores to reduce cart abandonment and increase sales. In recent years, many dark grocery stores have emerged such as Cajoo and Gorillas. Dark stores will continue to develop online shopping features and automation to optimize customer experience and meet their evolving demands. 

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