How to Win in Online Grocery

June 16, 2020

Grocery represents roughly half of all retail sales in the Unit-ed States. Yet, despite this demand, the penetration rate of on-line sales for food and beverage last year stood at a mere 6.3 percent (though this represents significant growth versus the year before1). Recent “shelter-in-place” orders have spiked de-mand, but have also exacerbated the profitability issues which plague online grocery. This first installment of a two-part study—launched before the coronavirus outbreak exploded in the United States—explores how grocery stores compete profitably against the world-renowned online leader, Amazon. Competing with Amazon’s variety may be a losing game, but traditional grocers can leverage their existing footprint to serve online shop-pers faster than Amazon. And by leveraging micro-fulfillment automation, they can do so at a lower cost than current crowd-sourced models.  

Grocery ranks among the most difficult shopping habits  to break. Obviously, the COVID-19 outbreak has forced   massive change in consumer behavior.

Our second installment will explore this phenomenon, and the probable long-term impact. No one can confidently predict when life in the US will return to normal, or even what “nor-mal” will look like. But we can confidently say that the essence of strategy entails a clear competitive positioning supported by the right operational capabilities. While the immediate priority is to protect employees and serve worried customers, grocery retailers must also look ahead to develop a clear vision for an omnichannel future.

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