Better price, time-saving, wide range of variety, home-delivery, and convenience; these are the things that encourage people to do online shopping. If they don’t get these things, they switch back to brick-and-mortar-store. When it comes to the online grocery business, many retailers lack in providing these things effectively.
As a result, these become challenges that hinder the growth of the online grocery shopping and if an e-retailer overcomes these, he can easily get answers to the following questions:
- How to retain customers?
- How to provide flexibility to customers?
- How to promote supply chain development?
- How to thrive in competition?
- How to give more personalized experience to customers?
Without further ado, let’s discuss challenges:
Problems in Logistic
It’s important to understand the nature of logistical issues that impedes e-grocers to reach their full potential. Some of them are:
- Mismanagement in the cold storage supply chain
- A problem in last mile delivery
- Not moving towards consumer-centric market
- Unable to adopt new technology
To solve these issues one’s has to understand the basic elements of logistics in the online grocery business:
Storage facilities-> Communication-> Inventory-> Utilization and Packaging-> Transportation
An e-retailer has to manage these fundamental elements properly and incorporates them into the core competitive strategy of the business.
In 2017, Johan Hagberg (Department of Business Administration, University of Gothenburg, Sweden) published a paper named, “Travel modes in grocery shopping”. In the research, he showed how consumer behavior & characteristics, environmental interests, and mobility conditions affect travel-mode choice in grocery shopping. The analysis can help e-retailers to understand and solve the logistic issue.
To run an effective delivery system in the online grocery store, an e-retailer should have to manage product quality, delivery cost, and time simultaneously. The primary point of concern for the majority of buyers and grocery sellers is delivery. Perishable items, eatable items and everything else that revolves around groceries need to be delivered on the same day.
The best solution to counter delivery problem is to adopt a good workforce management system e.g
- Routing optimization
It helps business by minimizing the driving time and fuel consumption.
- Real-Time Locating System
A fleet manager or dispatcher can view vehicle progress in real time that put him in direct control and can further take better decisions and improve customer service.
Click and Collect
It is a combination of online and in-store shopping where customers order their product on the website and then pick them up from pickup spots. The method is very popular in countries where the cost of delivery is high.
Let’s check out how much Click and Collect is prevalent across the globe.
Australia: 42% of retailers are offering Click and Collect.
North America: 36% of retailers
Western Europe: 36% of retailers
Walmart’s Click and Collect Strategy
The American multinational retail corporation, Walmart has more than 1,200 grocery pickup spots across the United States of America. Through this Click and Collect strategy, Walmart is successful in lifting its sales and has got that extra edge against its competitors.
Congested Delivery Centers or Warehouse Problem
A warehouse or Delivery center (DC) is getting extremely congested with the rise in demand. To counter this, one interesting solution that e-retailers opted is “Dark Stores”. It is also known as Dotcom Centre or Dark Supermarket. Its interiors are the same as a supermarket with shelves containing groceries. But, dark stores are not accessible to retail customers. Whenever an order is placed online, a store employee known as picker get the product from the dark store and send it to the shop floor.
The dark store is incorporated with an automated storage and retrieval system (ASRS) which improves the overall store performance.
Many online grocery retailers failed to adopt new technology which directly impacted their sales. Big players like Amazon and Alibaba invested hugely in technology that ultimately improves customer experience and promotes growth. Following two are the newest tech trends in the online grocery business:
- In- Fridge Delivery: Last year, Walmart has partnered with August Home in order to start an In-fridge delivery service. A customer order groceries from Walmart.com and has August Home’s smart locks installed in his house. The delivery person will unlock the door of the house with a one-time password (which is pre-authorized by the owner). He further unloads the grocery items into the refrigerator and the door will lock automatically after he left.
- Customer Analytics: Kroger, an American retailing company uses customer data to create a personalized and unique store experience. The company has data on demographics, feedback, clickstream, etc, which helps them to entice customers to buy more.
Perishable grocery items pose a challenge to the overall management process and organization. The most important things while dealing with perishable products are their shelf life and packaging. Following are the ways that an online e-retailer has to keep in mind while packaging perishable products:
- Apply an adhesive to the bottom of the box.
- Protect the pallet.
- Let the grocery items breathe.
How to Increase Shelf Life
Fruits and vegetables stay fresh for three days longer in corrugated trays than plastic. Corrugated packaging prevents contamination as a very high temperature is applied during the manufacturing process. This kind of packaging is particularly important for eggs, meat, bread, vegetables, fruits, and other perishable products.
Due to the above-mentioned challenges, not everyone has embraced online grocery shopping. But if an e-retailer gets successful in overcoming them, it will give a major boost to the grocery business. The bottom line is to maintain a balance between the convenience of customers and the overall price of a grocery item.
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