The recent pandemic has forced many brick and mortar stores to go online. This change has brought a paradigm shift in the way things that were traditionally sold. Even habitual online shoppers skipped a few items and bought them in person.
COVID-19 has pushed majority stores to think about e-commerce. But the new shift has brought bigger issues to online grocery stores specially in terms of repeat purchases.
When it comes to groceries, only big players were selling online so far. U.S. online sales of groceries for delivery and pickup reached $7.2 billion in June, a 9% increase over May. Household penetration rose to 35%, up from 33% in May.
According to the latest Nielsen report, online contribution to India’s FMCG sales rose nearly 50% year-on-year in the March quarter as consumers increasingly shopped from e-grocers.
Online grocery has been growing at over 50% year-on-year for the last couple of years, but with the outbreak of COVID-19 resulting in a shift to online, the growth will accelerate to 81% CAGR during 2019-24, it said.
As exciting as this sounds, following a trend is not always profitable, but you can still make a mark. Especially when it comes to the online grocery sector, many challenges await the seller and a lot of competition.
Apart from figuring out the recurring and fixed costs, investments in the stockroom and online setup, many other factors like ‘how to ensure repeat purchases’ have to be taken into account. Online grocery stores get very frequent repeat purchase, but due to many established players in the market only a few of them might be dominating this sector.
Let’s start by understanding the different types of online grocery businesses you can start.
Types of online business models one can choose from
1. Warehouse based model
Companies have their warehouse. The in house staff manages all the purchase and delivery; there is no third party involved. Big basket is an example of this.
2. Local store aggregation model:
In this model, the company is responsible for taking orders but not delivering. They pass that responsibility to local shops.
3. Only delivery model:
This model is almost the opposite of the local store aggregation model. Companies act as a medium for taking orders, take full responsibility for deliveries but don’t own any inventory. The inventory belongs to retailers.
4. Omnichannel (Deep integration with Stores):
This model is a mix of all the above models. Companies may supply some products directly and some with collaboration from other big stores/brands.
Challenges E-commerce grocery stores face
- Margins can be low :
Depending on what products you are selling, margins can be low. Thought the product range could be widened to avoid this challenge.
- Consumers are not willing to pay for delivery costs/extra costs
Customers usually buy groceries in bulk; when they buy it in bulk, they prefer the delivery charges be waived off. Even otherwise, if the cart total is less then don’t prefer to pay extra. This can be a barrier in increase repeat puchases.
- Competing established and more prominent brands.
This is an issue that is the scariest part. Even if you do manage to tackle all the above problems competing with bigger and established brands may make your survival even more difficult. Customers might be willing to repeat their purchases from bigger brands than trying a new one
Before we begin to talk about tips and tricks to increase repeat purchases in online grocery stores, you can read on how to open an online store on Shopify in this blog.
How to make your store stand out and increase repeat purchases?
1. Focus on your customer account page
Apart from the full range of inventory, merchants need to focus on a customer account page that will help them increase repeat orders through the reorder section. When it comes to groceries, most of the customers now have stable and recurring needs, hence the reorder feature becomes a must given customers will increase repeat purchases monthly or quarterly if they order in bulk. You can use apps like Flits.
Customer accounts can be used tactfully in many ways. You can remind customers of the products they regularly buy; you can suggest products based on gender as well, especially if you have a range of beauty products as well.
2. Offer rewards
Due to the presence of various online stores, customer loyalty is a big issue. To tackle this issue, you can offer them rewards. Which can be redeemed as free delivery or at a specific cart value. Flits also offer a reward program add-on along with a customer account page.
3. Use apps that help you upsell
There are various Shopify apps like Bold upsell that can help with product suggestions/ product bundling on the Shopify app store. These apps help you suggest products to customers that are frequently bought together. You can suggest combos and offer them at a decreased price or give rewards. Bundling products and offering them at a lower price can help with more repeat purchases.
4. Make good use of Instagram
The great part about marketing online is that you can select the area you want to advertise your store in, you can choose the age range as well. If you have the budget for it, it will prompt a lot of customer’s to check out your site. Instagram is one of the popular social media platforms, and the best part is it’s easier to advertise grocery and products with photographs/ videos. Give tips on groceries, write more content around groceries.
5. Start a blog
Given the current situation, every customer has become a hygiene freak. To build trust, you need to share information on how you are maintaining cleanliness, how you are making sure that all of your employees are getting their temperature checked regularly. Add photos/ videos of how you are maintaining cleanliness, regular sanitizations and the health of your employees as well, how you keep your packaging virus free etc. Restaurants listed on Swiggy mention the last temperature check of their cooks and other employees.
6. Reach out to your existing customer base
Even if you decide to go online or provide pickup/delivery options, you need to inform your existing customer base about it. You can go for:
Whatsapp/ Text marketing- SMSbump
Email marketing- Klaviyo
Facebook messenger marketing- Recart
Shopify app store has many apps to cater this need.
If you have a store that is already popular, this task will be a cakewalk. Existing customer are already your loyal customer base hence more likely to help with increasing repeat purchases. Most of the customers are incredibly loyal to the shops they buy from if you reach out to them with more and better services they will respond positively.
7. Take advantage of Tyranny of distance
A few years ago Ondoor was launched in my city. Ondoor did extensive marketing for many days. People initially were hesitant about the idea of buying groceries online. But slowly we saw almost all of my neighbourhood was buying from Ondoor.
They targeted a city where Bigbasket and grofers were not available. This ensured them repeat purchases from customers willing to buy online.
You can find out locations where people don’t have the option to buy online, or they are hesitant to try it. You can give them introductory offers, try a bit of offline marketing to convince them to try out your store.
In most of the smaller towns in India, people still get their groceries in bulk which lasts for 6 to 8 months. You can target such towns and offer them home delivery in bulk, or you can change their mindset and make them buy monthly or quarterly.
8. Use lockdown innovations :
Lockdown forced all the physical stores to go online. By online, we don’t mean a fancy website and app. They used Whatsapp and phone calls to get a list of groceries from their regular customers. This is the cheapest way to sell your groceries without much physical contact.
You can either offer delivery or ask the customers to pick up. In cities like Mumbai, this method was already quite familiar. People would call up the grocery stores and give them a list of items that they required.
9. Add Multiple payment method options :
Covid-19 has made people reluctant to touch currency notes. You need to give them options to pay through different payment methods. There are various payment methods like Gpay, paytm, UPI, Paypal etc.
All the above points will be extremely helpful if a merchant is aiming to establish repeat purchases. Opening an online store where you have to manage your own inventory can be a daunting task. In the case of groceries it becomes even more difficult as the stock exhausts soon and customers may not want to wait for deliveries. However platforms like Shopify have simplified the process of setting up an online stores and Shopify apps have simplified marketing, upselling and other activities.
Getting in the online grocery domain can be a challenging task. Especially that big players have already entered this domain. But if you focus on getting repeat purchases and customer loyalty it will make it easier to survive along with giants in the same industry. You can look around and see what local physical stores have done during the pandemic, learn from them and improvise.