Covid-19 crisis accelerates adoption of online grocery model
Shoppers’ new habits are likely to persist after the pandemic has passed, Takeoff Technologies says.
Online grocery shopping has boomed in March and April in response to consumers practicing social distancing policies during the coronavirus pandemic, and the industry is now looking to keep up with that hot demand by deploying new technology like automated picking and e-commerce platforms.
For example, San Diego-based Mercato, which provides an online e-commerce platform for independently owned grocery stores, is growing by about 50 stores a day, resulting in a 5,000% spike in consumer orders in March alone, the firm said. According to Mercato, about 31% of U.S. households used home delivery and pickup grocery services in March, pushing monthly order volume among users to jump 193% and increasing order rates by 19% compared to August 2019.
Much of that growth comes from new users, with more than half of today’s shoppers being new to online ordering and delivery, according to Fabric, a logistics technology startup that has collected millions in venture capital backing for its micro-fulfillment platform that uses robotic technology to help retailers offer fast fulfillment.
“Retailers are overwhelmed with orders and delivery windows are completely booked for weeks ahead,” Fabric’s chief commercial officer (CCO), Steve Hornyak, said in an email. “At the moment consumers are looking to order online in any way they can, whether it’s for pickup or delivery.”
While some consumers want their orders delivered straight to their front doors, others are willing to choose “click and collect” options like curbside pickup or in-store pickup. A recent Fabric survey showed that home delivery is “marginally” more popular at the moment, but that pattern may change as grocers adjust and implement new strategies to open up more e-commerce volume, Hornyak said. And regardless of how long the crisis lasts, online grocery penetration will approach—or even exceed—10% by the end of the year, four years sooner than previously forecasted, the survey found.
Although the Covid-19 crisis is acting as a catalyst to accelerate the adoption of online grocery, those new patterns are likely to be permanent long after the pandemic has passed, says Max Pedró, the co-founder and president of Takeoff Technologies, an automated grocery fulfillment system provider.
“One of the major challenges to increasing online penetration has been breaking shopper’s existing habits. Though this does tend to happen slowly over time, what we’re seeing with Covid-19 now is a huge surge in online demand,” Pedro said in an email. “Shoppers are currently in what we would consider a ‘habit-breaking’ period. After spending several months exploring eGrocery options and becoming comfortable with the platform, we expect to see shoppers continue to order online, well beyond the Covid-19 crisis.”
Regardless of which delivery model shoppers choose, retailers must focus on making all of the options convenient, he said. According to Takeoff, the key to that goal is locating fulfillment operations locally and driving down the cost of delivery, so that grocers can match shoppers’ preferences, however they develop, Pedro said.
