3 Things Ecommerce Businesses Can Learn from Struggling Online Grocers

by Rakuten Super Logistics | eCommerce, eCommerce Strategy

Online grocery shopping— the answer to all your needs? Sounds like a no-brainer to do grocery shopping online, after all, life is busy and buying things online is quick and easy. So why is it that online grocers are not doing great? A seemingly great idea, supported by trends in other business arenas, is a near flop. So, what is the problem? And more importantly— what can online retailers learn from the struggle of the online grocer?

In business, retailers are often pressured to stay on top of technological trends and attract new customers by staying ahead of their industry with innovative concepts. It’s a pressure to perform and be the best in a fiercely competitive ecommerce world. Often, the pressure gets some businesses in financial trouble when they invest heavily in a risky new concept. In this case, the heavy investment is in the online grocery industry.

Avoiding the Pitfalls

Struggling online grocers teach the ecommerce world quite a bit. Many big chain stores have dabbled in the online grocery industry, including: Target, Walmart, Whole Foods, and Kroger. At surface level, this seems like a booming industry as more retailers join in, however– recent news and research paint a completely different picture of a struggling online grocery movement.

Forbes, a leader in business, entrepreneurship, investing, and technology news, shares that, “Grocers are making a huge mistake investing heavily in a service that the majority of customers are not asking for and this can be dangerous.” Forbes referenced a recent Gallup survey with 84% of respondents indicating they had never shopped online for groceries and a dismal 4% were actually using the online grocery services regularly. It appears to be a misalignment between what customers want and what these businesses are offering. This leads to confusion regarding the push for innovation. In which cases does innovation pay off?

Innovating Within Reach

What happened to the mindset of giving customers what they want before they want it? Steve Jobs was known for taking this approach to business development and was successful… In fact, in one of his famous quotes, Jobs explains that his business task is to read things that are not yet on the page.

This is where it gets quite confusing. Listening to customers while innovating beyond what they think they need. Thinking “ahead” of customers can be dangerous when businesses offer a product that the customers do not actually want. Another problem arises when the product is too far beyond the capacity of the customer.

Steve Jobs developed products that met the customer in terms of skills, interests, and practicality. He made the products and concepts accessible to the customer, with a very clear alignment to their needs. In the case of online grocers, the businesses have not aligned to meet the customers skills, interests, or practicality. Below are three things online retailers can learn from the struggling online grocer.

Lesson #1: Alignment of needs

Regardless of how innovative and seemingly perfect a business decision may be, the product or service must align with the needs and skills of the customers. The online grocery industry, at surface a transformative innovation, has a customer base not engaging with the product. The needs of the customer are not aligned. When customers’ needs are not central to business decisions, ultimately the investments lead businesses down a dangerous path.

Lesson #2: Know your customers

Although a basic concept, getting to know customers is often neglected. Many times, businesses assume they know current and future customer needs. However, rather than rushing to innovate, shifting efforts to get to know customers is critical. The best way to know customers is to talk with them. This “talking” can take many forms that are quick ways to learn needs, interests, and skills. Prioritize time to engage, such as: leveraging social media, conducting surveys, looking at the purchases customers are making, creating customer profiles, or hosting a customer event. The options are endless.

Lesson #3: Earn their trust

This is where the “Steve Jobs approach” to business is a guiding light. Earning customer trust has been central to Jobs’ business ventures. His diverse customer base embraces innovation with open arms. They trust the product and process. This trust does not develop overnight, though. A concerted effort must be made to earn that trust.

The struggles of the online grocery industry provide a moment for ecommerce businesses to step back, reflect, and (re)plan. Avoid the mistakes of investing heavily in a service that the majority of customers are not asking for. These dangerous investments that are seemingly perfect could create a major business loss. Take action by listening to customers. Focus on long term success by remaining loyal to customer needs and increasing trust.