Consumer Confidence Creates Massive E-Commerce Opportunities
Walmart and Google’s recent announcement that they’ve partnered to bring voice-activated grocery shopping to consumers using Google Assistant comes as little surprise as the two mega brands continue to challenge Amazon.com's vise-like grip on the online shopping arena. As consumers become increasingly comfortable with online purchasing, retailers of all stripes are seeing the need to invest in the shopper experience through updated mobile interfaces, increased product assortment, easier payment methods and more delivery options.
While consumer confidence started on shaky ground in 2019, due in part to the government shutdown and increased trade tariffs, a new report from IRI found that nearly 55 percent of consumers said their house was in good financial shape in Q4 2018, up 4 percentage points from Q3 2018. However, 30 percent of respondents reported they struggle financially, with Gen Xers and millennials struggling most to afford groceries. One way every group said they're saving money is through online shopping, which provides consumers with convenience, free and fast shipping, and the ability to search for the best prices. Fifty percent of respondents said they save money shopping online because they're less likely to make an impulse purchase.
According to the report, e-commerce sales for the latest 52 weeks ending Dec. 30, 2018, were $58.6 billion, a 35.4 percent increase from the prior year. Top-selling items consumers purchased online were nonfood items, such as vitamins, pet food and supplies, and skin care products. The only food item to crack the top 10 was coffee. However, many categories that saw the most growth in e-commerce sales were edible items, including hot cereal (+151 percent), refrigerated lunch foods (+81 percent) and frozen appetizers (+77 percent).
The types of products being purchased most often online or in the fastest-growing categories indicate consumers prefer the comfort and convenience online shopping offers them. Weight control supplements, gastrointestinal solutions and adult incontinence products may feel too sensitive for some consumers to buy in-store. Pet food and supplies can be bulky and difficult to carry or move. Vitamins, skin care and cosmetics often require additional research that only the internet can provide.
It’s more important than ever that retailers invest in a variety of delivery solutions that meet their customers’ needs. Each consumer will have different priorities when deciding what to order online and how it will be delivered. For example, parents with younger children and seniors may prefer home delivery, whereas a single adult may be open to picking up an item from a locker. Where someone lives may also play a part in their ordering decisions. For example, shoppers in Chicago may be more likely to pay for delivery during a particularly harsh winter, while consumers in California might prefer the flexibility of timing afforded with ordering online and picking up in-store. No matter where someone lives, 38 percent of all consumers surveyed said they like having the ability to order online and pick up in-store, noting that it’s a good way to avoid shipping fees.
E-commerce sales growth will continue in 2019 and beyond. Even fresh grocery fulfillment, long considered a weak area in e-commerce, will continue to gain ground as retailers work to solve selection, handling and delivery challenges. According to our survey, a growing number of consumers plan to shift more of their food buying online in 2019. Grocery retailers understand that they no longer have the option of excelling at either an in-store or online experience. Today’s shoppers expect great selection, excellent service, and a seamless experience both in-store and online.
Joan Driggs is vice president, content and thought leadership at IRI, a leading provider of big data, predictive analytics and forward-looking insights that help CPG, OTC health care organizations, retailers, financial services and media companies grow their businesses.