Brands that may not have had much share in stores are now dominating in the retailer dot-com space."
As the pandemic accelerates online purchases, consumer packaged goods makers have new opportunities to gain significant market share by investing smartly in advertising and smart pricing on grocery retail apps and websites, according to three e-commerce experts at “New Opportunities in the Surging Online Grocery Marketplace,” a webinar hosted by Advantage Digital Commerce.
The use of online grocery delivery and pickup use rose quickly in the early days of the pandemic and have held steady since then. The number of active online grocery customers has leapt from 16.1 million in August 2019 to 45.6 million this June and past-30-day sales grew from $1.2 billion to $7.2 billion during that time, according to Ryan Mulvany, executive vice president and general manager of Quiverr, an Advantage Digital Commerce agency.
Citing Mercatus research, Mulvany noted the average basket spend grew from $72 last summer to $90 in May, before settling back to $84 in June. “The reduction in average spend reflects that shoppers are now using online grocery for both stock-up and in-between-trip orders, as active shopper frequency has grown from 1 time per month to nearly 2 times per month.”
While Amazon is “doing its best to become the most relevant online grocery retailer,” the platform accounts for 1.9% of U.S. grocery spending, while Walmart’s online and in-store grocery sales account for 19.1% of the country’s total, he said. “Walmart is the [biggest player], but there is great potential to gain market share with other retailers online, too.”
Mulvany was joined on the webinar by Willy Blesener, associate media director, and Sumi Mukoyama, senior director of advertising alliances, of Beekeeper Marketing, an Advantage Digital Commerce agency.
Instacart on the Rise
Many brands are making market share inroads on the fast-growing Instacart app, which now partners with 350 retailers and is available to 80% of the nation’s shoppers, Blesener said. “Chances are, if you are selling your product in a grocery store, that store is on Instacart and so your product is on Instacart, but you are not maxing out the opportunity by investing in your placements there,” he said. “And if you are selling your products in Kroger stores or Walmart stores, you are on their online platform but not leveraging your placement there either.”
Gaining market share on e-commerce platforms is “a whole different game,” he said. “The share brands own in store is not the share they own on the retailer’s dot-com. They need to be investing in their brand there, too. Brands that may not have had much share in stores are now dominating in the retailer dot-com space.”
On Instacart, brands are succeeding by investing in keywords and featured positions on pages where they organically would not appear in the first or second position, Blesener said. “Seventy percent of shoppers don’t look past the first row of products; 90% don’t go past the first page. So, if you are bidding on keywords, the first row is the preferred outcome.”
Indeed, most Instacart shoppers are finding products by entering keywords and 85% of those searches are not brand specific, he added. “They may have never bought the featured product, but if it is found at a competitive price they may buy it and it may be a lifetime switch.”
Brands also have the option to leverage discounts that will appear regardless of the retailer selected. Instacart also features retailer-exclusive discounts; if there are both retailer and Instacart discounts on a product, the platform automatically defaults to the selected retailer’s promotion, Blesener explained.
Still, brands have a very small level of influence on how their products appear on Instacart. Unlike Amazon product listings, Instacart listings do not include detail pages or reviews, only images, titles, prices and promoted discounts. Images are typically syndicated from the participating retailer’s website.
“Everything we talk about for having the right content on Amazon and Walmart.com to be found in their search results doesn’t exist in Instacart,” Blesener said. “Shoppers simply hit the plus sign and the product is in the cart.”
In that way, Instacart is strictly driving conversion, Blesener said. “It is built for the shopper’s mindset of getting through their shopping list and getting products into their cart. They want it to be a quick experience. But if a brand is selling a product that is not on the customer’s shopping list, buying the right keywords offers huge potential for cross-selling with other products.”
Amazon Grocery Platforms
The panel of experts also discussed Amazon’s grocery platforms — Amazon, Amazon Fresh, Amazon Prime Now and Whole Foods Market. These platforms all play by different rules and operate “somewhat separately,” according to Mukoyama. Amazon Fresh, for instance, is a gated platform.
“Amazon Fresh is by-invitation only. For any brands who have been invited I strongly suggest you say ‘Yes.’ They are cherry-picking the brands they want to work with,” Mukoyama said.
Orders made on Amazon Fresh (one-day delivery) and Amazon Prime Now (one- or two-hour delivery) pull from the same fulfillment centers and handle perishable and frozen items with cold shipping, unlike orders made on Amazon.com pulled from Amazon.com fulfillment centers, Mukoyama noted. “Amazon Fresh and Prime Now offer a much different, more turnkey experience for brands than Amazon.com in terms of the cold supply chain.”
There has been some integration with the Amazon platforms and Whole Foods, though it’s uncertain how far that integration will grow in the next few months, Mukoyama said. In Seattle, for example, a Whole Foods order may be delivered via Amazon Prime Now.
“You can see Whole Foods products listed as ‘delivered by Prime Now,’ but the platforms are not necessarily pulling from each other’s inventory.”
Brands that are invited to Amazon Fresh are distributed wherever Amazon Fresh is available, in 50 markets, Mukoyama said. “Once you are on Fresh, the brand can be leveraged through media on the platform.”
As on Instacart, sponsored ads hold the first three listings on Amazon Fresh and shoppers make use of an easy-to-find add-to-cart function. However, Amazon Fresh offers product detail pages, including descriptive bullet points and multiple images, Q&A and shopper reviews.
“It’s important to set correct expectations in the product description,” Mulvany noted. “Reviews are the lifeblood of sales online. A negative review can take you down.”
Shopper mindset and behavior are much different on Amazon.com, versus Amazon Fresh or Prime Now, Mukoyama said. “Shoppers are spearfishing on Amazon. They’re basket-building on Fresh and Prime Now.”
As online grocery continues to rapidly grow, it’s increasingly clear that brands require a more nuanced and platform-specific approach to maximize their impact and business online, the experts agreed.