Executive Briefing

The online grocery discovery problem

Something important is missing from the online grocery experience. That’s a big opportunity.

(Artist unknown)

One of the big relevant trends during the Covid-19 pandemic has been the rapid acceleration in adoption of online grocery services for delivery and pickup. 

In the US, online grocery sales were still growing much faster at the end of March than they had been earlier in the year, according to data from Rakuten Intelligence. (E-commerce spending growth, more broadly, also continues to accelerate.)

Chart of the Day

Year-over-year change in daily US e-commerce chart

Unlike many quarantine trends, there’s a good chance this will end up sticking, at least for many consumers, at least for some portion of their grocery shopping.

For the stuff you already know you need, it turns out that it’s a lot easier and more convenient to replenish it with a few clicks once every week or two — and just have it show up — than to chase it down in a store.

But last week, halfway through another Whole Foods order on Prime Now, re-buying mostly the same items — box of arugula, shallots, yogurt, frozen berries, etc. — it hit me that something important was missing from the experience: The serendipity of walking through a grocery store and all the opportunity for product and brand discovery that comes with that.

Online grocery delivery has become essential infrastructure during Covid-19, and I’m grateful that it works at all, even in its flawed state. It has been an incredible privilege to be able to get fresh food delivered without risking my family’s health, and I don’t take that for granted.

But looking through my Whole Foods online order history, it really is almost all the same stuff from the same brands, over and over. The existing user interface, mostly built around search and convenience, simply wasn’t built for browsing and discovery.

It’s been helpful for my waistline (and wallet) that I haven’t recently impulse-purchased favorites like artisanal pork rinds, bark-wrapped cheeses, frozen gyoza, or smoky dark chocolate, the sort of stuff that tends to jump directly into your basket in the store, especially if you’re a little hungry. But I also haven’t really found anything new this way. If this was the only way I ever shopped for groceries again, it would be a boring existence, and a missed commerce opportunity.

And that’s a big loss, because modern grocery stores offer all sorts of discovery, wandering past various formats of shelf and cooler display, eye-catching packaging design, sampling, in-store editorial and collateral, seasonal highlights, and collaborations. I learn about something new every time I go to the store, and frequently make “exploratory” purchases.

Fortunately, this isn’t a new problem, and it’s hardly unique to grocery. The apparel industry, for example, has been dealing with this for decades, following the death of the department store. Broadly, big e-commerce — especially Amazon — is great for convenience and selection, but bad for discovery.

It’s perhaps going to become a bigger problem if online grocery continues to take market share with its current interface design. But I see several solutions for fixing the online grocery discovery problem.

Better user interfaces: This is obvious, perhaps, but there’s plenty that online grocers can do to improve product discovery in their stores, from photography to personalized recommendations. The beauty of Amazon or Instacart knowing everything you’ve purchased means it also knows what you haven’t yet purchased.

This will be worth the engineering and design effort, translating to larger basket sizes and more repeat purchases.

Inline advertising: The truth about the “user interface” in grocery stores — how and where products are displayed, promotional pricing, and even which products are available for purchase — is that in most cases, it’s because someone is paying for it.

Contextual advertising will become a noticeable part of the online grocery experience, too, giving brands a chance to introduce themselves and their products, and giving online grocers another revenue stream. Instacart has been building out an advertising business, and I’d be shocked if Amazon didn’t eventually introduce advertising to its grocery stores (if it hasn’t already in some places).

Instagram: This is perhaps the single most important place for product discovery today — the new word-of-mouth — through friends’ posts, experts’ and influencers’ posts, brand posts, and advertising. I’m underwhelmed by its shopping tag program — I just don’t see it in use very frequently, and have never used it to make a purchase. But its “Shop” page (in the Explore tab) is interesting.

Instagram remains the most influential and vibrant catalog of visual culture on the planet. Unless it somehow blows the opportunity, it should be able to use that to drive discovery and commerce business over the long run. Online grocers shouldn’t sit this one out.

Editorial and social media: Watch, for example, how Brightland, the tiny California olive oil startup, conducts itself online: An Instagram Live series around food and wine to keep fans entertained during social distancing, email newsletters including recipes and techniques, brand partnerships, recipes and storytelling, and more.

Some of this, no doubt, is see-what-sticks programming during a strange time. But the consumer brands that can become the best, most nimble publishers and community builders will have an advantage.

(This is where I’ll pause and admit that I’ve been… collecting… olive oil over the past few weeks. May I recommend Brightland’s fire-y Ardor chili-infused oil? I’m also excited to finally take delivery of the Bay Area’s Fat Gold, previously only available by membership. And, because it looked cool on someone’s Instagram story, a five-liter jug of Grove and Vine is arriving today via FedEx.)

I anticipate this will also fuel the rise of more food- and consumer goods-discovery-focused editorial media, and potentially more experiential spaces and events like Pop Up Grocer

It took The Wirecutter to finally build a trusted front end to Amazon’s electronics selection, and eventually many of its categories. Several properties and communities, such as A Thing or Two, magazines like Bon Appetit, food YouTubers and influencers, Thingtesting, etc., will combine to serve that role for online grocery and consumer packaged goods, especially if lucrative affiliate models emerge.

Online grocers should also invest in their own editorial operations and make them excellent — they’ve got the best conversion funnel. Trader Joe’s figured this out a long time ago with the Fearless Flyer newspaper, but I can’t point to a great digital equivalent.

Direct-to-consumer sales: The dream is that all that content and advertising will really pay off when it can convert to high-margin sales and a direct, long-term customer relationship.

I’ve been doing a surprising amount of grocery shopping during this period directly with brands — Anson Mills for grains, Brami snack beans, the aforementioned olive oils, Fly By Jing Sichuan chili crisps, Burlap & Barrel spices, coffee beans from Integral, and more. Some are brands I know and love, others I’d just discovered — on Instagram, through articles, etc.

It’s not always a great experience, especially when you need to buy too much to get free shipping or when only absurd bulk quantities are available. I’ve abandoned multiple shopping carts this week due to one source of friction or another.

But in the current situation, it’s often the best or only option, and business is booming. Zak Normandin, the founder and CEO of Iris Nova — which owns Dirty Lemon and handles digital sales and distribution for eight beverage brands — says direct sales are currently more than double their pace from three months ago.

I’m curious to see how this develops as a channel for food, beverage, and other consumer formats, especially when multi-brand stores — which will always have a bundling advantage — aren’t so supply constrained.

Boutique online grocers: Opinionated enough to be interesting, introduce new brands and products, and cater to specific lifestyles, but broad enough in their selection to justify a regular order, or at least spending the $50 to get free delivery.

You probably already know Good Eggs and Thrive Market, which are already pretty big. I’m eager to see where Bubble goes. 

And discovery potential aside, how much room there really is for third parties between niche brands and the big online grocers? It’s really hard being midsized.

Physical grocery stores! This has been an interesting exercise, and I almost forgot about the actual stores. But the good news is that eventually, once the Covid-19 threat recedes, we’ll be able to spend more time outside our homes again.

While I expect some grocery shopping to move online permanently because of new habits established this spring, it still won’t represent the majority of grocery sales for many years, if ever in the foreseeable future. The advantage here goes to the incumbents, especially those savvy enough to connect their physical and online businesses through elegant digital products.

So physical grocery stores — and cafés, restaurants, hotel lobbies, concept stores, specialty shops, pop-ups, travel, etc. — will again get to serve as discovery and service hubs, with online stores an easier place for restocking. The best of both worlds!

Also: Why Instacart matters

Dan Frommer

Hi, I’m Dan Frommer and this is The New Consumer, a publication about how and why people spend their time and money.

I’m a longtime tech and business journalist, and I’m excited to focus my attention on how technology continues to profoundly change how things are created, experienced, bought, and sold. The New Consumer is supported entirely by your membership — join now to receive my reporting, analysis, and commentary directly in your inbox, via my twice-weekly, member-exclusive Executive Briefing. Thanks in advance.

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