Grocery retailers have been trying to make online grocery shopping work, but so far, it doesn’t look like it’s going to succeed long-term.
For example, Amazon launched an online grocery business called AmazonFresh, but it’s not doing well. In theory, Prime members located in one of 20 designated cities can order groceries to be delivered fresh to their door, but that’s not what’s happening.
In the last few years, Amazon Fresh customers have been routinely complaining about missing items, delayed or canceled deliveries, improperly packed items, and spoiled produce. Amazon tries to make it easy for customers by offering refunds, but that doesn’t help people who needed their groceries delivered and now have to go to the store. “I just bought groceries from you because I need groceries,” one Fresh customer complained. “I can’t eat a refund.”
It’s been 11 years since the service launched, so why is the service so poor?
Online grocery delivery is a flawed business model
There’s nothing profitable long-term about online grocery delivery. Groceries are a high expectation product, and it costs more to meet on the delivery model. Food is sensitive to temperature and has a limited shelf life. The prices must be higher to cover the cost of delivery, packaging, and labor. It’s unclear exactly what Amazon is doing to create so many customer horror stories, but it’s clear that groceries don’t work as ecommerce.
Although online grocery is said to be growing by 15% annually, that growth can be deceiving. Many businesses are following the trends without realizing the trends aren’t profitable.
TABS Analytics’ CEO, Dr. Kurt Jetta, has a practical view of the whole situation. Jetta told CBS Sunday Morning that online grocery has three main problems: a limited frame of reference for shopping, a higher price point, and it isn’t a personal experience. These three problems make the online grocery model not profitable long-term.
As if groceries weren’t already expensive, online grocery shopping costs an average of 25% more. That’s a small price to pay for the convenience of not having to leave your house or drive to the store. However, the convenience isn’t all that convenient. No matter how great a website is designed, it won’t recreate the tangible experience of browsing supermarket shelves to compare prices and selections at-a-glance. These comparisons are easier and faster to make in person.
Perhaps the biggest downside is shopping online isn’t a personal experience; some people need to see and touch their produce before buying it.
Online grocery shopping is tedious
Shopping for groceries online is tedious. Looking at 2-dimensional images of food products isn’t the same as looking at 3-dimensional items on shelves that can be picked up. Many people need a tactile experience before they decide to buy something new. Looking at a photo makes the process harder.
Smaller retailers are trying to expand into online grocery
If online grocery isn’t profitable long-term and even Amazon failed to make it work, why are retailers still expanding into the market? Even though the systems are flawed, big companies like Amazon and Walmart are influencing other retailers to follow suit. However, don’t be so quick to copy Amazon. Remember when Amazon launched “Dash” buttons? Those branded, sticky-backed, chunky, Wi-Fi enabled buttons meant to re-order products with a single touch? The idea failed miserably. Even tech giants aren’t successful 100% of the time.
We don’t need to automate every aspect of our lives
Automation is convenient, but why are we trying to automate every aspect of our lives? It makes sense to automate your email marketing campaign and maybe even some phone calls. It doesn’t make sense to automate your dinner from farm to table, and perhaps the reason it’s not catching on is because it’s not really what people want.
There’s a joy in grocery shopping that younger generations are missing out on when they get anything they want delivered with a click. They don’t know what it’s like to sift through all the avocados to get the ones that will ripen in exactly three days for a party, but not before. All they know are the overly-ripe avocados someone else picked out that will probably be brown by the time they need to make guacamole.
If we’re too busy to go grocery shopping, it might be time to question our lifestyle rather than have our bread and jam delivered to our door. Some aspects of everyday life are better done manually.
