This is where the hard work starts for the grocers; as the battle for online grocery market share rages, profitability will continue to be an issue, and Click & Collect will be the only way the grocers can sustainably increase share in this fast growing channel.
At present, 86% of UK online grocery shoppers have products delivered to their door, with this being seen as the most convenient method of fulfilment for food & grocery products. The remaining 14% use click & collect, with shoppers taking advantage of refrigerated lockers, drive-through and instore collection. These 14% are a small but important cohort for the grocers, as they provide them with much needed online revenue at a fraction of the cost of fulfilling home delivery orders.
The battle for the grocers is to get the remaining 86% of online food shoppers – or at least a significant proportion of them – to start using click & collect. Andrew Stevens, senior analyst at Verdict, said: “While the uptake of online food shopping has been encouraging over the past few years, it isn’t healthy for retailers as the cost to fulfil a home delivery order outweighs delivery charges customers are being asked to pay.” Click & Collect will be the only route to sustainable online market share growth.
A big hurdle for the grocers, however, is that when asked what they would rather use if they had the choice, only 3.6% of those shoppers currently using home delivery would like to switch to Click & Collect.
“It just isn’t convenient for shoppers” explained Stevens. “While for some it might be useful to collect an online order on the way home from work, the vast majority of food shoppers would rather have their food delivered straight to the kitchen.”
The grocers need to be more aggressive in urging shoppers to use Click & Collect rather than home delivery. Increasing delivery charges will be inevitable; however, it will be a bold move from the first grocer that does this, as it will run the risk of losing shoppers to competitors with lower delivery charges.
“The grocers need to start pushing Click & Collect more to shoppers. It’s all well and good softly rolling it out to grocery shoppers, but all of these retailers need to ensure that Click & collect needs to be seen as the first choice for online grocery fulfilment instead of home delivery,” added Stevens.
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