Technology

New research reveals the ‘secret’ to growing digital grocery business

In short, don't mess up orders. Giving customers what they ordered and not damaging any items are the key factors in whether shoppers will return to an online grocer, according to a new survey from Mercatus.
Online grocery shopping
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Want to get more digital grocery customers? It’s easy: Just don’t mess up their orders.  

Customers who had a positive online grocery-shopping experience were 2.2 times more likely to use that service more often than those who’d had a less-than-stellar one, according to research released Monday from e-commerce firm Mercatus.

What’s more, customers who had a negative shopping experience were 2.6 times more likely to use a service less often than those with a positive one, Mercatus found. Unhappy shoppers were 3.4 times more likely to switch to another grocery retailer and were 1.6 times more likely to stop buying groceries online all together, the firm found.

"Grocery retailers who want to grow their online business need to improve the overall customer experience,” said Mark Fairhurst, VP of marketing at Mercatus, in a statement. “By providing a great experience, the first time and every time, grocery retailers can retain more current customers and fuel positive word-of-mouth advocacy that can attract others to try their online services.”

But what makes for a positive online grocery-shopping experience?

The most important factor was receiving all items in good condition (no smooshed loaves of bread or shattered olive oil bottles) and getting everything that was ordered.

“When it comes to a positive eGrocery experience, minimizing out-of-stocks is important but providing products in the condition that customers expect is essential,” said David Bishop, partner at analytics and strategy firm Brick Meets Click. “In other words, having the exact product ordered is good but ensuring that the ice cream is frozen when it arrives is even better. The reward for making improvements in the necessary operational areas can be substantial.”

The survey also found that grocery pick-up seems to have better staying power with shoppers than delivery.

Nearly half of all U.S. households had ordered groceries for pick-up in the last 12 months, Mercatus found, but just one-third had received grocery delivery. Plus, two-thirds of grocery pick-up’s user base remained active during the past month compared to just half of delivery customers.

Delivery has more potential pitfalls for retailers, too: Customers were 30% more likely to have a bad experience with delivery than with pick-up, the research found.

Financial incentives, such as no fees or getting money back, were shown to motivate consumers to try a new or different online grocery provider.

“Going forward, online growth will be fueled by the steps grocery retailers take to provide a differentiated customer experience that blends technology, insight, and operational excellence to encourage more frequent repeat purchases,” said Sylvain Perrier, president and CEO of Mercatus, in a statement. “Fundamentally, it comes down to knowing who your customers are, understanding what they want and developing better ways to satisfy those needs.”

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