2023 Consumer trends impacting eCommerce profitability

Mike Weber has spent his career rooted in the retail experience, beginning with retail design and shopper strategy for global big box stores, grocers and c-stores. Brand building for firms of all sizes led Weber to marketing strategy and eventually to the helm of Upshop marketing, where he works to make Upshop’s narrative clear, memorable, and relatable.

U.S. consumers face a rising tide of economic challenges: so why are they still spending money on cut fruit and prepared foods?

Uncertain times don’t always mean consumers are spending less, and 55% of consumers surveyed on spending habits say they spend the most on essentials such as groceries during uncertain economic conditions. The convenience of pre-made selections is undeniable in a post-covid world, and now is the time for grocers to seize that valuable shopper loyalty through customer service and expanded digital capabilities.

The present and future of omnichannel land heavily on retailers; managing ever shifting omnichannel expectations has become a major competitive necessity. As a post-pandemic market soothes the injuries of a fluctuating workforce, rising inflation, and demand amidst supply chain disruptions, grocers are searching for the steadfast in all the change.   

The massive shift toward online shopping has taken permanent shape in shopper habits, and strong, positive shopping experiences across channels are cardinal to ensuring satisfied customers. The 14th Annual Zebra Global Shopper Study “The Next Wave of Retail Fulfillment” identifies that 60% of shoppers prefer shopping with retailers that let them pick up orders in store, curbside, or from another location such as a locker.

As the option for choice reigns, so does the need for consistency. Retailers need to gear up for 2023 consumer trends to nail eCommerce profitability.   

Trend #1: Expanding marketplace variety 

Owning eCommerce is no simple feat: even if retailers take on order picking and curbside pickup, some eCommerce fulfillment services and delivery are undoubtedly quicker and more cost effective when handled by a third-party platform. And the third-party platform continues to flourish and expand in numbers: services like InstaCart, Uber Eats, and Doordash are continually met with grocery delivery apps like Shipt, PeaPod, and Gopuff.   

Grocery fulfillment and delivery services leverage convenience to snag loyalty. Deep discounts for new customers, excellent refund and return policies, and near-impossible promises on ultra-fast delivery make quick-delivery services enticing to consumers. In a market flush with this speed-based competition, retailers are stepping up to the challenge.

Margin-sharing may seem like a suitable way to circumvent the immense cost of eCommerce, but reliance on third-party platforms distances a retailer from a focus on customer service and, eventually, customer loyalty. When a shopper encounters a dissatisfying eCommerce experience, they blame the retailers—it was, after all, the retailer who hired the platform, allowed the order to be packed by outside labor, and endorsed the pickup or delivery.

Are they not to blame?

If the grocer wants to own that experience, end-to-end, with efficiency and success, then the experience needs to be branded, reliable, personable, and fresh. Start to finish. Every time.

As customer expectations of quality, accuracy, and speed increase, grocery retailers see the importance of tech investment ensuring efficient omnichannel experiences. Grocers also need to consider the price of offloading responsibility: failure to own the eCommerce customer journey end-to-end creates a high barrier to long-term profitability.

Trend #2: Growing need for personalization  

Shoppers have always wanted to be wooed for their preferences, but here’s how retail data scientists are fueling the cause: by providing complementary pairing ideas and “you’d also like these” suggestions. It’s the same principle as impulse buys in the grocery store checkout line: a shopper may be more likely to find something they didn’t know they needed at the eleventh hour—right before they hit “checkout” in their online cart.

Why not be completely prepared to take advantage of that buyer’s last-minute wish? Personalization can also boost localized selection and needs: Why not provide personalized suggestions based on specific regions or local events? Personalization can also mean allowing shoppers to provide preferences, like how ripe they would like their bananas to be, or how large of an apple they are looking for. The more personal a shopper’s cart is, the more certain their satisfaction will be.

The chance to personalize a shopper’s experience ties tightly to inventory integrity. Retailers that construct unified inventory systems—in-store and online—will have higher chances of matching that shopper’s unmet need. 82% of associates Zebra surveyed identified technology ensuring real-time inventory visibility as a key factor in creating a better customer experience. Ensure upsells and increased basket sizes are possible before you personalize eCommerce: confidence in on-shelf availability begins with streamlined inventory management.    

Trend #3: Narrowing delivery timeline expectations  

The pandemic buoyed an already significant grocery trend: hundreds of emerging delivery startups. In 2021 alone, New York City saw over a 100 startups racing to fulfill a 15 minute delivery promise. It was a frantic response to the burgeoning market, a $2.8 trillion global market where increasingly the default demand is customers “needing it now;” wanting faster, cheaper delivery and greater control over the entire experience.  

But as much as consumers want convenience in delivery, when it comes to perishable groceries, a convenient time slot is more important than receiving it quickly. And while delivery apps scramble to meet skyrocketing consumer expectations, it also means retail operators can be as good as their online assortment.

Achieving an online assortment that’s absolutely in sync with in-store or dark store assortment boosts the entire omnichannel experience: from order to fulfillment to pick up or delivery. There’s no room for OOS—or unfillable substitutions in the case of an OOS—and the consumer can bank on accuracy and quality service. When the order is picked up or delivered as fresh as it would be in-store, that’s when the customer knows convenience is worth the wait; a poor 15-minute delivery can never replace long-term brand trust.   

Retailers can’t ignore the threat to profitability, however. In the future, we could see these delivery apps pick products from different stores based on availability and aggregate consumer orders on their end. Ensuring zero OOS is critical to remaining competitive in a marketplace saturated with startups and third-parties eager to win customer loyalty through speed.     

Trend #4: Increasing demand for fresh  

When asked at NRF 2022 what Albertsons would continue to focus on in a post-pandemic world, CEO Vivek Sankaran said “we celebrate fresh. And we’ll continue to celebrate fresh.” Major retailers celebrating fresh is undoubtedly a response to the growing demand for it: more than 80% are increasing the space they allocate to fresh-prepared grab-and-go products. Health-conscious consumers exhibit increasing expectations for fresh and organic selection, and environmentally-conscious shoppers want to see sustainability practices coming out of their preferred retailers.

Fresh retail operations are notoriously complicated; but the challenge isn’t going away. As consumers expect more and more out of omnichannel buying, fresh becomes infinitely more complex. How do you keep a rotisserie chicken warm for a curbside order? How do you ensure the freshest made-to-go sandwich is in a customer’s bag when it gets delivered to their front door? How do you compete when consumers start expecting restaurant-quality sushi? 

Streamlined eCommerce systems become critical where fresh foods are involved. Managing shopper expectations must be balanced with equally important considerations like minimizing waste through production planning accuracy. Investments in technology that integrates fresh operations—production planning, commissary and kitchen management solutions—result in greater fresh item and meal replacement assortment options while ensuring inventory integrity. Similarly, retailers that provide more flexibility to make online order changes—sometimes right up until pickup time—create an experience that makes the shopper feel seen and cared for.   

For consumers spending money on fresh groceries for home cooking, retailers must uphold the same quality standards online as they do in-store; maintaining those shoppers and retaining their fresh loyalty long-term.    

Trend #5: Last mile fulfillment models

The pandemic created a need for omnichannel that could meet a variety of consumer needs during a time where health and safety was top of mind. Now that the smoke has cleared and omnichannel remains high-priority, evolving eCommerce models call for the proliferation of hybrid channels such as:

eCommerce must stand up to the challenge of accommodating every customer’s specific needs; quality in one sector will not make up for poor service in another. But pulling off delivery at-scale is inherently difficult and costly. Oftentimes, profitability comes down to cost of labor, high logistics ecosystem complexity, and ineffective customer engagement and visibility.

Third-party delivery partnerships that leverage scale across a market remain critical to managing labor and delivery costs, model innovation, and major customer concerns like transparency, flexibility, and delivery price-point. Demand aggregation and deploying different delivery models through partnership is key to standing apart from the competition in a market flush with choice.  

eCommerce profitability is no longer a journey: It’s a race  

Retailers of all sizes face continued margin pressure from intense competition; eCommerce can make or break loyalty when consumers are less forgiving and more willing to move onto any other variety of vendors. Growing profitable eCommerce channels depends on accounting for evolving consumer trends and critical investment in technology solutions that help retailers manage changing expectations at scale.    

Technology solutions that synchronize eCommerce systems are integral to driving fulfillment optimization. Increasing collaboration with technology allows retailers to leverage granular data and analytics to get to the source of key eCommerce challenges like inventory integrity, substitutions, and order pick up wait time. Smart solutions will connect retail eCommerce end-to-end, ultimately minimizing the cost of fulfillment by hero-ing the associate and increasing efficiencies in picking operations through multi-order, zone pick methods. Retailers making these strategic investments today are well-positioned for a profitable future.