E-tailers address challenges of growth

Retailers and suppliers that stand to benefit from the ongoing explosion in e-commerce sales need also to prepare for the operational challenges the omnichannel world presents.

For retailers this includes everything from managing the efficiency with which orders are picked in store to ways of ensuring the online shopping experience actually delivers the convenience shoppers expect of it. Suppliers in the meantime should understand there are vast differences between success on the physical and digital shelves.

Those were the messages from a panel discussion as part of Saint Joseph’s University Academy of Food Marketing’s Educational Scholarship Series, held Wednesday evening in Jersey City.

Donna Zambo, director of digital commerce, e-commerce and digital innovation for Wakefern Food Corp., said ShopRite stores offering store-picked orders for its popular ShopRite from Home internet shopping service are examining ways to fulfill orders without putting strain on the stores or employees.

“We have some of the largest volume stores per square foot in brick and mortar, and there's a lot of traffic in stores, and picking Internet orders in the store on top of it, there's a challenge from a space operational standpoint,” Zambo said. “So the question is, how do you repurpose that space so you can serve in-store and online.

“When you reach that tipping point where 10% of your business is online, some categories are up 25%, 40% or 50% in sales online, so do you still want to pack out the shelf only to have somebody come around and select,” she said. “So we're going to focus on operational issues around how do we select most efficiently.”

The issue underscored the importance of getting the online experience right, a theme not only for ShopRite but for its online competitors FreshDirect and Peapod, which were also represented on the panel.

“One thing I've learned after many years of ecommerce is you can have the most amazing website there is, you can have every button, whistle, visual aid you want, but if the eggs show up broken, you have failed,” said Linda Crowder, senior director of Peapod Interactive, the U.S. online grocery arm of Ahold Delhaize.

“When you look at this [e-commerce] space, it can be really complicated,” added Zambo. “But it has to be easy for the customer.”

E-commerce operators should prepare for still more demands of convenience, said Crowder.

“I think particularly as Millennials come on, their definition of convenience is going to require more than we think of now — just getting it there on time at a good price,” she said. “Its going to start requiring 'Give me ideas. Give me inspiration. Engage me’ – taking the navigation of shopping simply from selecting products to putting together solutions. There are a number of places where we're looking at that, I think the meal kit operators are giving them that. But there's nobody yet who's doing a suburb job yet.”

Charlie Moore, VP of grocery and frozen for FreshDirect, said competing with the convenience aspects of online retail is pushing brick-and-mortar counterparts to pursue better service. “For brick and mortar to stay competitive they have to focus more on service,” he said. “That what the ones that are winning are doing. We're seeing more service-oriented stores that can customize each and every thing for their customer needs while they are there.”

Crowder agreed, with reservations. She noted that openings of Mariano’s stores in Peapod’s Chicagoland market had an effect on online sales, but she cautioned that a developing a Mariano’s-like presentation to defend against online competition is a challenge in itself.

“When you see a new store like Mariano's coming in, and they really try to create an experience in their store, that can affect online, because all of a sudden, there's a reason to go back to the store,” she said. “I think there are definitely ways for retailers to get more experience into their stores, but my guess is that's a very defensive proposition, and it's not easy to do that.”

Panelists noted that some brands have found it difficult to replicate their store-based share in the digital world, noting successful brands and suppliers online tend to be those willing to invest in making certain their product looks right online. Flexibility and a willingness to test and explore are also marks of successful online brands, they said. For many categories, top 10 products in-store and online tend to look different, Zambo said, saying for example that pack sizes tend to be larger in online orders.

“Too many companies simply assume ‘If I have leadership in the brick-and-mortar channel, I’m set.’ But that kind of perception is very dangerous,” Crowder said. “If you’re not already thinking about simple questions like ‘What does my product look like online?’ you need to. You’d be surprised at the level of attention you need to put behind that.”

An additional challenge for brands is to crack the saved “shopping lists” of online shoppers, who tend to use them to aid convenience. “If you haven’t made the effort to get on the list and established relevancy, you’ll have you fight to get on a list, and that can be an expensive proposition,” she said.