IRI Insights:
Changing the E-commerce Experience
The Shifting Shape of the Demand Curve
Many shopping carts have gone virtual in the wake of COVID-19, as consumers seeking to avoid or minimize virus exposure swap in-store visits with online buying. While the e-commerce experience is decidedly different and there are inherent challenges, the same hands that usually push a physical shopping cart are now clicking on a cart icon. Manufacturers and retailers can create meaningful ways for shoppers to buy and connect with their brands and stores in this new omnichannel environment.
Taking Stock: The Concerned Consumer
Starting with pantry-stocking trips amid shutdowns in March, U.S. consumers have changed their buying behaviors to protect their health and the health of their families during the pandemic.
Sales growth in e-commerce, grocery and dollar stores have accelerated, as consumers boosted their home food supplies and dined out less often.
The Rise of E-Commerce
More households are buying groceries and goods online.
of U.S. households shopped via e-commerce during the 12-week period ending July 12, 2020, compared to 24.9% for the 12-week period ending Jan. 26, 2020.
Consider the Source
Putting Their Money Where Their Mouths Are
E-commerce dollar sales per household reached $250.70 for the period ending July 12, 2020, compared to $175.60 for the period ending Jan. 26, 2020.
Site Seeing
The moves shoppers are making are not necessarily lateral or linear in the COVID-19 era. Because they can conveniently order from different sites via their device or home computer, consumers are splintering more of their purchases.
The majority of non-edible
e-commerce purchases are made through shipment sites, such as Amazon.
Center store items addressing COVID-19 risk factors are performing strongly:
Up and Away
Big chains are getting big gains in e-commerce, as consumer trust and familiarity cross the threshold from brick to click.
Albertsons, Kroger and Ahold Delhaize experienced dramatic bumps in e-commerce sales during pandemic.
Growing demand has put a strain on some e-commerce infrastructures, which are challenged by difficulties in predicting stock with existing models and lags between orders and fulfillment. Remember, this shift was rather sudden and the situation is largely novel.
Making E-Commerce Structurally Sound
is needed to keep up with the existing leaders in e-commerce.
The Price Factor
of shoppers say that they check which items are on sale before making a purchase decision.
Looking ahead, while general uncertainty remains, expect e-commerce to remain elevated into 2021. Beyond demand from consumers who appreciate the virtual shopping experience amid COVID-19 worries, its future is facilitated by large retailers now investing in e-commerce infrastructures.
What to Expect After a Year of the Unexpected
CPG considerations
Elevate Your Own E-Commerce Share
If the shape of the demand curve looks different than it did pre-COVID-19, CPGs and grocers can shape their own part of that curve going forward. The rapid change in the omnichannel environment requires companies to assess changes in shopper behavior online and in-store and adopt accordingly, through distribution, assortment, marketing, pricing, promotion and logistics.
dollar sales % change vs. YA
3/13-3/15
41%
51%
61%
66%
67%
69%
70%
73%
74%
82%
86%
3/27-3/29
3/20-3/22
4/3-4/5
4/10-4/12
4/17-4/19
4/24-4/26
5/1-5/3
5/8-5/10
5/15-4/17
5/22-5/24
While Instacart, Amazon and Walmart.com are big players in e-commerce, grocery chains, mass merchandisers and club stores are holding their ground – and trying to hold their base – as shoppers shift their browsing and buying habits.
Chain Reaction
1/1/20-4/12
4/19/20-6/7
4/19/20
4/26/20
5/3/20
5/10/20
5/17/20
5/24/20
5/31/20
6/7/20
-4.6%
9.3%
8.4%
7.0%
7.9%
8.4%
9.3%
11.7%
13.6%
8.0%
say they are focusing more on their health
35%
of consumers say they proactively take care of their physical and emotional health
31%
22%
say they are eating healthier
Products with immunity claims almost
2019 growth during the 8-week* COVID-19 period.
doubled
Hypertension support did
Diabetes support grew
9X
Obesity support grew
11X
22%
of 2019 dollar sales in 15% of the weeks
21%
14%
65%
Same day
Next Day
2 days+
about IRI's report, “The Changing Shape of the CPG Demand Curve: E-Commerce” – part 6 in IRI’s ongoing series of reports on navigating a path forward through COVID-19 - or customize research by category or industry by emailing IRI@IRIworldwide.com.
of shoppers polled indicated that items were unavailable in their orders.
Learn more
*8-week period is March 8 to April 26, 2020
Appetite for
E-Commerce Success
E-commerce share has grown across several categories, but the growth is proportionally higher in the edible market.
Grocery
Mass
Convenience
Jan & FEB
March
April-Present
1.0%
3.2%
2.9%
22.8%
51.4%
28.9%
0.0%
Challenges and Opportunities
A Real Future for Virtual Shopping
The shape of the demand curve is likely the shape of things to come, as shopping online for home delivery and curbside pickup is here to stay.
of those using curbside pickup more often than they did before now plan to use it for at least half of their groceries as current restrictions and concerns end.
To keep shoppers satisfied with e-commerce, CPGs and retailers should make the experience easier by helping them discover and search for items.
Take It Easy
of shoppers say they use search tools to type in the name of specific items they want.
Retailer recommendations
Invest in online product availability and tracking to ensure consumers can easily get the products they want.
Grocery Pickup & Delivery Availability Timing
was the top reason for dissatisfaction with e-commerce.
Unavailability
62%
increase through July vs. YAG for
74%
online sales increase thru Q1 for
92%
increase in
e-commerce sales for
141%
March 2020 online sales were 48.3% higher than
March 2019 for
48.3%
increase in digital sales for
276%
increase in online sales in Q1 for
42%
Other major retailers that sell groceries, including Walmart, Target and Costco, likewise saw e-commerce sales jump.
24.9
25.1
31.8
32.9
24.5
28.6
32.6
12 w/e
1/26
12 w/e
2/23
12 w/e
3/22
12 w/e
4/19
12 w/e
5/17
12 w/e
6/14
12 w/e
7/12
+7.8
E-Commerce % Households Buying
34.6%
In the nonedible market, paper products
(not surprisingly) scored the highest percentage
growth.
Dairy, packaged foods and fresh foods had the highest percentage
growth within
edible.
Beverage
Packaged Food
Frozen Foods
Dairy
Fresh Foods
EDIBLE
Cosmetics
Personal Care
Pet Food & Care
Baby Food & Care
OTC Healthcare
Home Care
Paper Products
General Merchandise
NONEDIBLE
11.1%
8.6%
8.8%
4.1%
1.8%
38.0%
33.0%
31.2%
28.4%
22.1%
14.9%
10.7%
12.2%
5.8%
23.4%
13.5%
12.7%
11.7%
6.6%
2.5%
7.8%
28.2%
47.8%
38.4%
38.0%
36.4%
29.7%
18.4%
15.8%
11.5%
2.4%
4.1%
2.9%
2.4%
0.7%
2.0%
4.8%
9.7%
5.3%
6.8%
8.0%
7.6%
3.5%
5.1%
0.7%
21%
47%
33%
59%
39%
35%
20%
26%
16%
22%
28%
35%
23%
47%
6%
-
-
E-Commerce Share of Omnichannel
June-February Change
Feb-20
Jun-20
Ppt. Changes
% Change
Many retailers are already making their own
Ahold-Delhaize is rebranding Peapod to Stop & Shop Delivery and Giant Food Delivery and is revamping its online experience
of those who have been ordering groceries for home delivery more often say they plan to get at least half of their groceries that way in the future.
35%
50%
47%
Dairy
Paper Products
47%
Packaged foods
59%
39%
fresh foods
8.1%
3.6%
People are spending more in the e-commerce channel.
E-commerce dollar sales were 61.8% higher in March 2020
than in
March 2019.
From April 2020-present, e-commerce dollar sales are 82.9% higher than the
same time frame
last year.
Shoppers shifted nearly 2.5% of their edible CPG spend and 7% of their nonedible CPG spend to grocery e-commerce.
$175.6
$180.0
$231.2
$249.2
$250.7
$191.0
$202.1
12 w/e
1/26
12 w/e
2/23
12 w/e
3/22
12 w/e
4/19
12 w/e
5/17
12 w/e
6/14
12 w/e
7/12
E-Commerce Dollars per Household
For now, the crowd-sourcing model Instacart is driving
e-commerce purchases of edible products from retailers.
Instacart
in the first eight weeks of the pandemic and its shoppers by summer.
Amazon experienced a
in the quarter ending 3/31/20.
To meet demand, Instacart improved its web platform to
doubled its shoppers
quadrupled
quickly boost capacity.
revenue jump
26%
of shoppers say that home delivery prices are higher than they normally would be willing to pay,
31%
compared with
of shoppers who feel that way about curbside delivery.
29%
17%
say they click on category menus to browse items within a category.
59%
35%
32%
say they accessed a list of previously purchased items on the site and
re-ordered from that list.
+38%
Kroger is planning to roll out Ocado delivery in 2021
Investment
Understand omnichannel purchasing behavior for your categories and invest accordingly in retail partners.
Work with retailers to create brand presence on platforms.
Use keywords to promote search and encourage discoverability.
Leverage promotion and marketing with each online retailer.
Ensure distribution in appropriate online retailers to retain existing buyers as they switch channels.
Customize innovation and pricing to the online environment to maintain competitive advantage in the omnichcannel marketplace.
Consider first, second- and third-party pricing.
1
20
4
3
5
7
1
Consider cost structure vs. competition.
Reallocate space and resources to
in-store picking and curbside pickup.
2
Consider investing in technology and training for associates to support new efforts.
3
Build search and awareness capabilities into your platform
Support shoppers’ lists of previously-ordered items for easy reorders.
Use delivery promotions to encourage adoption, build baskets and spark impulse purchases.
4
5
6
7
21
IRI offers a variety of solutions and services to help manufacturers and retailers enhance their e-commerce strategies.
Actions
Kroger
Walmart
Albertsons
Ahold Delhaize
Target
Costco