Grocers are focusing on the fast-growing eCommerce chan-nel and generating sales by meeting changing customer de-mands for online shopping experiences and convenience.

But they are also encountering challenges on the way from early stage online sites to more powerful integrated operational and fulfillment solutions and practices to cap-ture much greater share of market.

In a study of grocery executives conducted by Progressive Grocer, for instance, frequently cited eCommerce pain points included operational challenges (69.2%), customer experience (53.8%), customer complaints (38.5%), incorrect order fulfillment (30.8%) and delivery fulfillment (23.1%).

Closing these gaps is a major goal for grocers engaged in eCommerce. Cus-tomers are demanding better online shopping experiences. And grocers want to cash in much more effectively on the enormous potential.

“Grocers are on the verge of reaping much more in the eCommerce arena. The industry has only just begun to realize the opportunities, both in eCommerce sales and operations,” said Kevin Kidd, Product Director, Mercatus Technologies Inc.

eCommerce is capturing impressive sales — with much more growth to come. Expanding customer demand and advances in grocers’ ability to fulfll online orders are ushering in the next stage in eCommerce business.

Roadmap to eCommerce Excellence:

Mastering Online Grocery Fulfllment

SPONSORED CONTENT

The Swift Growth of Online Grocery Sales Currently, most grocers are embracing eCommerce ini-tiatives and realizing significant success from programs now in place. But they are also ready and looking to ex-pand and capture greater share of wallet.

Grocery eCommerce revenues today often represent 1%-2% of total sales and clearly prove the demand for online sales. But the opportunity is much higher.

Senior management at major grocery companies are looking for eCommerce to capture 6%, 8%, or even 10% of sales. Executives know they need to satisfy customers in whatever channel they choose to shop and that the pressure to do so will only increase.

To meet the next stage of eCommerce opportunity and goals, grocers are looking for new ways to achieve opera-tional precision and productivity to enable associates to fill and deliver orders and to satisfy eCommerce custom-ers at a much higher level.

Among the areas grocers must include in the checklist of areas ripe for improvement to reach eCommerce operational excellence are staffing, technology, data and processes.

But addressing those areas separately is not enough. In-stead, a total integration and synchronization of all eCom-merce touch points within the end-to-end operational framework is an absolute requirement.

The Four Pillars of eCommerce Operational ExcellenceThis series will focus on four main pillars of eCommerce op-erational challenges that grocers must overcome to optimize online potential and achieve much higher sales volume.

“The challenge of eCommerce is converting on the booming demand into tangible sales,” Kevin Kidd said. “And delivering on the promise and capturing the full grocery bas-ket. To achieve the latter, it is necessary to unify sales and operations in a centralized, integrated and fully transparent fulfillment solution,” he stated.

Among the most important challenges grocers face and must overcome, which will be covered in this four-part series, are:

Fulfllment Grocers must implement a unified eCommerce fulfillment solution that encompasses all products and ser-vices offered in-store, with added convenience to shoppers and store associates serving those shoppers. Failure to do so results in disappointing shopper experiences and inevitably in lost sales. Moreover, cumbersome, disjointed eCommerce fulfillment capabilities impact staff morale and inevitably result in poor service.

Transparency Another key ingredient to true eCommerce success, to be explored in depth in Part Two of the series, is ensuring that the retailer has access to all information needed to effectively engage, convert and retain shoppers, including streamlining their operations throughout the en-tire order lifecycle.

Q&A with Mercatus: eCommerce Fulfllment for Success

Why have you invested in the

operational capabilities of your

solutions?

We recognized an opportunity

for improvement throughout the

online order fulfillment lifecycle

from both the shopper and gro-

cer perspectives. Two common

grocery challenges are eCom-

merce services not meeting

customer expectations during

the last mile of fulfillment and

the inability to scale for meeting

growing demand.

A sustainable eCommerce

solution should increase customer

lifetime value. Only when grocers

consistently deliver on online com-

mitments and exceed shopper

expectations throughout the entire

experience can that goal be real-

ized. Grocers also gain by realizing

signifcant operational cost savings

with our solution.

What is the network efect, and

how does it beneft your clients?

A product or service becomes

more valuable to members of

a network as more people join

in. In our case, clients beneft

from other clients leveraging our

platform. The network is a major

contributor to our product road-

maps and ensures that our clients

keep pace with the ever-evolving

grocery market.

Mercatus has a disciplined ap-

proach for selecting which market

needs we address and developing

solutions that have the greatest im-

pact. The capabilities we develop are

confgurable to support the diverse

needs of clients. These granular con-

fgurations are instantly available and

empower grocers to further refne

and enhance their solution. 

SPONSORED CONTENT

Labor Efciencies Knowing precisely how many, where and when store associates are needed to prioritize operations from receiving and filing the order to delivering product is crucial for optimizing profitability and customer satisfaction.

Integrated Operations Finally, all segments of eCommerce operations must be integrated to produce superior results. Major success comes only when all areas are merged with a centralized digital solution that can deliver improved produc-tivity, higher sales goals and superior customer service.

The Impact of Inefcient Fulfllment on Customer ServiceSeveral factors are particularly frustrating for online customers.

The inability to choose and change delivery times to meet shoppers’ needs is one that ranks high. The same is true for changing orders— adding or deleting items — in progress, much less nearing delivery.

To customers used to ordering, changing and purchasing items at the touch of a button, difficulties in making what feels to shoppers like minor changes can be frustrating.

“Online eCommerce must integrate seamlessly with in-store shopping experiences the shopper is already accus-tomed to. Retailers need to accommodate shoppers adding last minute products to already submitted online orders, or redeeming paper coupons at pickup,” Kidd said.

Other areas that frustrate shoppers and undermine the ability of grocers to successfully expand the online business include limiting the selection of items for purchase and refus-ing to honor all promotions and coupons offered in the store.

These are the types of missteps involving operational ful-fillment systems that many grocers are grappling with and want to improve.

If anything, the ability to shop online should provide new possibilities to expand the range of items available for sale, to create an endless aisle, to upsell and cross-sell.

Which trend is most prominent for

grocers and for evolving eCommerce

technologies in 2016?

Many grocers are evaluating or

already in the process of “re-platform-

ing” their eCommerce solutions. The

motivation for re-platforming most

often is that eCommerce demands

have matured beyond the capabilities

of the solution.

How can grocers gauge the

impact of their eCommerce

programs? What measurements

should they use?

Grocers need to have multiple

vantage points throughout the en-

tire journey of the shopper. They

need to look beyond average

transaction size and total sales.

Grocers also need to avoid relying

too heavily on conversion rates,

which results in more reactive

rather than proactive actions. The

right solution allows grocers to

understand the key variables en-

gaging, converting and retaining

shoppers, and provides insights

critical for sustainable growth.

Key areas grocers should

understand include:

Infuence of product substitutions

on repeat business

Confgured pick strategies on

fulfllment throughput

Production standards and

actual production.

Grocers should also compare

performance among stores, pickup and

delivery; guest and member shoppers;

service hours; overall sales; and

especially — Customer Lifetime Value.

What excites you the most about

the solutions you and your team

are creating?

We’re getting grocers to market

faster, continuing to launch compel-

ling eCommerce features for shop-

pers, and integrating with the best

complementary technologies in the

market. We are also further evolv-

ing our capacity scheduling algo-

rithms that orchestrate online order

fulfllment, and through prescrip-

tive analytics personalizing online

experiences on a 1-to-1 basis.

Q&A with Kevin Kidd,

Product Director at Mercatus

Technologies Inc.

SPONSORED CONTENT

Why limit selection, such as selling center store items in the store only, when grocers can expand into new categories that offer higher profit margins and attract customers to shop the site more fully and more often? The opportunity is at hand, and customer desire to shop online is increasing.

The Rewards of eCommerce Customer Appreciation Resolving these issues and expanding sales, profits, custom-er satisfaction and loyalty begins with leveraging the right eCommerce fulfillment solution.

Also critical is harnessing the power of all key tools in-volved in the eCommerce operations — people, processes, technologies and data. It is not just a matter of buying and in-stalling a new technology application or stand-alone solution.

“Leveraging a unified fulfillment platform to direct, track, correct and perfect all aspects of online operations — from filling a diverse range of product orders to offering greater service and superior experience to customers — will bring a new level of success to the grocery industry,” Kidd said.

“Centralized digital platforms enable grocers to overcome a number of complex pain points, do so swiftly, and then grow the online business successfully and profitably,” he added.

Tracking of online shopping patterns, basket size, aban-doned items and carts, and recognizing new patterns of cus-tomer behavior — made possible with the right centralized fulfillment solution — yield insights that allow grocers to cus-tomize offers and enhance shopper appreciation. Total basket size jumps when product availability and service levels rise.

Grocery Associates Remain Key to eCommerce Success The growth of online sales is mandat-ing that grocers retool business prac-tices — and that includes working processes and tools for store associ-ates and managers.

With the right systems, grocery managers and associates gain real-time insights into incoming online orders, how best to pick and deliver orders, and how to improve all segments of the process more precisely.

Old practices such as transmit-ting order changes or other in-process variables — via paper notes, Post-its or fax machine — disappear. Simi-larly, call-center associates no longer need to call store associates to convey changes in order status.

Store associates picking and pack-

Food FoR ThouGhTVisit our hub for industry insights & additional resources.

www.mercatus.com/hub/

ing online orders must be able to work from a single cen-tralized system, to eliminate wasted time, excess labor, failure to make requested changes in orders and more.

“We are now able to accommodate these types of changes. The alternative is inefficient. With a unified digi-tal platform, all workflow scenarios are accounted for, and the business runs much more smoothly. Antiquated prac-tices can be phased out, and improved methods imple-mented efficiently and quickly,” Kidd said.

“We are ready to dial things up. If we continue on the present path, without an integrated fulfillment solu-tion, grocers will have to double resources,” Kidd said. Grocers are increasingly leveraging these types of fulfill-ment solutions to ensure that every step of the process is tracked, recorded and fully visible — to associates and customers alike.

The result is much higher customer satisfaction levels and higher productivity and morale for all associates involved in eCommerce operations

The bottom line is that grocers who want to thrive at eCommerce must leverage the power of new operational fulfillment solutions to meet increasing shoppers’ demands. Those who do so will stand the best chance of beating the competition and succeeding in the long term.

The next section in the this four-part series will focus on transparency and the need for retailers to have more visibil-ity into all information required to eliminate wasted efforts, streamline operations and boost customer satisfaction and appreciation throughout the entire order process.

SPONSORED CONTENT

March 2016 | progressivegrocer.com | 51

Omnichannel Retailing Feature

For more information on your specific category or

department, contact Ted Taft at Meridian-NorthStar

Partners, ttaft@meridiannorthstar.com, 203-981-5759,

or Jeff Friedman, Progressive Grocer,

jfriedman@stagnitomail.com, 201-856-7621.

success today and tomorrow,” one retailer remarked.Te second is to ensure that objectives and in-

centives at the top of an organization are consistent with those at lower levels. Tis may sound obvious, but retailers and suppliers noted multiple examples where these can be signifcantly out of sync.

Organization Structure NeedsStructure is related to process. Since most structures were developed decades ago with the introduction of brand/category management, a key need in today’s very diferent omnichannel environment is to revisit certain underlying principles of one’s structure.

With both retailers and suppliers, for example, structure must be able to align with the retailer’s need to prioritize 150-plus category solutions into a unifed whole to excite/engage shoppers and cre-ate diferentiation.

“Our company has to be willing and fexible to test and learn from solutions that will ultimately break the mold of traditional organization design,” a leading beverage supplier said.

Looking ahead, more than half of retailers expressed interest in a supplier role above category captain that could be aspired to, with a more strate-gic focus to consider broader shopper/store needs.

New Benchmarking ApproachStudy respondents — suppliers and retailers — indicated that in a fundamentally diferent and ever-changing business environment, a diferent benchmarking approach is needed that provides deeper insights and greater actionability.

It was noted that current benchmarking tools, while helpful, focus on external perceptions and broad recommendations.

“Current rating systems are interesting,” a sup-plier observed, “but focus on general industry or overall observations, versus an in-depth understand-ing and assessment of my strategies and actions, specifc to my organization.”

An expanded approach is needed, with focus on internal process, goals and capabilities.

“To truly understand what’s working and [what’s] not, and especially to develop actionable outputs that can improve our organization efective-ness, we need to address our internal processes,” a general merchandise supplier responded.

Actionability must then address organization-specifc areas, including “knowledge estate,” research tools, innovation protocols and strategic selling plat-form. Te goal is to build the bridge from who/where we are today to who/where we need to be tomorrow.

“Improvements in benchmarking would provide specifc action steps, instead of broad eforts, to help drive changes required for a total-store ap-proach,” the beverage supplier said.

Action Items: Retailers/Suppliers Create a capability above category manage-ment to address higher-level shopper and store needs; over time, this may also include a supplier role above category captain to support this higher-level focus.

Review new product development protocols to enhance focus on market space opportunities outside conventional category defnitions with shoppers and at retail.

Identify SBUs and leverage a full range of tactics: 4Ps plus 2Es.

Defne a vision/roadmap to achieve newly defned goals; change the conversation and strategic focus from “perimeter/center store” to “integrate and engage across the total store.”

Review your business process and organization structure to ensure alignment with new require-ments for success.

Consider a diferent benchmarking process — both qualitative and quantitative — to defne your current state and measure progress.

Summary: What’s Next?Future releases of “Envision” will build on the foun-dation this study has established, with deep dives in such areas as e-commerce best practices and brand/retail loyalty in an omnichannel world.

Key elements of the next release will be an update on continuous market changes/implications and a deep dive on e-commerce best practices for retailers and suppliers. PG

Why should the pet aisle look the same as household cleaning or snacks or HBC? These sections need to connect with shoppers, not just provide products.”

—Retailer

Continued from page 46

Feature Marketing & Merchandising

SoundStrategies

Driving health in-store requires the cooperation of

various stakeholders.

By Bridget Goldschmidt

Shoppers are taking charge of their health like never before, and the

grocery industry is favorably situated to help them do so.

“Consumer-driven health care is a trend that will only grow in prominence as more shoppers recognize and act on the personal connections they have between food selections and their health,” afrms Sue Borra, a registered dietitian and SVP of communications and strategic planning at Arlington, Va.-based Food Marketing Institute (FMI). “Many food retailers are capitalizing on this trend and making the transfor-mation to be a destination for health and wellness in the community.”

“Grocers have a unique opportuni-ty to become destinations for shoppers

interested in changing their dietary habits:

they are food experts, consumers trust their local store, and they have the frequency to efectively

communicate with shop-pers,” notes Jef Weidauer, VP marketing and strategy at Little Rock, Ark.-based Vestcom In-ternational Inc., which ofers the HealthyAisles in-store nutrition marketing program.

“Since the nation’s grocery stores understand shoppers’ need for solutions in-store, grocers are identifying their own unique strategies that bridge the gap between food and pharmacy to help support their customers’ overall wellness goals,” says Borra. “We’re witnessing more attention to health-and-wellness programs that beneft the shopper — more

52 | Progressive Grocer | Ahead of What’s Next | March 2016

Veggie Burgers

Hash Browns

Kids Littles

Veggie Puffs

11 NEW

Items!