December 15, 2014

Shopping for Essentials Online Becomes Routine

By Hisham Isa, Vice President (Marketing)

A host of new online shopping services - by established and upstart companies alike - are leading consumers to shop more frequently with their phones.

And more than that, consumer shopping routines are changing too, with people going online to shop when they need something, rather than just making regular visits to the store.

Sixty-nine percent of mobile users now shop online - up from 59% a little over a year ago - according to a BuzzCity survey of 4700 consumers from 25 countries across six continents. More than a quarter of these consumers shop online every day.

The market segment experiencing the biggest uptick consists of food and grocery supplies. Nearly 16% of mobile users told BuzzCity that they plan to purchase groceries online in the near future. That's double the response two years ago.

These numbers are consistent with a trend highlighted by the market research group Packaged Facts, which notes that online grocery sales in the United States will grow from US$23 billion this year to nearly US$100 billion in 2019.

What's behind the surge?

The easiest factors to point to are an increasing comfort level with mobile commerce by consumers and a greater availability of mobile wallets and mobile payment mechanisms. In addition to this, though, we are also seeing companies - from Amazon to mainstream grocers - offering more online shopping options.

In the UK, for example, Tesco reports that 200,000 consumers are making online grocery purchases, up nearly 13% from a year ago, which is also the first year that it offered online sales. Most of Tesco's virtual clients are having the goods delivered to their homes. However the UK's biggest grocer has also started offering a 'Click-to-Collect' service, which is particularly attractive in rural or outlying areas, where home deliveries take longer (up to 8 days in parts of the Highlands & Islands) and delivery charges can be steep. Click-to-Collect is a time-saver for people who would like to avoid the shopping aisles and check-out lanes.

This past Black Friday, so many people wanted to place Click & Collect orders that Tesco's website couldn't handle it. While the technical faults and resulting delays in fulfillment are embarrassing, they also highlight strong consumer demand.

Brick and mortar grocers need to stay on their toes. "Amazon's dead-set on killing off the grocery store," writes Engadget. The world's second biggest online retailer, behind Alibaba, is offering same-day delivery in the US as well as a gadget called 'Dash' which is essentially a home scanner and voice-recognition device that connects directly to your Amazon account, allowing consumers to not only easily compile a shopping list, but also purchase and schedule delivery.

Amazon's 'Prime Pantry' focuses on everyday essentials in ordinary (ie non-bulk) sizes. You can watch online as your virtual 45-pound box fills up. Delivery is a flat rate -US$6. And now, like many traditional grocers, Amazon has introduced its own branded products. The first two products on offer are diapers (US$9-14 per box of 40) and baby wipes (US$10.99 for a pack of six).

These services are changing the way consumers shop. No longer is it necessary to write out a weekly shopping list. Simply put, it's become to easy to order everyday essentials with your phone and either have them delivered to your home or prepared at the store for easy pickup.

Related Article