E-commerce has grown more than 400% in the past decade. The reasons are obvious: Shopping in your underwear and getting a great price is better than driving to the store and ducking behind aisles to avoid acquaintances But there is still much more growth possible in e-commerce, and you might be surprised by the next market it will disrupt: groceries.
Back to the basics
Why do you shop online for products? Because (a) you don’t want to leave your house or (b) because you want a better price than can be found in stores. But in exchange for that convenience, we make a tradeoff. When we go to the store, we can put our hands on the products and take them home immediately.
As e-commerce has become a bigger piece of our economy, other shopping dynamics are coming into play. Retailers have gotten burned by what has been termed “showrooming” — scoping out merchandise in stores, but purchasing online (often from a rival, and sometimes while you are in the other company’s store). I’m guilty of it, too. But it was a logical step in the mobile data revolution, and it can be difficult for brick-and-mortar retailers to combat.
Obviously, an online retailer can offer discounted prices, since it doesn’t have to cover the overhead of a physical location (employees, rent, etc.). But compared with the instant gratification of a bricks-and-mortar store purchase, relatively slow shipping speeds have forced online shoppers to wait days or even weeks to receive what they buy. A few of the companies you know and love are ready to change all of that. This Wired article gives the details on how a few companies can deliver your orders faster.
Players in the Grocery Market
Forty years after supermarkets drove many mom-and-pop grocers out of the sector, and roughly 20 years after Whole Foods shook up the business by offering organic foods, the grocery industry is once again ripe for disruption.
Kroger, Safeway and Supervalu are huge players in the grocery market, but companies like Amazon.com, Inc. (NASDAQ:AMZN) are looking to change that. Amazon.com, Inc. (NASDAQ:AMZN)’s Prime service, which offers two-day delivery for subscribers on most items, gives the retailer a proving ground to fix its logistical kinks and roll out even quicker delivery.
Reducing/eliminating spoilage is key to being successful in the grocery business. Amazon.com, Inc. (NASDAQ:AMZN) has invested heavily in automation of warehouses with its purchase of Kiva Systems. This equipment flips a typical warehouse on its head by delivering product to stationary employees who pack and ship. That gets the product to you, the customer, quicker. In essence, Amazon.com, Inc. (NASDAQ:AMZN) is creating a robotic shopper.