Priya A. Shah, GrocerKey Content Writer
Kroger. Costco. Sam’s Club.
These are just a few big-name retailers who’ve partnered with eCommerce grocery marketplaces over the last few years. While marketplaces have certainly proven where they can provide retailers with short-term value, they lack the necessary long-term benefits to allow retailers to appropriately leverage the power of their brand.
The Growth of eCommerce Marketplaces in Grocery
The grocery industry has been slower to evolve than other retail verticals when it comes to eCommerce. Both Instacart and Shipt took advantage of these market conditions by raising a lot of capital and offering solutions that have put retailers in the eCommerce game very quickly.
In the wake of Amazon’s purchase of Whole Foods, independent and regional grocery chains were forced to take immediate action. Jobs were on the line, and an armageddon scenario felt very real. It was natural for retailers to turn to solutions that could provide immediate results. Marketplace solutions served as very logical eCommerce partners given that they were strapped with a war chest of venture capital, motivated by top-line revenue growth, and hungry for geographic scale.
Over time it’s become clear that retail partners of eCommerce grocery marketplace solutions benefit in some financial aspect in the short-term. Retailers also learn a lot about an operation that will likely become critical to their long-term success. However, the approach of going all in with marketplaces is a very dangerous strategy.
The Risks of Relying On Marketplaces
When you rely on marketplaces, the inherent risks are damaging for your brand. This takes away from investing in your own success, which should always be your top priority. By relying solely on eCommerce grocery marketplace solutions, retailers lose control of the most important facets of an eCommerce business such as:
- Customer Experience: The retailer loses all control of the user interface and misses out on all interaction before, during, and after the order fulfillment process including the face-to-face interaction.
- Customer Data: Retailers won’t be able to gain access to email addresses, phone numbers, and shopping history to build their marketing strategy.
- CPG Brand Partnerships & Monetization: Retailers have the ability to heavily monetize their consumer packaged goods (CPG) branded digital assets with their eCommerce sites and mobile apps by allowing their brand to access paid media, send out digital coupons, place promotional items in orders, and boost product displays. This opportunity is entirely lost through marketplace providers.
- Using eCommerce to Increase Share of Wallet: eCommerce is of greatest value to a retailer when used as a channel within a complete digital strategy. Connected channels increase shopper engagement and brand loyalty and in turn increase share of wallet. By relying on a marketplace, you lose the ability to create connected digital channels that enable one another.
An Alternative Approach For Grocery Retailers
When you put in the effort to scale your own eCommerce business, you gain full benefits and control in the most critical areas. Let’s look at 5 benefits you’ll gain by focusing on a branded eCommerce experience.
- Differentiate. Build a unique and authentic eCommerce (and digital) experience that caters to the needs of your shoppers. This will look different for all retailers — there is no one size fits all strategy. When you’re in control you gain the flexibility needed in order to develop a truly custom go-to-market strategy with best practices baked into it.
- Customer Experience Control. You are in full control of the customer experience and can always improve on it by managing the labor required to fulfill orders internally. You can also work with a true partner who will give you a voice in how to best embody your brand.
- Customer Acquisition. By working with knowledgeable partners, you can derive the full benefit of acquiring customers in a cost efficient manner with a very high lifetime customer value. Once customers are funneled into your branded digital experience, you can leverage engagement tools and incentives to greatly reduce the risk of losing customers to competitors (which is a significant risk with marketplace solutions that make all retailers available within the same ecosystem).
- Building a Complete Digital Experience. 51% of in-store transactions are influenced by digital. Customers crave omni-channel experiences that allow them to shop however they prefer. When you maintain a strong connection between eCommerce and in-store experiences, you create an experience that meets shopper expectations.
- Monetize Digital Assets. Once you begin to scale your eCommerce business and build up an active user base utilizing your mobile app, there’s a significant opportunity to monetize your digital assets through CPG brand engagement. The economics of slotting fees has a significant impact in the physical store, the same can be said of paid media and digital merchandising through your eCommerce and mobile app experiences. Also, keep on the lookout for subscription / replenishment models that will elevate the customer experience in parallel to providing an incremental CPG monetization opportunity.
How GrocerKey Is Different
GrocerKey is a retailer-branded technology provider and our main goal is to help our clients grow their own eCommerce grocery business. We focus on digital strategies you need to connect with customers, while owning all the valuable data that comes with that process.
GrocerKey helps retailers leverage their brand both online and in-store through an omnichannel technology solution.
Jeremy Neren, the CEO of GrocerKey, ran an on-demand grocery delivery service profitably for a decade before he founded GrocerKey. Therefore, all current and future retailers get the benefit of working with a team who’s been through the process!
We even provide a fully managed CPG monetization strategy that allows our retail partners to gain an incremental revenue stream without incremental work.
It’s time to take the next steps and invest in your own growth! The future of grocery in an omnichannel world is constantly changing, and we’re here to help you maintain speed with long-term benefits.
What are your thoughts on investing in your own brand for long-term benefits? Contact us today!