Profitero’s recent webinar with IGD “How FMCG Brands Can Compete and Win in Online Grocery” covered the latest UK online grocery trends and forecasts, as well as guidance on how FMCG brands can optimize their performance in the eCommerce channel. In this post, IGD’s Senior Multichannel Analyst Toby Pickard summarizes some of the key takeaways.
By 2020, IGD expects China to be the biggest online grocery market with sales of almost $180 billion, driven by the expansion of mobile and online marketplaces like Tmall and Alibaba. Alibaba has an 80% share of online sales in China with incredible reach; in December 2015, 400 million people used Alibaba, representing one third of the Chinese population.
The UK is the second largest online grocery market globally, a market where all major retailers now compete online, and where high quality, low-cost home delivery services are increasingly part of people’s everyday lives.
IGD’s new UK forecasts to 2021 shows that online continues to be the fastest-growing grocery channel, both in percentage and cash terms. In the next 5 years, the UK online grocery channel will be worth £17.6 billion, a 68.3% increase from 2016 (£10.5 billion will be spent on online grocery shopping in the UK this year).
It’s important to understand how consumers shop online, with search the most important route to grocery shopping, followed by favourites or previous orders. Being discoverable and ranking on the first page of a retailer’s search results is essential.
IGD’s ShopperVista survey also shows that on average, shoppers are combining two and a half approaches when conducting their online shop.
Getting the basics right is critical to success in the online channel. Shoppers want to see the products and packaging that they are looking to purchase, and while the industry has done a lot work in this area over recent years, however there is still much more that can be done. As an example, Sol beer saw a sales increase of over 33% just by having a photo of the product outside of its packaging.
With the arrival of AmazonFresh into the UK, it is likely that product imagery will be a key area of focus for a number of retailers as Amazon excels in displaying products. Product video is another area that is predicted to see significant advances in the coming months and years.
Reviews are also still very important to consumers, with the majority of online shoppers saying they are influenced by product reviews. Executing great product imagery, with reviews and links to social media, is not simple. However, getting it right can be worth the effort, as is illustrated with Ocado which saw significant sales uplift for Rubicon fruit drink (65%) when shoppers were able to write reviews online.
For more online grocery insights, don’t miss IGD’s Online & Digital Summit 2016 which brings together the leading online grocery retailers, innovative suppliers and ground-breaking innovators.
