Online Grocery Customer Experience — Minding that Catalog Gap
Recently a candidate interviewing for a product management position at a leading online grocery retailer asked me this question — “how do you define online grocery customer experience”? As I started answering I realized that the answer to this seemingly simple question is not very straightforward. Yes, on the surface of it, online grocery appears to be just like any other online commerce. When you provide a frictionless shopping experience and deliver a perfect order, you will have a highly satisfied customer. But if you dig a bit deeper it becomes clear that grocery customer experience is extremely nuanced.
I will share some insights that I have gained from being directly or indirectly associated with this vertical for over a decade. In addition to listening directly to customer feedback, my point of view has been shaped by being on the other end as a regular online grocery shopper for the past 8+ years, and more recently as a personal shopper and delivery driver. If you are new to this exciting and fast-growing space, my hope is that you can take something away from this.
What did not change after Covid-19?
First, the obligatory disclaimer. The pandemic has disrupted most of the retail industry, but none more spectacularly than online grocery. As online demand started going through the roof in March 2020, grocers naturally focused more on beefing up the supplies and less on customer retention. Customers were willing to look past the stockouts and long pick-up wait times just to avoid going inside the store to shop. Although the demand for online groceries will continue to stay much higher than the pre-pandemic numbers for a foreseeable future, we are seeing the fundamentals of the business starting to shift back to pre-covid figures, and so will the factors that constitute customer experience.
Grocery runs — back to basics
Shopping for groceries in person at the store is a time-consuming chore. But for many, it is the preferred way because that is exactly what it is — a chore. When you make that routine walk through the store from the fresh produce section on one end to the dairy aisle on the other, you are certain to have covered all that needs to be covered. If short on time, you stick with your staples, and if you have extra time you stop to explore something new. And when in the checkout line why not pick up the AAA batteries that you are running out of? This is how it has always been — it is pretty basic.
Online grocers have tried but they are yet to meaningfully recreate this experience for the customers. The challenge is enormous — providing easy access to all items frequently purchased while allowing for discovery of new items on a web app, or as is more likely these days, a smartphone app, is hard.
But why can’t I find the keto fat bomb online?
One of the common complaints that you hear from customers who have given online grocery a try, but are reluctant to do so regularly, is that they cannot consistently find online all the items they are seeking. In many cases, customers are convinced that the items that are missing in the online assortment are available on the store shelves. This leads to a general lack of confidence in the online offering, and very often is a key factor in many shoppers switching to a different online grocery service or simply going back to store shopping.
Minding the Gap
So, if you are researching a drop in customer repeat purchases or reduced frequency of shopping, the Catalog Gap is a good place to start looking. Catalog Gap can be defined as the delta between the grocery items that a brick and mortar store carries and the subset of which can be ordered online for pickup or delivery from the same store. There are two ways you can look at Catalog Gap(CGAP): 1) measured in the number of unique items (SKUs) or 2) measured in terms of sales contribution. Let’s call the two KPIs CGAP(SKU) and CGAP(Sales) respectively.
CGAP(SKU) is the more straightforward measure. If a store sells N unique items in the grocery department through the point of sale in a given period (say a week) and if a M unique items (where M is subset of N) are made available for online ordering from the same store during the same period, then:
CGAP(SKU) = (N-M)/N
If this KPI is trending higher than 20%, look closely into why a significant number of items are not getting published in the online catalog.
CGAP(Sales) is the more relevant metric to watch for, as it measures the true impact of the catalog gap as reflected in the online sales. There is a disproportionate impact to sales and customer perception when staples such as bananas, the popular pasta brand or potato chips are not available to the online shopper. To compute this metric we need to first find the brick and mortar sales contribution from the missing online items. Say the POS sales for the missing items ( N — M items as described above) is P for a given period and the total sales for the grocery department (for N items) is S.
CGAP(Sales) = P/S
If this metric is consistently above 5% for a store, it is a reason for concern. You are probably leaving a lot of potential online sales on the table, as well as disappointing customers using your online service.
If you are attempting to get a handle on the online grocery customer experience, Catalog Gap is a good KPI to start with. Right data instrumentation to get accurate POS sales data to compare with the online catalog can be a challenge, but it is well worth the effort. Measuring and addressing CGAP for your online grocery stores consistently will be key to converting those habitual store shoppers into online shoppers.
Watch this space for more on online grocery customer experience and key performance indicators.
Learn more about Nextuple with our FREE Brochure!