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Will the Trend Towards Online Shopping Negatively Affect the Supermarket Industry?

There’s no doubt that online shopping is mindlessly easy, convenient, and even budget-friendly. Shopping online was once limited to non-perishable items only, but with a goal to simplify the time-consuming task of grocery shopping, many companies are racing to offer online grocery delivery for their customers. In an effort to compete with e-commerce rivals such as Fresh Connect and Instacart, many brick-n-mortar stores such as Wal-Mart and Costco have brought their grocery department to the web, offering services such as free grocery pickup.

Online grocery services are challenging even for giants like Amazon because perishable food may only have a shelf-life of a couple of days, meaning e-commerce companies need to integrate careful logistics to prevent product spoilage. Amazon tested the waters with the grocery industry back in 2007 when they launched the grocery delivery service Amazon Fresh. In 2016 they revealed their plan for Amazon Go, a physical grocery store where customers could buy fresh food without having to stand in line and pay at a register like traditional grocery stores. The plan was halted after Amazon ran into technical issues with sensors that tracked customer purchases. In an effort to gain more market share in the grocery industry, Amazon purchased Whole Foods for $13.7 billion. Gaining a larger physical presence will likely help Amazon achieve e-commerce efficiency in the near future.

Amazon isn’t the only tech giant that’s tried to take a jab at the supermarket industry. Google started a grocery delivery service called “Google Express,” but later went on to drop a portion of the grocery delivery service. Both Amazon, Google, and other tech companies struggle when it comes to developing a supply chain that supports delivering fresh food. Brick-n-mortars such as Wal-Mart have a huge advantage since they have advanced supply chains and distribution networks. Since Wal-Mart already has thousands of established stores throughout the USA, they eliminated the delivery part of their service and instead offered a pick up only service which has flourished.

A few niche chains, such as iFresh, have begun to offer online shopping services to smaller markets. iFresh takes on a unique approach using a highly integrated supply chain to offer products such as Chinese seasoning and vegetables that cannot be found in normal grocery stores. Focusing on a limited market helps iFresh narrow its supply chain and provide fresh food that’s preferred by Asian Americans.

Although the majority of Americans still make weekly trips to the grocery store, online grocery shopping is an upward trend that could eventually revolutionize the way we get our groceries. However, some of America’s biggest companies face challenges when it comes to maintaining the freshness of perishable food, so don’t expect online supermarkets to become the new norm anytime soon. In fact, the merchandising program for a supermarket’s fresh food section will be of even greater importance given that consumers will continue to prefer buying their perishable products in person, rather than through an online platform.

2018-05-22T21:23:09+00:00