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What Four Things Can Grocers Do To Compete Like Amazon And Walmart?

CEOs column, Sylvain Perrier
Sylvain Perrier

by Sylvain Perrier/president and CEO, Mercatus

Every day, we read news about major retailers shaking up the grocery space through new delivery options, acquisitions, partnerships and more. Of course, we’re hearing these kinds of stories most about the major players—especially Amazon and Walmart. Between Amazon’s marriage of Prime and Whole Foods, and Walmart’s constant stream of innovation, local, regional and smaller chain grocers are recognizing the need to change in order to compete and stay relevant to shoppers for years to come. 

It’s difficult to go toe-to-toe with these huge businesses. Instead, regional and independent grocers should take a step back and try to learn from these innovative companies’ e-commerce strategies. In doing so, grocers will understand that Amazon and Walmart are doing great things that can be incorporated by grocers of all sizes.

User experience with ads and sponsored listing

Retailers have spent plenty of time perfecting each aspect of their in-store experience, but many have fallen short in offering a similarly thought-out and lucrative online experience. According to L2 research, only 27 percent of grocers display sponsored products on grid pages, which is a huge missed opportunity for grocers. Similar to in-aisle displays, marketing products on grid pages is a great way to grow basket sizes and convince your customers to buy products they otherwise wouldn’t buy. If you look at Walmart.com and Amazon, you will instantly see advertisements for various products that these retailers promote to both profit from brands and expose more products to shoppers. 

Only 50 percent of grocers cross-sell on their e-commerce pages. While we see this in physical stores all the time, grocers are failing to utilize this tactic online. Cross-selling is a simple way to increase sales and is as easy as Amazon’s add-ons and ‘you might also like’ recommendations; it can be as plain as adding a jar of sauce along with a box of pasta. Retailers should take the steps necessary, whether internally or with a partner capable of implementing shopper personalization, to make it easy for their customers to make relevant additions, which helps increase basket sizes.

Rich ratings, reviews and content

Shoppers place significant value in word-of-mouth, and as such, ratings and reviews are extremely valuable for grocers and retailers in general. How important is this? Just think about the last time you shopped on Amazon and didn’t check a product’s rating and comb through the reviews—it’s probably been awhile. It’s imperative that you give your customers the chance to love or hate products and let others know. This will help shoppers make informed decisions and ultimately build their trust in your platform as a place to make these decisions. It will also provide important data about product assortment and buying trends.

Optimizing content to improve SEO and product descriptions for products is also extremely valuable. Enhancing SEO assures that when customers search for a specific product, they find it on your page instead of a competitor’s. Similarly, Google search terms can drive significant traffic to your site. With a simple Google search, you can tell that Walmart invests heavily in this and is a clear leader, further increasing traffic to its site over regional grocery stores. Amazon used to also be a leader, but recently stopped investing in Google Ads with Amazon, which offer an opportunity for smaller retailers to gain more attention on Google with an investment in ads. Regional grocers should take advantage of these advertising opportunities and invest in bidding on local search terms in order to make their presence known among online shoppers.

And while you’re enhancing content, don’t forget to focus on product descriptions. Accurate, informative descriptions help guarantee that customers get what they want in order to ensure satisfaction and reduce returns.

Convenient fulfillment options

We constantly hear about new fulfillment options from Amazon and Walmart as they continue pushing the envelope and driving customers’ expectations. These investments can lead to greater customer satisfaction as customers are receiving their products faster than ever, with limited hassle. Amazon has established its own delivery and fulfilment systems and is increasingly moving towards using them instead of third-party services.

Walmart has chosen to go a different route and incorporate its own delivery and fulfillment solutions while also partnering with third-party delivery and fulfillment services. Amazon’s approach increasingly allows the company to build more brand loyalty by keeping everything under the company’s name and utilize important data collected between order and delivery about its customers. On the other hand, Walmart’s strategy allows the retailer to provide its shoppers with a variety of delivery options, no matter their preferences or location.

Smaller retailers seeking to introduce fulfillment options must strike a balance between being able to deliver customer orders fast and efficiently, while not giving up too much. Partnering with a third-party delivery company assures that you can quickly offer customers reliable delivery, without too much investment in store operations. However, grocers also risk giving up some shopper loyalty as third parties get to know your customer’s buying preferences. Investing in your own fulfillment options assures that your retail brand remains front and center throughout the buying process. Grocers will have to decide what is best for their customers and business and invest accordingly.

Product bundle discounts

Bundling products is a great way to move inventory and make life easier for customers. Through offering customers bundled products, grocers enhance the customer experience by making the process of purchasing multiple products more straightforward and streamlined. It also limits the choices customers have to make and expedites the shopping process. Rather than selecting detergent and then searching for dryer sheets, bundling allows one simple choice. Walmart is great at bundling products to increase basket sizes and generate more revenue. By offering customers the opportunity to simply click once and add multiple products to their online carts, Walmart is increasing customer satisfaction and confidence and saving time.

By observing which technologies do and don’t work for the larger players, grocers can take advantage of winning strategies and tactics to offer compelling online and offline experiences in ways that increase efficiency, customer satisfaction and the bottom line.

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