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Report: Strategic Fulfillment Can Drive Digital Profitability

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Recent research by Incisiv, conducted in collaboration with FMI – The Food Industry Association and in partnership with RELEX, highlights the importance of strategic fulfillment in achieving digital profitability.     

With 69 percent of grocery sales in 2023 being digitally influenced, the grocery shopping experience has become firmly omnichannel. However, despite this boom, profitability remains a significant challenge, with $23 billion lost in digital sales due to unavailable or unsubstituted items in 2022.

The report, “Increasing Online Profitability Through Strategic Fulfillment,” provides a guide for grocers to navigate the landscape of strategic fulfillment, identify opportunities for growth and overcome challenges to thrive in an increasingly competitive market.

“Digital offers immense potential for growth. However, for that growth to be profitable, grocers must improve their fulfillment operations considerably,” said Gaurav Pant, chief insights officer of Incisiv.

“Grocers can unlock the opportunities presented by optimizing availability, enacting more strategic fulfillment methods and harnessing the power of AI to improve their margins.”

Key takeaways from the report include:

  • 97 percent of grocers view improving product availability as their top technology priority followed by using technology to better balance workload and orders (89 percent).
  • Produce and center store products are the top areas designated for more strategic fulfillment options.
  • Nearly 90 percent of respondents stated that better optimizing their end-to-end order fulfillment methods will get them the best opportunity to improve profitability. 
  • 59 percent of grocers are dissatisfied with their e-commerce strategic fulfillment solutions.

“Technology is enhancing customer loyalty and retention,” said Doug Baker, FMI VP, industry relations.

“Since 2019, among the wide range of applications we [have seen] in our operations analysis is that most food retailers have been experimenting with new technologies to improve customer experience and efficiency, relieve margin pressures, shore up labor limitations and improve e-commerce capabilities.

“Key strategies have included shopper loyalty programs and a checkout experience focused on speed that is frictionless.”

Marc Koehler, director of product strategy for RELEX Solutions, echoed those remarks.

“As the grocery industry continues to adapt to the omnichannel landscape, it is imperative they evolve their strategic fulfillment strategies to align with consumer expectations,” he said.

“Unifying processes and driving efficiencies related to strategic fulfillment, including forecasts and order recommendations and pricing and promotion strategies will all help to improve profitability while ensuring consumer satisfaction.”

Retailers Believe Digital Shopping Makes Shoppers Less Loyal

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