Adopting e-commerce to enhance sales in the UK Grocery Market
Are you looking to establish a presence, or grow your presence, in the UK grocery market?
Many food producers struggle to reach end customers with their product and 90% of food start-ups fail in their first year. Producers regularly cite issues with distribution and not being fully aware of their retail presence at any given time. This may involve countless trips to retailers nationwide, to ensure the product is widely available to the end customer.
Ideally, producers want as much control over their product as possible. For producers, getting their product listed with the major retailers is one thing, however their brand is often one of many on crowded shelves.
Creating an online shop provides producers with a new sales channel, where they also have full control over their product - enabling the producer to become a retailer themselves and to directly reach the end customer. This in turn lets the producer build direct relationships with customers.
Online Grocery purchasing is rising
Nearly half (48%) of UK grocery shoppers buy at least some of their groceries online, and as many as 14% of the British population currently do all of their grocery shopping online (7% in 2014).
The UK online grocery market has become the fastest-growing grocery channel. IGD estimates the UK’s online grocery market will grow by 68% between 2016 and 2021 to represent £17.6 billion of sales.
Even though only 6.1% of UK grocery sales are made online, 29% of UK shoppers browse products online before purchasing in-store, so the role of ecommerce websites in driving UK sales is potentially far higher than this figure suggests.
Importance of building a strong online presence
According to Nielsen Connected Commerce, 49% of online shoppers combine physical and online stores to fulfil their grocery needs. So, for producers, setting up an online shop provides more benefits than an added sales stream:
- Even if customers do not ultimately buy a product from the producer’s online shop, product awareness is raised.
- The producer can provide a means for the customer to review their products, thus generating valuable intelligence.
- The producer can share product videos and promotional material to enhance the customer’s buying journey.
Competing with the 'Big 4'
Ocado and the big 4 Supermarkets dominate the UK online grocery retail market. While these major retailers may sell a producer’s offering on their e-commerce websites, it is still beneficial for the producer to establish their own online shop, where they can control the distribution process and enhance customer relationships.
There are many reasons why it is more beneficial for the end customer to shop online directly with the producer, than with the major multiple retailers:
- There is a perception that when receiving orders through their online store, the major retailers deliver products which are close to their expiry date to ensure they do not waste any stock. This isn’t an issue when buying a smaller range direct from the producer.
- The producer can also offer cheaper delivery prices - 68% of current online grocery shoppers would like delivery prices to be lowered.
- The producer can also offer a more personalized service, with easier direct communication methods available to the customer.
Setting up an online shop is a significant step in expanding market presence, however customers need to be given an incentive to make a purchase and, in time, ultimately become a loyal shopper. Product quality and value are the most important factors for customers when shopping for grocery, and these need to be clearly communicated. According to a VoucherBin study, 81% of consumers have used a voucher code to make an online purchase in the past 12 months, so regular promotional activities will also help to enhance producer efforts.
Contact us today to learn more about building your online presence