CLICK AND COLLECT

How to make online shopping profitable for grocery stores

What can Click & Collect do for you?

The rapidly growing e-commerce is moving slower for the grocery industry than other retail businesses. That is because of challenges that only grocery stores face. The answer to those problems could be what is known as “Click & Collect”.

About 75 percent of shoppers in Western Europe use the Internet to purchase goods and services. The most common process is to get the goods delivered to your home. However, there is always a risk is that the delivery takes place when the customer is not at home, which means that the distributor must either find a new time or leave the goods at, the for example, the post office. This is inconvenient for customers and expensive for distributors.

The home delivery option seems to be especially difficult for grocery retailers. In fact, so much so that consumers hesitate to buy groceries online. A global study from Morgan Stanley shows that online grocery has a low market share of overall grocery sales: Around two percent in the US and six percent in European markets. This could be
due to a vicious cycle that Europe’s online-grocery market has been stuck in, according to a McKinsey study: Poor supply drives low demand, which in turn justifies the poor supply. Also, retailers are put off by the economics of the business: selling groceries online means taking on additional costs in labour, delivery vehicles and fuel. These costs are typically higher than the fees customers are willing to pay for deliveries, so the retailers have to take these costs today. In countries such as France and the UK, the time it takes for a truck to move around busy cities combined with fuel cost are very expensive. And in Scandinavia, having truck drivers is a huge personnel cost. In the near
future, that cost will have to be charged to the customers.

Due to a vicious cycle that Europe’s online-grocery market has been stuck in, according to a McKinsey study: Poor supply drives low demand, which in turn justifies the poor supply. Also, retailers are put off by the economics of the business: selling groceries online means taking on additional costs in labour, delivery vehicles and fuel.

According to the McKinsey study, Click & Collect will result in as much as a 30 percent cut in cost, which makes the investment much more viable for retailers. “A common rule of thumb that almost always applies is that the last mile is the highest cost. Click & Collect opens up for the possibility for profitable and convenient online shopping in the grocery segment as well,” Teigen says.

“Supply, convenience and price are the most important drivers for e-commerce,” says Ove Teigen

A WIN-WIN FOR CUSTOMERS AND RETAILERS

The retailer puts the
groceries in the
pick-up station

The customer places
the order online

The customer gets
a notification on the
phone

The customer picks up
the groceries from the
station

Click & Collect allows customers to order online and pick up their purchases at pick-up stations placed at convenient
locations such as shops, supermarkets, post offices and public transportation stations.
Andrew Starkey, head of e-Logistics at IMRG, an organisation based in the UK that frequently publishes studies on online retail, says that the Click & Collect increase is about proximity.

Is it a win-win for customers and retailers?

Be on top of your game by using technology

It is not that long ago that many consumers throughout Europe were totally fine with working from home on a day of delivery. And to stay put for a delivery that could come anytime between 8 am and 5 pm. Those days are over. Not only do customers want a more specific delivery time – or more realistically – a place to pick up their purchase, they also want to know the status of the delivery preferably on their phone. So, retailers would be wise to prepare for providing all the digital services that come with e-commerce, such as providing customers with updated text messages or emails on the status of the delivery. Consider developing an app that will give your customers all the information in one place.