News flash: Amazon wins. So does Walmart.
Amazon’s ecommerce dominance has been counterbalanced because most shopping happens in stores. Amazon represents almost 40% of all online shopping, but 4% of total retail, according to a 2019 eMarketer report.
But Amazon is winning share as grocery shopping comes online.
Ocean Spray’s advertising budget has ticked up since the pandemic, with high demand for shelf-stable drinks, said Trace Rutland, the brand’s digital hub director.
“Amazon has picked up a lot of those incremental dollars,” she said.
Amazon and Walmart are the big beneficiaries of this sudden change in shopper marketing, because grocery brands are rushing to the largest sellers, said Frank Kochenash, president of US marketplace services for Wunderman Thompson Commerce.
“What we tell brands is you need to get on the list now with the major platforms to benefit from the overall acceleration,” he said.
The brands that perform best with Amazon and Walmart now will see knock-on benefits as those platforms retarget their own shoppers with email promotions and suggested repurchases, or with organic site placements such as “People who tried this also bought.”
It’s hard, if not impossible, for grocers to launch ecommerce programs during the pandemic, if they don’t exist already.
Target was planning to roll out curbside pickup for fresh groceries in March. The spread of the coronavirus didn’t accelerate those plans – it halted them. Target can’t create a grocery pickup program without training employees. And it can’t train employees because they’re already overloaded.
The tech opportunity
Just because the retail goliaths have an advantage doesn’t mean there isn’t growth elsewhere.
Regional chains have benefited because they have items in stock. Walmart and Target operate such precise supply chains that they don’t hold weeks’ worth of inventory, said IRI EVP Sam Gagliardi.
This is a rare moment when smaller grocers’ relative inefficiency is an advantage, because they hold more items in stock instead of operating a national distribution system, he said.
Retailers that can’t invest billions in ecommerce and fulfillment – as Walmart and Target have – are also rushing to build BOPIS or “click-and-collect” ecommerce programs now that online groceries are a profit driver instead of a cost center. And many are turning to tech companies to bridge the gap.
Quotient, which operates ecommerce shopper marketing platforms for grocers including Albertsons, Dollar General and Peapod, has a larger pipeline of new retailers than it’s ever had before, said CEO Steven Boal. Those ecommerce grocery platforms convert with BOPIS sales, grocery deliveries or digital coupons that are redeemed in store.
“Those with performance advertising solutions are so clearly benefiting from ecommerce grocery, that those without sponsored search or ecommerce offerings are working around the clock,” he said.
The biggest non-retailer beneficiary could be Instacart.
Instacart started testing a self-serve ad tech platform last year, and launched the commercial version last month, said CRO Seth Dallaire, the former Amazon VP of global advertising. In the past year, the number of CPG brands on the platform more than tripled, he said.
And the rush of brands onto ecommerce grocery platforms isn’t likely to subside even after the shock and consumer impacts of the coronavirus recede.
“Grocery has been a very slow category in the ecommerce space,” according to Rutland, who was Tyson Foods’ director of media innovation before joining Ocean Spray. “But in the new normal, I think these will become habits.”