RETAIL STRATEGY CASE- EGEN SOLUTIONS

Submitted by- Lavanya Lipika

CONTENTS PAGE

1. OVERVIEW 2

2. US ONLINE GROCERY INDUSTRY 2

3. CONSUMER JOURNEY MAP 3

4. CONSUMER PAIN POINTS 4

5. COMPETE WITH AMAZON FREE DELIVERY 5-6

a. CLICK AND COLLECT MODEL OR BUY ONLINE PICKUP IN-STORE 5

b. GROCERY DELIVERY THROUGH POSTMATES 5
c. OPTIMUM SOLUTION TO SHIPPING DILEMMA 6

6. BASKET ABANDONMENT 7-9

RECOMMENDATION TO MINIMIZE BASKET ABANDONMENT RATE
a. OPTIMIZED CHECKOUT PROCESS 8
b. OPTIMIZED PAGE LOAD TIME 8
c. ABANDONED CART EMAIL CAMPAIGN 8
d. PERSONALIZED RETARGETED ADS 9
e. IMPLEMENT EXIT-INTENT POPUPS 9

7. WAYS TO ACQUIRE AND RETAIN CUSTOMERS 10

8. RECOMMENDATION 11

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 1. OVERVIEW

W hile store-based sales will continue to account for the majority of worldwide edible grocery sales over the next five
years, online sales are poised to grow much faster as leading retailers continue to prioritize e-commerce by expanding
their online assortment and fulfillment options. Thus, the food business is subject to fierce competition, leading to
extremely low margins compared to other industries. Because of the low margins on many grocery items, retailers need
to generate a high volume of sales to make a sufficient profit. In order to meet their profitability objectives, the retailer
needs to focus on improving its resources (technology, human capital, etc.) and capabilities (marketing, innovation, etc.)
while having a keen focus on customer satisfaction.

CASE SCENARIO
In this changing landscape, with the plummeting per-store sales, legacy retailers will need to re-think the role of their brick
and mortar assets and make them adaptable to the changing consumer needs. Thus, in order to be competitive, a major
grocery retailer has started its online store with in-store pickup and delivery options. They have also partnered with
Postmates for grocery delivery.

CASE OBJECTIVE
To address the issue of basket abandonment and strategize the consumer experience, ultimately leading to an increase in
Online Sales.

2. US ONLINE GROCERY INDUSTRY

The Online Grocery Sales industry has grown rapidly as online shopping increased and industry services improved
substantially. From 2014 to 2019, domestic consumers' affinity for the internet has driven industry growth. Broadband
connections and per capita disposable income have increased, aiding the industry's robust revenue increases. During this
period industry revenue has grown at an annualized rate of 16.5% to $33.4 billion. Moreover, thanks to strong gains in per
capita disposable income and the number of services conducted online in 2019. Revenue is expected to increase 5.6% this
year as more consumers try online grocery shopping. (Source- IBISWorld)

Online grocery currently comprises a small portion of grocery overall but is on a rapid rise. Adoption is still fairly low, 10%
of US consumers saying that they regularly shop online for groceries. (Source- NPD)

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 3. CONSUMER JOURNEY MAP
Consumer journey map for users buying groceries from an online retailer can be found below-

Stage Awareness Consideration Acquisition Service Loyalty

Consumer From Friends, Compare and Select Make a payment Pick up an Contact Enjoy Order Again Share
Activities Online or evaluate required and confirm the order from Consumer Groceries experience with
(Thought Offline Ad, alternatives, groceries order. store Or Service others
Process) browse and Add to Home
through Shopping Delivery
various Cart
competitors
website, visit
the store first

Consumer - Find the best Find the Order effortlessly Receive the Get help if Receive what Repeat the good Share the good
Goals option to buy required order or pick there is any is expected. experience. experience and
products it up problem. recommend
easily whenever Option to others.
needed and ask for a
effortlessly. refund.

Touchpoints Word of Word of Website, Order Delivery Phone, Food Website, mobile Word of Mouth,
mouth, social mouth, Mobile App confirmation service, email, live Products, app Social Media,
media, website, brick email. packing, Chat packages Website
newspaper & mortar store, message via
social media email, text,
phone

Business Goal Increase Increase the Increase Increase online Deliver on Increase Make Increase Turn Consumers
awareness and number of shopping sales and time. Consumer products to retention rate to advocate.
interest website and cart value conversion rates. Minimize service match and order value, Turn negative
app visitors and delivery satisfaction. expectations. frequency experience to
conversion window Minimize positive.
rate waiting

Key Number of New website Shopping Online sales, On-time Consumer Product Retention Rate, Consumer
Performance People reached visitors Cart Value conversion rate delivery service, reviews Order value & satisfaction
Indicator (KPI) rate, success rate, frequency
average waiting time
delivery
window

Organizational Create Create Optimize Optimize online Picking and Organize Develop Target Manage
Activities marketing marketing grocery purchase funnel, delivery Consumer products and marketing, make feedback and
campaigns campaigns shopping order handling service product range re-ordering easy, social media,
both offline both offline experience upselling/cross- develop
and online and online selling sharing/inviting
chances

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 4. CONSUMER PAIN POINTS
A Consumer pain point starts with brand discovery and ends with a purchase transaction. If the company takes the time
to understand what happened at each drop-off, what the Consumer journey pain point was, it can increase conversions
and reduce churn.

In order of stages of Consumer Journey, various types of pain points are mentioned below.

a. Availability pain point (confusing site search and lack of product discoverability)
When it comes to creating a seamless Consumer experience, optimizing the site search is critical. According to
Forrester, as many as 68% of shoppers would not return to a site that provided a poor search experience.

b. Process Pain Points (slow loading site)

Shoppers are having trouble browsing the required products on the website. Page load is taking a lot of time.

c. Checkout Pain Points

In-cart transparency is important. 23% of Consumers will abandon their cart if they can’t see/calculate the order
total upfront. The company can make sure that delivery dates, shipping costs, and other important order
information that Consumers care about are clearly stated on each order summary.

d. Tracking and Delivery Pain Points

Consumers want to be informed of the status of their orders as soon as they pay for them. They want to know
when product ships and when they can expect to receive it. The company could build the website in a way so that
Consumers could track their orders all the time.

e. Support Pain Points

Consumers aren’t able to ask for support at any stage of the journey easier when there is no call-to-action button
upfront. The company can make sure that even after delivering goods, for any query and complaint, Consumers
can find contact details upfront.

f. Multi-channel Shopping Pain Points

Most Consumers use more than one device to shop online. A company needs to avoid inconsistency between
channels so that Consumers are able to use the loyalty program equally across in-store, online and mobile.

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 5. COMPETE WITH AMAZON FREE DELIVERY
When it comes to e-commerce marketplace dominance, Amazon is at the top of the food chai n. Competing head-
to-head with Amazon in the grocery delivery business may not be wise —or even necessary. The bottom line is
that most of the companies aren’t able to invest the time and capital it takes to build anything close to what
Amazon is offering. Thus, the company just needs to learn how to co-exist.

There are many ways Grocery Retailer can tackle Amazon's Free Delivery Issue.

a. Click and Collect Model or Buy Online Pickup In-Store (BOPIS)

b. Grocery Delivery Through Postmates
c. Optimum Solution to Shipping Dilemma

a. Click and Collect Model or BOPIS

Brick and Mortar grocery retailers can play to their strengths in terms of utilizing convenient physical locations.
Their in-store pickup is a service that Amazon simply cannot match. This service features the speed and
convenience of online shopping with the flexibility many shoppers want: There’s no nee d to be home waiting
for a grocery order to arrive, and consumers picking items up at the store can scoot inside for something they
forgot, or even ask for an exchange if the loaf of bread or bag of apples brought out to the car doesn’t look up
to snuff.

b. Grocery Delivery Through Postmates

The retailer has partnered with Postmates for grocery delivery and Postmates seem to be head-to-head with
Amazon.

Grocery Retailer Amazon

Partnered with Postmates- Free Shipping for Amazon Fresh- Free Shipping for Prime Members for
Unlimited Members for $9.99/month or $12.99/month or $119.99/month
$99.99/month

Minimum basket size $20 or over Minimum basket size $35 or over

Flexibility to collect the groceries- Either pick up from Limited flexibility- Only delivery at Home.
store or deliver it at home

c. Optimum Solution to Shipping Dilemma

Besides focusing on resolving Consumer issues, a retailer can utilize some information regarding “free shipping”
mentioned below to their advantage. Nearly 70% of all online shopping carts are abandoned and research shows
that high shipping costs are the number one reason that e-commerce consumers don’t complete their orders.
This happens because of the following reasons.

- Shipping costs are often “unexpected.” Because shipping costs usually aren’t displayed until during
the checkout process, Consumers feel duped by the added cost.

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 - Consumers don’t see shipping as an extra service. Since shipping an online purchase is required,
Consumers see shipping as a cost of business for the company and, therefore, not their responsibility.
The shipping order is no longer going above and beyond for your Consumers. And due to this fact,
Consumers often feel taken advantage of when forced to pay ever-increasing shipping costs.
- Consumers overvalue free. It is within human nature to value something that is free even more than a
better quality item at a small price. Free shipping can outperform discounted shipping or reduced order
totals. In fact, most Consumers prefer a $6.99 savings of free shipping to an offer that would take $10
off their order total.

The company doesn’t need to offer free shipping all the time, or even at all, to take advanta ge of this pattern
in consumer behavior. Below are a few options when it comes to finding a solution to the “shipping dilemma. ”

- Be upfront about shipping costs. The company could display the shipping costs on each product page
or have the shipping costs displayed in a pop-up when an item is added to the cart. By knowing the fees
beforehand, a Consumer would feel less frustrated and less shocked at checkout.
- Use a flat rate for shipping. Again, this takes the surprise and guesswork away from the Consumers. If
the company has a consistent shipping price, regardless of order size, Consumers will always know
what to expect when it comes time to check out.
- Better still, set a free shipping threshold. This is becoming a popular option among many online
retailers and can, as mentioned above, actually increase average order values. However, this will require
some research on the company's part to determine what the company’s threshold should be. The key
to this strategy is to make consumers “reach” for free shipping. If the threshold is set too low,
Consumers won’t spend any more than normal and you’re eating the cost. But, if the threshold is too
high, Consumers will be unwilling to spend so much extra in an effort to achieve free shipping. When
determining the threshold the company needs to determine the median order value of the Consumers
and use this as a guide.

Thus, there is one realm where the company can live in the same relative sphere as Amazon: Consumer
experience. Amazon has a lot of the same problems that most retailers have when dealing with Consumer service.
They still deal with Consumer complaints with varying degrees of success, just like everyone else. And Consumer
experience can play a big role in Consumer retention and loyalty. Consumer experience can be improved by
focusing on the pain points at every stage of the Consumer journey and make plans to minimize it.

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 6. BASKET ABANDONMENT
An engaged consumer is not always guaranteed to buy. The phenomenon of a Consumer simply deciding to leave an e-
commerce transaction has come to be referred to as shopping cart abandonment. The percentage of abandoned carts
ranges anywhere from 53% to 87%. (Source- Annexcloud.com)

In the first half of 2019, the average cart abandonment rate for retail e-commerce sites reached 84.24%. Grocery websites
performed better than others at 72.06%.

Abandonment can affect conversions. For instance, a 65% cart abandonment trend can leave a 97.9% gap in conversions.
(Source- ReadyCloud Report)

According to Baymard latest quantitative study of reasons for abandonment, 58.6% of US online shoppers have
abandoned a cart within the last 3 months because “I was just browsing / not ready to buy”. Most of these will abandon
even before they initiate the checkout flow. Besides, the “just browsing” segment, below mentioned are the reasons for
abandonments.

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Recommendation to minimize basket abandonment rate

a. Optimized Checkout Process

A fully optimized checkout process usually requires as few as seven form fields, which includes basic information such as
name, credit card information, and shipping address. An average large-sized e-commerce site can gain a 35.26% increase
in conversion rate though better checkout design.

- Avoid unnecessary barriers and make checkout lightning fast. Make the checkout process as easy as possible by
limiting the number of clicks between adding an item to the basket and completing the purchase. (example- Avoid
asking alternate contact details)
- Remove compulsory registration. Allow guest Checkout. This is the quickest way to improve conversion rate,
remember that 31% of online shoppers abandon their carts because they are being forced to create an account.
- Include thumbnails of purchases in Consumers’ carts- It helps ground the visitor throughout the process and
greatly reduces the risk that they’ll abandon their cart in a moment of apprehension or hesitation.
- Reaffirm prices and delivery charges. Be clear about the shipping costs upfront and not on the last page of the
checkout. This allows Consumers to quickly check on the contents of their shopping carts and the total charges
before they complete the checkout, removing any concerns about costs.
- Provide alternative payment methods, and Add trustworthy security seal- The PayPal Verified Seal is recognized
as the most trustworthy security seal by 63% of online shoppers. Research shows that the more familiar a trust
symbol is, the higher it is rated in terms of perceived security. However, while 42% of the respondents say that
they are most familiar with the Visa-Mastercard seal, 63% of them would be more inclined to purchase if they find
the PayPal Verified seal on the website from which they’re shopping. (Source- Conversion XL). According to
WorldPay stats, alternative payments account for 22% of global e-commerce transactions, worth a total of
€165bn, so it makes sense to allow Consumers to pay using different methods.
- Clear calls-to-action. Include a Progress Indicator on checkout pages Use big, clear CTAs so the Consumer knows
exactly what the next step is and doesn’t have to waste time working out what to do.

b. Optimized Page Load Time

Statistics show that 7.57% of online shoppers will leave their carts if they have to wait more than three seconds for a web
page to load. Additionally, 80% of these shoppers will never return due to the sluggishness of the website. As businesses
grow, it’s important to perform regular tests to ensure that what worked yesterday still works today. The more Consumers
visiting a site can boost the bandwidth needed to run smoothly. The company needs to evaluate internet service providers’
capabilities, website host’s storage capacity, and so on to ensure website visitors can maneuver around the site without
issues. (Source- Sleeknote)

c. Abandoned Cart Email Campaign-

45% of cart abandonment emails are opened. Out of these opened emails, Consumers only engage with half of them or
21%. Out of the half with which users engage, only 50% (10.27%) end with Consumers purchasing items from their
abandoned carts. (Source- Barilliance). Abandoned cart email campaigns are more effective when planned as a series.
Three follow-up emails result in 69% more sales compared to just one email.

- Most Effective subject lines for emails (Source- Omnisend analyzed more than 90,000 cart abandonment emails)
“15% Off purchase” – Open rate: 48%,
“Cart left” – Open rate: 45%,
“$20 Off cart” – Open rate: 44.5%,
“Items left” – Open rate: 40%,
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 “Still shopping?” – Open rate: 39%
The most common characteristics these subject lines share is that they’re short, simple, and provoke curiosity
from its recipients.
- Personalization can be as simple as using the shopper’s name in the subject line and email copy.

d. Personalized Retargeted Ads-

Three out of four consumers welcome retargeting ads. This means people still like to be reminded of products they are
interested in but have forgotten about. Of those consumers, 26% will click on the retargeted ad and return to the website
to complete their purchase. Personalized Retargeted Ads Can Lead to ROIs of More Than 1,300 Percent. This means the
company should consider sending retargeted ads that showcase the same products Consumers previously added to their
shopping carts but failed to buy. Statistics show it is more likely to turn into sales, compared to displaying a generic
retargeted ad that just promotes the company. (Source- Sleeknote)

Reaching site visitors who left their shopping carts via Facebook can provide at least a 3% sales conversion for the e-
commerce store. Aside from Google, Facebook is an effective retargeting platform. Shoppers who spend more time
engaging with your business on Facebook will be more likely to purchase. 3% of users who “like” your post will convert
into paid Consumers, followed by 4% who share, 4.67% who leave a reaction, and 4.9% who comment. (Source- Wolfgang
Digital, KPI 2019)

e. Implement Exit- Intent Popups-

Exit-intent popups can be installed on any page, including the shopping cart and checkout pages, and works by detecting
when a user is about to leave the page. It then sends a popup message that encourages them to stay by offering a deal or
presenting more information.

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 7. WAYS TO ACQUIRE AND RETAIN CONSUMERS

In order to fully succeed in eCommerce grocery, retailers need a complete solution that addresses each facet of the
business leading to both profitability and sustainability.

Consumer Acquisition

Brick and mortar retailer can also bring current Consumers into the funnel by leveraging existing marketing channels such
as; in-store signage, email lists, print & digital circulars, radio/tv ads, etc. New Consumer acquisition can also be done
through various channels such as paid search campaigns, paid social campaigns, and referral programs.

Consumer Retention

It is built on trust, communication, and convenience. To keep current Consumers happy and coming back for more, it’s
important to get the basics right. Once the company is able to deliver a great experience, there are a number of retention
tactics that can be utilized to stack the deck even further in favor of the company.

The key is to keep Consumers active with retargeting campaigns, branded paid search campaigns, and promote a referral
campaign that’ll turn your best, loyal Consumers, into brand ambassadors. Retailers need to create a first-time Consumer
offer that’ll make the second, third, and even fourth-order much more likely. Retailers are in very good shape once they
get a Consumer to place a 2nd e-Commerce order. (Source- GrocerKey)

Consumer Retention Stage Likelihood of Incremental Order

1st order placed 57.51%

2nd order placed 71.83%

3rd order placed 77.89%

4th order placed 82.44%

A Consumer loyalty program can reward Consumers for their continued loyalty. The more they shop and interact with
your business, the more they're rewarded. This keeps Consumers happy because they're getting more from the experience
than just your product or service. And, since the top 10% of your Consumers spend three times more than the rest of your
Consumer base, you'll want to make sure these users are more than satisfied.

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 8. RECOMMENDATION
The Online Grocery Sales industry has grown rapidly as online shopping increased and industry services improved
substantially. The competition is tough. A grocery store can differentiate itself from others through unique Consumer
experiences. The retailer can retain online Consumers by making the Consumer’s journey from browsing the products to
the delivery of the products easy and quick. Thus, it focuses on minimizing the basket abandonment rate. Based on the
findings, below are the few recommendations to increase online sales. (Note that values here might have to be changed
depending on Consumer base)

- Referral Program-Refer and Earn $20; Signup and get $50 off ($10 Off every purchase).
- Loyalty Program- Make sure there is consistency between channels-( Free to become a member- Earn 1 point for
every $100 spent).
- Click and Collect Model- Free pick-up (no extra service fee involved + minimum basket size $20 or above).
- Implement Exit-Intent Popups- Offer a deal or present more information- ($5 off if ordered in the next 5 min).
- Subscription model- biweekly/monthly- (Subscribe and Save 10% of the total cost)- valid only for the Click and
Collect model.
- Optimize the checkout process and page load times.

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