Know How eCommerce Is Transforming The Food Industry

As per some studies, the revenue generated through different eCommerce platforms for different business niches will be quite well in the coming years and this will be due to the significant price drops shoppers experience when shopping online. Moreover, facilities like cash on delivery (COD) has played a major role in leading to many spontaneous purchases.

Not over!

The convenience of buying and saving oneself from passing through the stressful traffic are two of the other major reasons why today’s generation prefer eCommerce shopping when compared to the visits to brick and mortar stores. They don’t have hours to spend on shopping or the patience to go through the checkout process! Initially, people were more inclined towards shopping for branded apparels, footwear, beauty products, and jewellery online. Later, online shopping of grocery items as well as food and beverage increased too.

In the year 2016, the online food industry saw a growth of 27.6% and it was enough to say that the industry has started to rise on the online platform. However, it has to be said that the greater part of the market is still uncovered and plenty of potential is yet to be unleashed. If we look at the total sales on the online platform including other business lines like fashion, beauty, electronics, etc. food industry managed to gain only 1 percent of the total sales in 2016 with 170 billion euro. In advanced countries, the rate has been growing steadily and so it won’t come as a surprise if you noticed more food retailers and restaurant owners investing in eCommerce in the later years.

Apart from small-level food businesses, big giants in the field are now getting ready to invest in various eCommerce channels and spend millions in the process. As per Indra Nooyi, CEO at Pepsico, “E-commerce is shaping up to be the next great revolution in the food and beverage industry.”

If we look at the numbers, there had been a steady growth in the retail sales of food and beverages in the month of May 2019 by 23%, and now, the numbers are expected to cross $40 billion by 2022. However, you need to know the surge in online shopping of food and beverages started even before pandemic hit our lives.

The onset of COVID-19 disrupted the ongoing businesses in the food industry right in the beginning of 2020. With lockdown applied across the globe followed by strict restrictions like maintaining social-distance, keeping oneself safe from touching surfaces, following curfews, etc. the role of online food stores became crucial like never before. People opted for online food businesses for safe and contactless deliveries. Again, the availability of digital payment methods made contactless deliveries a safe affair.

Most of the businesses hit a break during pandemic but, food and beverages were not one of them. On the contrary they did well!

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If we look at the graph above, you will see that the eCommerce business for food and beverages has increased over the years steadily. The popularity of eCommerce food industry increased with lockdown restrictions getting implemented after the spread of Coronavirus disease in 2020.

Will the consumer behaviour change after COVID-19 goes away?

Not completely. People may have the tendency to be back at the stores. However, newer formed habits and convenience to shop will still keep online options their first choice. With spreading of virus being at the peak again and vaccination drive still slowly covering the masses, the reverse change in shopping behaviour is yet to happen.

What makes eCommerce a better choice for food industry?

  • Consumers prefer online shopping

Food and beverage companies are now more inclined towards choosing eCommerce and one of them is to satisfy customer wants. Above all else, online shopping is a convenient option for shoppers. If we look at the numbers from Coresight research, there was a rise in the US online grocery sales in 2019 by 22% and it reached 40% in 2020 with rise in COVID-19 cases and related lockdown. In one of the polls conducted, 52% of the 1152 consumers who participated has shopped for groceries online in the last 1 year. From that, more than half of them have done it for the first time. The number of shoppers choosing online food and beverages stores will increase in the coming years. It is true that now a greater number of people are finding it convenient to shop for items with a few clicks.

Another important reason why people choose to buy online is that they can check out the reviews of other customers before they buy a product. As per Local Consumer review Survey 2020, 87% of customers looked for online reviews before buying. Here hotels and restaurants were the top industries where consumers were more likely to read reviews.

With every passing year the number of people looking online for local businesses is growing. With sites like Facebook, Yelp, Google My Business, and others, new scenarios are created for potential consumers to get connected with businesses.

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  • eCommerce brings in more data

Making more money is definitely one of the reasons why businesses choose to go for eCommerce store, however, it is not the only reason.

In order to be successful in a new market like the one of food and beverages, you need data. Businesses can learn more about the market needs and improve their profit margins by using big data. Today, more restaurants and retailers are working on data to get more detailed insights that can be put to use to achieve profitable end results.

All such data is generated from customer behaviour. More and more amounts of data get produced whenever a customer clicks on the website. Such movements collected in the form of data helps the business to understand the behaviour of customers very clearly. The amount of data produced through consumer interactions have been roughly around 2.5 quintillion bytes a day and the number keep on increasing at an exponential speed with the collaboration of technologies like Internet of Things (IoT).

Companies that plan to choose to go on the eCommerce road get to know about the purchase history and browser interests of the customers and know when they are prone to buy more. Again, businesses get to predict the upcoming trends and work in its path by understanding the online behaviours of shoppers.

  • Food eCommerce is yet to be explored completely

Food and beverage industry is slowly and steadily moving towards the eCommerce platform however, its full potential is yet to be discovered and exploited. If we look at the numbers from 2017, you will notice that direct-to-consumer and third-party eCommerce platform sales of food and beverage accounted for only 36 percent which means there is enough scope for same niche businesses to grow over the internet.

Today many companies are coming forward and trying their luck on online shopping. Let’s take the example of General Mills. Some of their European markets witnessed 10% sales on food items amidst booming sales of electronics. Smaller businesses are now more excited to take a chance on the online platform and get to enjoy a part of its success. Beer Cartel, one such small business based on Australia known for its crafted beer had been able to manage a 34% of their sales from such a platform after they launched their online store.

How is the transformation going on?

Since last few years, consumers have been using one or another form of online solution to make restaurant reservation and food delivery. With each passing day their preferences towards choosing a digitized solution have ever increased. Right from food delivery apps to the ones that let you make a reservation at restaurants; food industry has gone through many trends. The industry has been going through development phases and the rise in meal kits and online subscription boxes have been on the forefront of it. Such kind of meal kits now saves people from making frequent visits to the supermarket to buy groceries as well as saves from the trouble of planning meals for people who have busy lives.

Changing consumer behaviour and restaurant approaches

With the wide use of smartphones and mobile apps, the online grocery market is on the path of continuous growth. As of in 2017, 31% of the US people were planning to choose online stores to buy groceries. However, 96.9% of them still have plans to visit local stores and buy items directly. Again, the number of consumers choosing to go for click & collect for their order increases too as online giants like Kroger and Amazon joins the league. Meanwhile, Amazon has managed to acquire WholeFoods and thus turned out to be a key player in the market.

If we look at fine and casual dining restaurants, they are also moving to digital platforms to offer better experiences to the customers. With increasing number of restaurant reservation and food ordering apps in the market, the whole idea of dining out has changed due to the intervention of technology. Restaurants are also now coming up with waitlist times for a table and with POS systems for tablet ordering at the table or for making payment. Such POS systems also lets the users give feedback on their experience while maintaining anonymity.

eCommerce trends in food and beverages industry

  • Contactless delivery

Contactless delivery is what businesses offer to their customers as a part of maintaining high-level safety standards. Here, very minimum human contact happens with the delivery person and the customer. Keeping the current COVID-19 scenario in mind, companies are now offering contactless deliveries. This helps both parties to “break the chain” and stop spread of infection.

  • Curbside pickup service

This service lets the customer to shop online and then pick up their ordered products from a point of convenience. Even though countries like the US have been following this method for other products for a long time now, in the pandemic days it has turned out to be a safe option rather than just for the sake of convenience.

  • Demand for authentic and quality products

The inclination to buy branded products from the food and beverages industry has increased during the span of a year. Such products have the nutritional value properly mentioned on the label along with other information. This creates a feeling of trust among customers.

Last year, during the initial phase of lockdown, people went into buying spree for branded items as they were safe and hygienic. Responding to the quick demand, brands stocked up their inventories and even started to look for innovative ways to deliver the products to the customers.

  • Social media for eCommerce

eCommerce platforms and brands are now working towards improving their presence on social media platforms. They are using platforms like Facebook to engage with the audience, know customer shopping behaviour and showcase products accordingly. For the same, they are opting for posts and product ads on the platform.

It was during the lockdown period that food & beverages industry saw fast-paced growth as dine-in restaurants and local grocery stores were shutdown. Businesses that came up with new campaigns like fresh delivery, same-day delivery, new product promotions, great discounts, different delivery options, etc. grabbed the attention of the shoppers.

  • Rise in cloud kitchens

Pandemic and the following norms to have safe and hygienic deliveries and takeaways have led to the changes in the food and beverages industry. One such solution that responded to the fast-moving industry is the formation of cloud kitchens. Cloud kitchens also known as ghost kitchens is slowly taking up pace across the world and is making millions per year.

No doubt online food industry will see tremendous growth in the coming years and if, as a restaurant owner or as an owner of a grocery store, you wish to take your business to the eCommerce platform then we can help you.

As a leading provider of eCommerce food business solutions, we understand what your business expects to achieve through an online store. Our team is well-skilled in offering fully-customized eCommerce business solutions that favours your food business. So, let’s have a talk and discuss the terms!

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