In the US, consumers have more channel choices when it comes to purchasing toiletries, soft drinks, processed food and other fast moving consumer goods than ever before.
According to Nielsen, 50 retailers accounted for nearly 80% of all FMCG sales in 2016. Specialized companies drove more than half of all FMCG growth over the last few years by focusing on particular verticals, while the bigger companies on average posted flat growth.
Beauty and pet care specific companies are experiencing higher sales than others, evident by the popularity of beauty subscription boxes – Althea and Birchbox – and pet food/accessories platforms such as Chewy.com in the US.
The wide FMCG umbrella is increasingly filling with online players that are offering what Nielsen coins the “total customer” something more than simply walking into a department store.
A total customer is someone who wants to the ultimate shopping experience from top quality, to brand value and a personalized product offering.
As the grocery-retail landscape continues to incorporate digital, there are six core (and relatively broad) factors that make determine whether customers will likely stay your customers.
It’s pretty obvious to most retailers that the total customer wants products delivered on time without damages, special discounts to save money, and an easy to navigate online interface.
But the latter three factors: assortment, convenience and personalization are particularly important to the more digitally engaged shopper as they tend to have higher expectations.
So what kind of things will appeal to this group?
Well, when it comes to experience, assortment and personalization, these online players are currently doing it right.
According to Nielsen, “click and collect” services like Amazon Fresh Pick Up will increasingly bring perimeter-store shoppers online. Currently available to only employees, Amazon-run stores will have groceries brought out to your car if you order online as a Prime Member.
In China, both Alibaba and JD.com lead online grocery sales. Why? Because delivery men on electric bicycles pick up orders from supermarkets and small corner shops to provide same day delivery.
Grocery delivery service Instacart from the US focused on personalization by partnering with PlateJoy last year to deliver customized meals to customers who shared their health and taste preferences.
Entering groceries in Southeast Asia
Although not as mature as the west, the rising popularity of on-demand platforms such as honestbee and HappyFresh, and food delivery specific services such as foodpanda, Line Man and UberEats creates a highly competitive space.
Each player is attempting to entice Southeast Asians with aggressive promotions and value added services. In Thailand, HappyFresh often has “buy-one-get-one” periods, 30% flash sales and more recently, begun targeting pet owners, stated by Nielsen as a growing vertical for ecommerce.
Competitor honestbee is instead working on creating a “convenience ecosystem” for its shoppers by adding extra verticals such as a laundry service and food delivery.
It’s very likely each market in Southeast Asia will have its own dominant grocery service as the region is highly fragmented and therefore highly differentiated preferences but one thing they all have in common is their obsession with convenience and personalization.