Whether you’re considering an e-commerce strategy, you must understand the potential challenges of e-grocery. We’ll discuss inventory management, delivery models, customer engagement, and taxes. These problems will impact all aspects of e-grocery, including the business model, technology, and taxation. Finally, we’ll discuss the remedies.
Inventory management
Many retailers are moving toward online grocery delivery like Russ’s Market, but this trend can hinder their business if inventory management is not implemented in real-time. With an average of 35,000 SKUs, a human being’s decision-making process leaves room for error. In addition, human intervention is unreliable; ninety percent of a three-five-thousand-item order is a binary choice. To solve this problem, retailers must adopt a more systematic order consolidation and inventory management process.
To make inventory management more accessible, use par levels to set minimum quantities of goods in stock. Par levels, which refer to the amount of each product that should be kept on hand at all times, require advanced research. However, by setting a minimum quantity of a product, the process becomes systematized, and staff can make decisions faster. In addition, by determining the par level, a business can better understand what items are selling for and if they’re at par level or below.
Delivery models
E-grocery is an increasingly popular way for consumers to shop and has several challenges. For example, consumers would instead shop online for convenience and price savings, while they would instead buy in-store. Managing the delivery process would be another challenge, and quick-commerce players would have to adjust their service model to cope with varying urban areas. In addition, high-tech refrigerators can be expensive, and managing delivery routes could be challenging. Fortunately, companies can hire mobile app developers to design and build an optimized API for grocery inventory management, reducing storage and delivery costs.
E-grocery is still in its early days, with many new services emerging daily and billions of dollars in venture capital pouring into the industry. The big players compete for market share with quick-commerce players and aggregators, combining grocery ordering and meal delivery services. New collaborations are popping up every day. And while online retailers are facing challenges in this area, they must remain vigilant.
Customer engagement
For e-grocery to succeed, it must offer a frictionless user experience. Consumers prefer a seamless online experience that involves the convenience of placing an order, choosing the items they want to buy, and paying in one transaction. A seamless shopping experience also eliminates the hassle of browsing pages of products. It should also offer relevant and timely recommendations and help customers become customers for life. This requires a well-designed eCommerce site and mobile app.
To avoid this problem, e-grocery owners must find out how to engage customers and build long-term relationships. Customers tend to use social networks to research products and read reviews. In addition, they are comfortable with online payments. By establishing a customer loyalty program, e-grocery companies can build long-term relationships with customers and successfully sell groceries online.
Taxes
As the ecommerce and taxation landscapes evolve, retailers face new challenges in tracking sales and ensuring compliance. For example, many small businesses rely on third-party fulfillment services and third-party warehouses, which makes it challenging to follow brand presence and comply with local tax laws. In addition, the warehouse and customer address differences can affect tax laws. Fortunately, backend data systems help retailers manage sales and tax with complete geographic awareness.
The main challenge for quick-commerce players is adjusting their business model as they expand. In densely-populated areas, independent delivery riders are abundant. Therefore, they must reshape their business models and offer flexible delivery time frames in second-tier cities. Despite this, the money flows into quick commerce, and $14 billion in investment is projected by 2021. This will alter the strategic landscape of e-grocery and add to the already drastic changes in consumer behavior wrought by Covid-19.
