Peapod overcomes major hurdles to maximize the full potential of ecommerce for groceries

21-Nov-2017 - Last updated on 21-Nov-2017 at 15:44 GMT

Americans may say they want to eat at home more in order to save money, improve their health and waste less, but the reality is restaurant spending is up – revealing a paradox and an opportunity for retailers and CPG manufacturers, according to a top Peapod executive.

More than a third of Americans aspire to cook more often at home this year, according to a survey the online grocery service conducted last year, “but then if you actually look at the industry data, share of wallet for restaurants actually went up last year. So, what they are talking about and their intent and what they are actually doing are two different things,” Carrie Bienkowski, chief marketing officer at Peapod, told attendees at FoodNavigator-USA’s FOOD VISION USA conference in Chicago last week.

That paradox, she added, “is where we see an opportunity because that means someone is not providing the solution that people need because they are doing something different from what they say the aspire to do.”

Ecommerce is well-poised to seize that opportunity by providing a solution to the major challenges that block more home cooking – mainly limited time, cooking skills and meal ideas, Bienkowski said. However, she added, before it can do this, it must overcome three significant challenges to bring more shoppers online.

Challenge: Overcoming consumer skepticism

The first major challenge for online retailers and manufacturers embracing ecommerce is consumer skepticism.

“This is a big, big change. [The consumer] has always bought her groceries in a brick and mortar environment. She has always had the ability to walk in a store and pick out the produce on her own. This is a massive habit change. So, she is very skeptical that someone else can do something she has been doing all along as well as she can,” Bienkowski said.

Peapod helps reassure skeptical consumers by providing them with several resources that will inspire and streamline the shopping experience. For example, Bienkowski notes that Peapod has more than 500 recipes on its website that will give shoppers ideas for meals – not just ingredients.

It also offers meal kits that it creates with help from CPG brands and well-known influencers in the food space, and it does this at a fraction of the price – about $5 per serving – of competing meal kit companies.

Peapod also partners with DinnerTime, a meal planning membership that creates plans based on several factors, including budget and nutritional needs. The service automatically delivers weekly meal plans that take into account Peapod’s sales and specials so that customers get the best value and stay on budget, Bienkkowski said.

Challenge: Soothing consumer emotions

The second challenge is addressing the emotions that are attached to grocery shopping.

“This is not about ingredients. This is about food. This is about meals. This is about nourishment. This is about taking care of families. It is a point of pride and it is very emotional,” which also is behind the skepticism consumers bring to online grocery shopping, Bienkowski explained.

One way that Peapod makes consumers feel emotionally positive about the service is by hiring full-time staff, rather than part-time contractors, that can deliver on last-mile logistics, she said.

“There has been a lot of attention around the crowdsourcing model … and I think it is a great way to get off the ground, but at the end of the day it goes back to his is a very personal experience. No other ecommerce has the delivery person coming into your kitchen. So, as a brand owner, we want to control that experience [which is why] we have chosen the full time employee route,” Bienkowski said.

Challenge: Proving the added value of ecommerce

And finally, Bienkowski said, online grocery shopping has to add value beyond convenience, which is cancelled out in part by the need for retailers to charge delivery fees.

“People are not expecting delivery fees, but quite frankly you simply cannot make money without them given the margins. So, the reality is if you are going to pay a delivery fee, then what is the value add?” she said.

Peapod adds value by simplifying and speeding the shopping experience, Bienkowski said. For example, the service is available across devices so that consumers can add to their shopping list in the morning from their mobile phones before they get out of bed, their desktop computers at lunch when they are in the office and on their tablets in the evening when they are relaxing with family.

The company even is willing to use competitor Amazon’s Alexa service if it means simplifying the shopping experience for consumers who are dedicated to interactive service, Bienkowski aid.

Peapod also streamlines the shopping experience by allowing consumers to filter the products that they see so they can more easily spot offerings that meet their unique nutritional needs. The online retailer currently offers 16 nutritional filters, which include GMO, vegan and vegetarian as well as fat content and sodium content. Other filters include price, so that consumers can easily customize their search results.

“The other thing we spend a lot of time on and optimizing is the search bar. About 45% of the dollars we get added to our cart from search,” Bienkowski said.

One-way Peapod does this is by allowing consumers to easily shop off lists of their previous orders, she said, explaining: “People love that. It speaks to why they are using our service. It is faster. It is easier. It is more convenient.”

But she added, it also “has major implications for our suppliers and our CPG partners because you have to get on that list. If you are not on the list in an ecommerce environment, you might as well be invisible.”

Peapod works with suppliers to enhance their visibility, such as through its personalization algorithm that makes suggestions based on previous or new purchases, she said.

Get the highlights from FOOD VISION USA here!