More People Buy Healthy Snacks Online: The Decline of the Storefront & Rise of Food E-Commerce
The traditional grocery shopping experience we once knew will be obsolete come 2025. Brick and mortar grocery stores are changing rapidly to compete with online marketplaces. With both demand for healthful choices and online shopping growing, more and more people are choosing to buy healthy snacks online. This is something we know first-hand, as the team behind SnackNation (http://www.snacknation.com), where you can buy healthy snacks online. I wanted to dig in a little deeper and find out why more people (including myself) are choosing to buy our healthy snacks and more online in addition to (or rather than) shopping at brick and mortar grocery stores.
“Omniconsumers” Shop Price and Convenience
According to an article in Time, Millennials (the most populous demographic, born between 1980 to early 2000s) have been dubbed the “omniconsumer” by Vantiv payment-processing firm for browsing, researching and buying across all tech and real-world channels: “Omniconsumers expect a seamless, consistent shopping experience regardless of the medium” [source].
Millennials are nearly equally split between their desire to showroom and webroom. Showrooming is purchasing a product online after researching it in person; webrooming is making an in-store purchase after researching the product online.
This makes sense for technology and clothes purchases, for example, but does it make sense for grocery store purchase? Would you buy healthy snacks online?
The Decline of the Grocery Store
It’s a competitive market for grocery stores. With natural-foods-focused chains like Trader Joe’s and Whole Foods on the rise, traditional markets like Ralph’s and Albertson’s are finding it hard to keep up. Larger grocery stores are reportedly shrinking to half their size. It’s worked for Trader Joe’s to be smaller than a traditional grocery store, but has been a failure for some chains like Fresh & Easy [source].
Five Reasons Traditional Grocery Stores Are Transforming
Lack of customization. Consumers want everything personalized, which is easy when you’re online shopping, but not so easy when shopping in person, especially at the grocery store. Some grocery stores have responded to this by hiring on-staff dietitians to consult with consumers in person.
Junk-food marketing. Parents who don’t want to subject their kids (and themselves) to being bombarded by marketing messages and the candy aisle, (placed strategically at checkout, of course) would prefer to shop online where they can bypass the tantrum.
Poor layout. The traditional grocery store layout is designed to make you purchase more than you intended. According to consumer expert Paco Underhill, two-thirds of what we buy in the supermarket we had no intention of buying. Supermarkets encourage unintended purchases in a number of ways – from their lighting to their music, straight down to the store’s layout (have you noticed there are no clocks in grocery stores, the milk is always in the back so that you have to walk through the entire store, and the candy is placed strategically at the checkout?).
Inconvenient/Takes too long. We’re growing accustomed to purchasing online. When buying online, there’s no need to get into the car, buy gas or even put on pants. There are also no lines!
Bad PR. Consumers are disenchanted with traditional grocery stores for continually decreasing workers’ wages.
What do we expect in the future? According to the Food Marketing Institute, which represents food retailers operating nearly 40,000 U.S. stores, and the coverage by AdAge, the grocery stores of 2025 will focus on “micro-personalization” and “hyper-showrooming.” [source]
From Etsy to Amazon, Online Stores Want a Piece of the $631B Grocery Market
Purchasing food and snacks online used to be limited to niche delivery services. Now, from Etsy to Amazon, you can find traditional food items, healthy snacks and unique handmade items for sale and ready to be delivered to your door. For example, my new favorite online food purchase comes from A Loving Spoon–vanilla bourbon peanut butter made in adorable dessert jars with wooden spoons complete with the phrase “Life is short, eat dessert first.”
Me & my love affair with A Loving Spoon
Currently, online grocery sales account for approximately 1% of the $631 billion U.S. grocery market, making it one of the lowest penetrated categories. That said, the market is changing incredibly rapidly.
Amazon.com seems to have its eye on taking a slice from the grocery sales pie with its new Prime Pantry service, which lets Amazon Prime members order up to 45 pounds of canned or packaged food items and get it shipped to their doorsteps for a flat rate of $5.99. Analysts say the move is to rival Costco and Wal-Mart. But could it?
Why More Consumers Buy Healthy Snacks Online & Why Food Retailers Are Following Them
Shoppers are more health-conscious now than they’ve ever been before. According to The Wall Street Journal, One survey found that nearly a third of people are trying to abstain from gluten even though only one percent of the population has Celiac Disease. A Google search for “gluten free snacks” turns up more than 25 million results, Facebook has more than 1,000 groups with “gluten free” in the name, an there’s even a dating group called “Gluten-free singles” [source].
Food retailers know that consumers are increasingly bringing very specific eating criteria to the table. Jon Polin co-founded Abe’s Market, an online retailer of natural foods and products, to meet this demand: “We’re seeing consumers increasingly looking to shop for more than one criteria. Stores may have increasingly large gluten-free sections. That’s great. But consumers who need more get stuck in stores. As an example, we may see a consumer seeking gluten-free products that are also kosher, low in sugar and made in a nut-free facility. The innovative Abe’s Qualities enables highly specific searches that enable shopping in a much smarter and more relevant way than trying to shop physical stores,” said Polin.
Richard Demb (L) & Jon Polin (R), co-founders of Abe’s Market
For smart shoppers who are still frequenting grocery stores in person, there’s another way to take advantage of technology. Mobile apps like Fooducate and Shopwell have armed shoppers with nutritional data at their fingertips. ShopWell gives shoppers a personalized score based on their dietary goals and food allergies for any UPC they scan. Fooducate assigns a grade to any product UPC scanned based on how nutritious the product is. I have been a fan of Fooducate since its inception and even had the pleasure of meeting its founder, Hemi Weingarten, at Expo West earlier this year (don’t worry, I believe Corona gets an exemption from the Fooducate app’s grading ;)).
Hemi Weingarten (L) & me (R)
While consumer demand is key to the push to food e-commerce, it isn’t just consumers pushing the trend to buy healthy snacks online. Food retailers themselves recognize that a growing health consciousness makes for educated consumers who privilege health and convenience over price point. Online food retailer Nothin’ But Food’s CEO Steven Laitmon, says, “More and more people are buying food online because today’s consumer is incredibly well-educated and resourceful and their trust for online food shopping is increasing. Customers of ours are incredibly well-educated as to what is in the marketplace and many of our online customers are ‘tastemakers’ in the category. They know who our competitors are and sought us out for our point of difference: taste. In addition, the explosive growth in social media has allowed our local fans to share their tastes and preferences with their distant friends and with that a ripple effect has been created. We now see inquiries coming from all over the world.”
Nothin’ But Foods’ CEO, Steven Laitmon
It’s expensive and incredibly cumbersome to get a product in brick and mortar stores like Whole Foods. With social media allowing food companies to reach to their target audiences directly, e-commerce is a viable opportunity for food entrepreneurs who want to bypass in-store retail. Laitmon tells me: “Brick and mortar distribution takes time and money and the demand for healthier snacks exists at this very moment all over the world.”
For those who’d like the convenience of online shopping, but still want an IRL connection, entrepreneurs have set their sights on a compromise—the convenience of technology with that community, in-real-life touch. For example, Farmigo uses a website and an integrated distribution system to connect local farms and consumers. Churches, workplaces or any other group creates groups of at least 10, and then place weekly collective produce orders through the site. Member farmers deliver to a central contracted warehouse in each market, which is then delivered by Farmigo to the community groups. According to its marketing materials, Farmigo differs from a community-supported agriculture program (or “CSA”) in that through a traditional CSA, “customers can only get what that farm happens to produce. But with Farmigo’s consolidation of many farms, users can theoretically access enough variety actually replace their supermarket trip. Farmers are separated from the risk of varying demand, because they all ship to a single warehouse based on the totality of a region’s orders each week.”
While consumers are more educated and savvy shoppers than ever and are turning to e-commerce to buy healthy snacks online, convenience, per usual, can be a double-edged sword (or magnificent in its diversity, depending on how far you swing in the health-nut camp). For example, companies like eCreamery and Georgetown Cupcake use e-commerce to sell their decadent desserts in addition to brick and mortar stores (eCreamery has one brick-and-mortar store in Omaha, NE; Georgetown Cupcake has several, but generates a third of its sales online). Coolhaus, an ice cream sandwich retailer that started as a food truck and is beloved by celebrities, offers special features like their pint and “Sammie of the Month Club” to online shoppers while also selling its product in brick and mortar stores. Founder Natasha Case does not underestimate the power of storefronts: “Retail stores are important because people see our products on store shelves and want to try it out.” This is showrooming at its finest–consumers find the product in stores and then purchase it online as well.
We’d love to hear from you!
What do you say—do you buy healthy snacks online or other food products? Why or why not? Do you use food apps when you shop at brick and mortar grocery stores? What advancements would you like to see in food e-commerce and/or in brick and mortar grocery stores?
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