How This Grocery Chain Met Consumer Demand During COVID-19
When Keshet Teamim began their journey to provide online grocery shopping, they weren’t expecting to be perfectly placed to respond to the new COVID-19-fueled spike in demand for online grocery shopping.
But when the novel coronavirus pushed a sudden rise in demand for online grocery deliveries, the medium-sized chain of grocery stores in central Israel was ready to deliver.
“The Future of Grocery Shopping is Online”
Long before COVID-19 appeared, Roi Vanunu, CIO of Keshet Teamim, had seen the future of grocery shopping.
“eCommerce is the future of grocery retail. Our children will not ever go into the supermarket,” he remarked, adding, “We estimate 80-90% of grocery shopping will be online in a few years.”
Driven by this vision, Keshet Teamim started looking for an appropriate solution that would allow it to expand online. They wanted to hold on to their well-earned reputation for customer service, but also keep down the initial and ongoing costs of any eCommerce solution.
Looking for an Independent Solution
Many smaller groceries in Keshet Teamim’s position turn to third-party solution providers like Instacart, but Instacart has many drawbacks. It seems like a good deal in theory: Instacart takes care of order processing, picking, logistics, and delivery, and the retailer enjoys increased sales. But in reality, that’s not how it pans out.
Instacart charges both customers and retailers high fees to use its system. Customers end up blaming the retailer for the higher prices, while the retailer loses its profit margin in fees.
Another issue is that Instacart owns the retailer’s digital assets, so the retailer can’t monetize them by pulling in advertising revenue. It all goes to Instacart.
“Retailers that choose to list their products on a marketplace like Instacart, Shipt or Google Express lose the ability to monetize their digital assets.” says Jeremy Neren, Founder and CEO of GrocerKey. “Many grocery executives have failed to understand this fact. Advertising is a major source of revenue in Instacart’s model. Advertising revenue that retailers should be capturing, not Instacart.”
Keshet Teamim heard these horror stories and wanted to run an independent, self-owned solution, but it was nervous that doing so would be expensive and slow.
Solving the Puzzle
After doing some research, Keshet Teamim turned to SelfPoint’s white-label solution, which allows the retailer to use all its own branding. SelfPoint checked every box that Keshet Teamim was looking for: it offers automated order processing, an integrated POS that keeps all data in a single location, streamlined logistics and delivery, and more.
It was important to Keshet Teamim to keep up its high level of customer service, so the management team appreciates that his new solutions works on every device and transfers seamlessly between mobile and desktop, without losing any details of the customer’s order. The intuitive picking app is easy for employees to master, and the built-in, automated SMS and phone calls allow customers to independently choose alternatives for out-of-stock items without delay and without needing to speak to a customer rep. SelfPoint’s omnichannel marketing support further helps Keshet Teamim to keep in touch with shoppers, track their preferences, and offer customized discounts and promotions.
All in all, Keshet Teamim was in the right place when COVID-19 appeared and raised demand for online grocery shopping through the roof. Keshet Teamim has seen online sales rise 300% during COVID-19, and their customer base increase 40% in 4 weeks. Keshet Teamim’s online store has become its biggest-selling outlet, serving consumers even in locations where they don’t have a bricks-and-mortar store.
Ready to Respond to COVID-19
Keshet Teamim had already begun implementing these changes before the pandemic hit, which gave it the vital flexibility to scale up quickly to meet increased demand for online orders. The coronavirus encouraged consumers worldwide to shift to online grocery shopping to avoid the infection risks of shopping in-store. Online grocery shopping reached $5.3 billion in April, a 37% increase over March sales. 28% of North American grocery transactions migrated online, opening up opportunities for grocery retailers to capture a share of the expanding market.
However, opportunity came with new challenges. Anxieties about supply led to hoarding, with people placing larger orders than usual. Unprecedented demand, a workforce hit by infection, and disrupted logistics stressed supply chains and delivery systems to breaking point.
Watching what happened to Instacart users proved that Keshet Teamim had taken the right path. In April, at the height of the pandemic lockdown, Instacart USA had delays of 5 days in fulfilling customer orders, delays which undermined the retailer’s own reputation. Other problems arose such as gig employees didn’t do a good enough job of selecting products, repeatedly choosing the wrong ones and picking products that are damaged or close to expiration, ruining consumer trust in the retailer.
Grocery retailers venturing into online have a single shot at greatness. Consumers who have a bad online experience are not likely to return, especially if they are first-time online shoppers compelled to do so by COVID-19. But shoppers who have a good experience are likely to stay with their first online grocery retailer. Keshet Teamim’s results prove the point.
A Future-Proof Business that Thrives Even During a Pandemic
The coronavirus pandemic brought grocery retailers the opportunity to capture a new share of the online grocery sales market, as long as they could overcome the challenges of an overstretched supply chain, disrupted logistics and delivery, high demand, and a reduced workforce.
A self-owned solution can be the way to expanding the business. “We believe any chain that does not kill it online, and especially during this current corona period, will either not survive, or will barely survive,” says Vanunu. “Now our business is future-proof and resilient.”