Can digital marketplace fulfil the online grocery shopper's desire?

With the unprecedented growth of online grocery shopping, in the past few months, customers have become used to more selections and convenience. Retailers are thinking on how to expand their online platforms to increase customer loyalty and acting towards implementing a digital grocery marketplace strategy to enhance customer experience so that customers can choose from an endless array of products unlike store shelves.

In August, Kroger implemented a marketplace strategy and introduced above 50,000 products from third party sellers by joining hands with Mirakl, a software company which has built successful marketplaces for companies like Carrefour and Best Buy.

Even though the model spoils customers for choices and also provides retailers with more revenue and data the value of a marketplace strategy for grocers is still under observation. As there is not much evidence that marketplaces add value to retailers according to studies. Following suit with successful models like Amazon may be like chasing one's own tail as the store is the strong point for Krogers, says Juozas Kaziukėnas, founder of Marketplace Pulse.

A relatively newer digital approach for grocers

The third party marketplace is nothing new for retailers but for grocers it is just a fresh experience. Albertsons went ahead with a third party marketplace in 2018 focusing on natural and organic items but the project is on hold for the time being. Similarly, Canadian supermarket Loblaw diversified through an online marketplace by introducing baby gear, home goods etc.

Experts feel more grocers will move into marketplaces as they have the option to expand their product choices for consumers without affecting their balance sheet. The model will be especially beneficial for large and mid sized grocery operators as they have the customer base and back up to go ahead.

Taking into consideration the higher chances of product discovery and availability as more people are shopping online nowadays, Brendan Witcher, principal analyst for digital business strategy at Forrester feels that it is already late for grocers to adopt this new digital strategy.

A look at Kroger's marketplace

The entry into the marketplace is a step by Kroger to add more revenue sources to their activities beyond the physical goods, says Gundalech. It will be interesting to monitor how Kroger's will mine their media business and connect it with the marketplace to get more revenue. The commission from third party sellers is always a bonus. Kaziukenas feels that the company should diversify quickly to gain traction from suppliers and increase the product number from 50,000 as this is a minimal number of products to offer and will not create the right impact in the marketplace.

The addition of products and brands should be done carefully, says Nussenbaum, as you need to recruit the right sellers who are in demand and in enough numbers so that your marketplace doesn't crash. Customer data should be monitored to achieve this feat.

Can shoppers benefit from marketplaces?

The marketplace diversification for Krogers is to provide a seamless, cross channel shopping experience for customers. The company is monitoring the data and details to understand the shopping behaviour of customers and provide better services. Krogers have also maintained transparency in their marketplace to avoid any confusion for their customers as the details, profile and performance of the third party seller from whom the customer is buying the product will be listed, also Kroger won't allow sellers who do not meet a particular set of standards laid down by them to do business through their platform.

Conclusion

Creating a grocery marketplace is not that simple. A lot of work goes into it to keep it up and running. So, ultimately the success of the whole concept for grocers boils down to how well they manage their digital marketplace and complement the customer requirements by doing the right research and taking the perfect steps.