e-commerce
Dec 01, 2015 • By

Full-basket food shopping online is growing

Did you buy any food on Cyber Monday?

Online grocery shopping is definitely something we have our eyes on, to make it even easier for you to buy your favorite brands.

e-commerce

While e-commerce now represents just about one percent of General Mills’ total sales, it’s poised to grow quickly. During our last quarterly earnings call in September, Shawn O’Grady – senior vice president, and president of Sales & Channel Development – called e-commerce our fastest growing food-channel. He said there are projections of sales reaching five percent to six percent in the next few years.

In the UK and France, online purchases there are approaching 10 percent of our total sales. In China, the channel is about 10 percent of our Häagen-Dazs sales.

While a share of these online sales are from “spearfishing” – when people search for and buy one or two food items, primarily from sites such as Amazon – more are coming from “full-basket” shoppers who buy all of their groceries online from the few retailers that have adapted well to e-commerce.

“We can see that coming and we’re well-positioned to capture that growth,” says Shawn.

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He says General Mills’ product portfolio is perfect for online shopping, citing LÄRABAR items and some of our gluten-free products, which do well on sites that are geared for spearfishing searches. Shawn also says cereal, yogurt, soup and baking mixes – the same items popular in stores – do particularly well on sites that cater to full-basket shoppers.

A recent article in Food Dive said food and beverage executives are calling e-commerce a “revolution” and that food/beverage e-commerce sales are expected to reach $12 billion by 2018.

For the past three years, General Mills has been readying for this e-commerce change, even being recognized this fall by Advantage Group International as the top food company in e-commerce performance and capabilities, among 25 food companies. General Mills also tied for first in another survey of 44 food and non-food companies.

But there are obstacles.

Only about 10 percent of our retail grocery customers in the U.S. offer a full-basket online business. And the overall shopping experience is cumbersome at best, says Matt Pierre, director of e-commerce. However, Matt predicts that number could climb to 70 percent in the next two to three years as more retailers embrace full-basket shopping.

“For now, availability is the issue  for shoppers, but that will change dramatically,” says Matt.

“Obviously, Amazon is leading some of the thought there. Walmart.com is investing a great deal to make sure that they are utilizing their stores to make sure they’re competitive. And that really is causing all of the players in the marketplace to want to be active in the e-commerce space,” says Shawn.

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Matt says many retailers see the opportunities because the average full-basket online transaction is $150 – more than five times the average in-store grocery transaction of $29.

Just like shelf space in an actual store, the amount of digital shelf space a retailer can offer is critical. For e-commerce, this includes search engine optimization, product attribution/categorization, and website navigation.

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Inside a store, the average consumer spends 92 seconds in the cereal aisle, which may contain 190 products. Online shoppers only see a fraction of those products on a single screen.

“That’s why it’s critically important the groceries are sorted online in a way that’s personalized for each consumer,” says Matt. “The products they see online need to be the products they want to buy.”

Shopping for groceries online has given rise to new consumer behaviors, and the way food makers and retailers respond to these needs will determine their success.

“In any given brick-and-mortar store, all consumers see the same shelf,” says Brian Westiner, senior category development manager within e-commerce. “Online, a consumer can search, filter, and sort to customize the digital shelf to meet their individual needs.”

Matt told Food Dive he thinks e-commerce will soon be “mission critical” for the food industry, and added that the early adopters among food and beverage manufacturers will stand out to consumers.

“I think anytime you have an inflection point in a pretty established industry like grocery, I think it gives brands and companies opportunities to drive an advantage if they can get out early and think about it differently,” Matt says. “I think our hope is can we get to a better position online than what we have in store.”

Which of our brands do you like to buy online? What sites do you shop on?

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  • Matthew

    Great article! Usually buy your cereal online. Big fan of Peapod and Instacart.

    • http://blog.generalmills.com Kevin Hunt

      Thanks for reading the post, Matthew. Glad that e-commerce is a good option for you!

      Kevin Hunt
      General Mills