Bakers are invited to seize the opportunities of e-commerce

PALM SPRINGS, CA. — Not only is online grocery shopping growing rapidly, but consumer interest in purchasing baked goods in general and bread in particular online is intense, said Kasey Jamison, Senior Partnership Director of brand at Instacart.

Ms. Jamison participated in a March 28 panel discussion on the growth of e-commerce and opportunities for bakers at the 2022 American Bakers Association Annual Meeting at the La Quinta Resort and Club, Palm Springs.

“Just show up,” she said. “Don’t wait to see if this online grocery thing is a fad.

“Bakery is incredibly important on Instacart. One in three baskets on Instacart includes a baked good.

She said bread was the #3 search term on Instacart for both first-time buyers and long-term customers.

She explained, “Why is this important? It is important for you to capitalize on this strong growth. If a baker enters a buyer’s cart for the first time, their lifetime value is 40% higher. »

Omar N. Haque, vice president, general manager and head of eCommerce Acelerada for Bimbo Bakeries USA, led the discussion during the ABA session.

“What we’ve seen is unprecedented growth over the past three years in e-commerce and the online grocery channel,” he said.

Noting that online sales only accounted for 3% of total grocery sales in 2019 before the pandemic, Haque said the conventional wisdom was that figure might rise to 6% in 2022. Instead, online sales were 9.6% in December 2021.

“Obviously it was driven by the pandemic,” Ms. Jamison said of the chain’s rapid growth. “At Instacart, we have grown for five years almost overnight. We tell Instacart that we have found our new resting heart rate, but I have to tell you that the heart rate has not slowed down, because the growth continues to be there. Orders are up 30% on our platform year-over-year, which is incredible after a period of strong growth.”

In Mr. Haque’s opinion, the baking industry should be prepared for this number to increase much further.

“A question I often get asked is, will e-commerce penetration in the bakery category reach over 20% like some other CPG (consumer packaged goods) categories?” he said.

Mr. Haque spent several years at Colgate-Palmolive Co. before joining Bimbo, and he said sales of many personal care, health and beauty products already had an online share of more than 20% with 35% pet food.

“The more relevant question is not ‘will’ but ‘when’ will the bakery category be over 20%,” Haque said. “I’ve heard different experts say three years or five years. Whether it’s three or five years from now, the question is, are we ready for this growth? »

Even now, between 20% and 30% of shoppers are essentially 100% online shoppers, requiring bakers and other food businesses to “be where the shopper is,” Haque said.

Offering insight into San Francisco-based Instacart and her responsibilities there, Ms. Jamison said she works with major manufacturers to develop and execute best-in-class advertising strategies on Instacart to help them win “on this oh so important digital shelf”. ”

She described Instacart as the leading online grocery platform in the United States, offering “brands people know and love from retailers people know and trust.”

She said the company’s scale sets it apart from its competitors. About 85% of the US population is able to order products for delivery through Instacart.

The company works with more than 700 retail partners, including Publix, Kroger, Albertsons, Costco, Loblaw, HEB, Sam’s, SuperValu and Walmart. Ms. Jamison said the company’s retail partners run the gamut from large national grocers to smaller chains.

The company currently has 600,000 associates who shop for customers.

For online grocery and Instacart to reach their potential, progress is needed on four fronts, Ms. Jamison said, starting with value.

“Consumers want groceries that are affordable and accessible,” she said. “Speed ​​is essential. I would say the two-day delivery is too long. Consumers want to be delivered the same day if not at the same time. We’re launching something called superfast. We offer 15 minute delivery.

Other areas of focus include reliability, which means anything available in a store should also be available online.

Finally, Ms. Jamison said frequency also provides the opportunity to match the pace of consumer needs, whether it’s standard weekly groceries, monthly inventory or shopping for special occasions.

Succeeding in the e-commerce ecosystem requires overcoming challenges, Haque said. He warned that the digital shelf is “cluttered and shrinking”.

“There is a misconception that the online shelf is endless,” he said. “Yes, you search in any category and Amazon, Instacart, Kroger, Walmart, you see thousands of results, that’s true. But the reality is that the digital shelf is much smaller. Shoppers rarely go beyond the first page, especially on a small screen, by results.”

To be successful, bakers will need to invest in paid search and develop an organic search strategy.

The increased need for bakers to step up their online games is because the barriers to entry are very low in e-commerce, anyone can sell anything from their garage, Mr. Haque.

“The starters don’t have an advantage,” he said.

At Amazon.com, only one of 14 in-store category leaders has more market share than the company in physical stores, he said.

A passive approach will not bring success to bakers or other food manufacturers, Ms. Jamison. She urged bakers to step up.

“Just show up,” she said. “Don’t wait to see if this online grocery thing is a fad. It’s here and there to stay. Yes, COVID has certainly accelerated it, but the 30% year-over-year growth is a sign that it’s here to stay. »

As online shopping represents a single channel, Ms Jamison said consumers shop online in very different ways, requiring different tactics from bakers.

“The online consumer journey is not linear,” she said. “Customers come to Instacart and shop in different ways. About 30% walk the aisles before they convert. That means she walks up and down the aisle. She’s looking for sales. be inspired.

About 40% research an item before placing an order, Ms Jamison said. Besides bread, popular terms include milk, eggs, and yogurt.

“Then about 30% come to Instacart and repeat their last purchase,” she said. “They come back, buy it again, without even thinking about it. You need to invest in how you present yourself and reach it in all of its touchpoints. You can’t skip one, because if you skip one, if you’re not there, someone else will be there.

“You really have to show up. Think about how you present yourself and talk to him. “

Ms Jamison urged bakers to focus on the opportunities presented by bread being a top search term. Over time, bakers should aspire to searches for their individual brands rather than a generic term.

How to start? Mr. Haque suggested an approach.

“When we started our e-commerce journey about five years ago, we had to prioritize,” he said. “We had to prioritize the business partners we were working with. We had to prioritize brands. I don’t think every brand has the right to win online, so our challenge was to figure out which were the right brands in the right categories within our online baking industry. It was the first fruit at hand. Then we built funding and strategies around that.