PALM SPRINGS, CALIF. — Not only is online grocery shopping growing rapidly, but consumer interest in purchasing baked foods generally and bread in particular online is intense, said Kasey Jamison, senior director of brand partnership at Instacart.
Ms. Jamison participated in a March 28 panel discussion about the growth of e-commerce and opportunities for bakers during the 2022 annual meeting of the American Bakers Association at the La Quinta Resort and Club, Palm Springs.
“Just show up,” she said. “Don’t wait to see if this online grocery shopping thing is a fad.
“Bakery is incredibly important on Instacart. One in three carts on Instacart includes a bakery product.”
She said bread was the No. 3 searched term on Instacart, both for first-time buyers and for long-term customers.
She explained, “Why is this important? It’s important for you guys to capitalize on this high growth. If a baker gets in a shopper’s first-time cart, they have a 40% higher lifetime value.”
Leading the discussion during the ABA session was Omar N. Haque, vice president, general manager and head of eCommerce Acelerada for Bimbo Bakeries USA.
“What we have seen is unprecedented growth over the last three years in e-commerce and online grocery channel,” he said.
Noting that online sales accounted for only 3% of total grocery sales in 2019 pre-pandemic, Mr. Haque said conventional wisdom was that the figure possibly would reach 6% in 2022. Instead, online sales were 9.6% in December 2021.
“Obviously it was driven by the pandemic,” Ms. Jamison said of the channel’s rapid growth. “At Instacart we grew five years almost overnight. We say at Instacart we found our new resting heartbeat, but I have to tell you that heartbeat has not slowed down, because growth continues to be there. Orders are up on our platform 30% year-over-year, which is incredible coming off a high growth period.”
In Mr. Haque’s view, the baking industry should be prepared for that figure to grow much larger.
“A question I get asked a lot is will the bakery category e-commerce penetration get to 20%-plus 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 and health and beauty products already have a 20%-plus online share with pet food at 35%.
“The more pertinent question isn’t ‘will’ but ‘when will’ the bakery category be more than 20%,” Mr. Haque said. “I’ve heard different pundits say three years or five years. Regardless of whether it is three years or five years, the question is are we ready for that growth?”
Even now, between 20% and 30% of shoppers are essentially 100% online buyers, requiring bakers and other food companies to “be where the shopper is,” Mr. Haque said.
Offering background on San-Francisco-based Instacart and her responsibilities there, Ms. Jamison said she works with large manufacturers to develop and execute on best-in-class advertising strategies on Instacart to help them win “on that oh so important digital shelf.”
She described Instacart as the leading online grocery platform in the United States, delivering “brands people know and love from retailers people know and trust.”
She said the company’s scale differentiates it from competitors. Roughly 85% of the US population are 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 shopping for customers.
For online grocery shopping and Instacart to reach their potential, progress is needed on four fronts, Ms. Jamison said, beginning with value.
“Consumers want affordable, accessible groceries,” she said. “Speed is critical. I would argue two-day delivery is too long. Consumers want their delivery the same day if not the same hour. We are launching something called ultrafast. We’re offering 15-minute delivery.”
Other areas of focus include dependability, meaning anything available in a store also should be available online.
Finally, Ms. Jamison said frequency also offers an opportunity to align with the rhythm of consumer needs whether it is standard weekly shopping trips, monthly stock ups or purchases for special occasions.
Succeeding in the e-commerce ecosystem means overcoming challenges, Mr. Haque said. He warned that the digital shelf is “crowded 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 the digital shelf is much smaller. Seldom do shoppers go beyond the first page, especially on a small screen, by results.”
To be successful, bakers will need to make investments in paid search and to develop a strategy for organic search.
Heightening the need for bakers to step up their games online is because barriers to entry are very low in e-commerce, that anyone can sell anything from their garage, Mr. Haque said.
“Incumbents don’t have an advantage,” he said.
At Amazon.com, only one in-store category leader in 14 has a larger market share than the company has in brick-and-mortar stores, he said.
A passive approach will not bring bakers or other food manufacturers success, Ms. Jamison. She urged the bakers to step up to the plate.
“Just show up,” she said. “Don’t wait to see if this online grocery shopping thing is a fad. It’s here and here to stay. Yes, COVID certainly accelerated it but the 30% growth year over year is a sign it’s here to stay.”
To the degree online shopping represents a single channel, Ms. Jamison said consumers shop online in very different ways, requiring different tactics from bakers.
“The consumer journey online is not linear,” she said. “Customers are coming to Instacart and are shopping in different ways. About 30% browse the aisles before they convert. That means she is going up and down the aisle. She is looking for sales. She is taking her time. She is looking to be inspired.”
About 40% search for an item before they place an order, Ms. Jamison said Popular terms in addition to bread include milk, eggs and yogurt.
“Then about 30% come to Instacart and are repeating their last purchase,” she said. “They are coming back, buying it again, not even giving it a thought. You have to invest in how you show up and reach her in all her touch points. You can’t skip any, because if you skip one, if you aren’t there, someone else will be there.
“You really have to show up. Think about how you show up and speak to her. “
Ms. Jamison urged bakers to focus on the opportunities presented by bread being one of the top search terms. Over time, bakers should aspire for searches for their individual brands rather than for a generic term.
How to start? Mr. Haque suggested an approach.“When we started our e-commerce journey about five years back, we needed to prioritize,” he said. “We needed to prioritize retail partners we worked with. We needed to prioritize the brands. I don’t think all the brands have the right to win online, so our challenge was what were the right brands in right categories within our baking industry online. That was the first low-hanging fruit. Then we built funding and strategies around that.”