A Profitero study showed Target’s online prices were 25% more expensive than Wal-Mart’s, which were just slightly more expensive than prices on Amazon.
Grocers can capture higher sales online with price parity and by playing to what consumers don’t like about buying groceries in the store, according to a new study from Forrester Research.
The primary target audience for online grocery shopping has an annual household income of $70,000-plus, spends at least $125 a week on groceries and has a household that numbers at least three, according to Forrester Research in Boston. But only 12 million or 18% of the 65 million U.S. households online fit this profile. To win online, grocers need to go deeper in targeting those shoppers that represent their best online market, focusing on that segment with messages that will resonate, prices on a par with offline prices, and free delivery on large orders, says Forrester analyst Robert Rubin.
Most of the target audience – 84% -- says they dislike store customer service or hauling groceries home from the store. Online grocery shopping appeals to this group by letting shoppers skip most of what they don’t like about going to the grocery store, but web grocers shoot themselves in the foot when they charge higher prices online than in the store, Forrester says. Some, such as Ahold USA, reportedly charge 10% more for the same items online. Yet only 11% of the target group say they are willing to pay more for the convenience of shopping online, while 65% say they’d buy groceries online only if they could pay the same or less than what they’d pay in a store.
By keeping online and offline grocery prices consistent, grocers can reach an additional 27% of the target group, says Rubin. And ultimately, that will means higher sales. "Once they move a customer online they’ll get more money – online grocery shoppers spend nearly $1,600 more per year within the franchisee than offline shoppers do," Rubin says. To further boost online sales within the target audience, he adds, online grocers should waive delivery charges on orders of $100 or more, and position online grocery shopping as the solution to complaints about grocery store shopping, "market to consumers’ pain."