What is the future of shopping search in food and essentials categories?
In the previous article, I defined “product search” and talked about the players in the market — platform companies (like Google, Amazon A9), service providers and retailers (Instacart, Doordash, Walmart, Target, Wayfair) and emerging players and social media companies (Instacart, Shop). I shared a point of view on who will lead this market depending on the shopping category. In this article, I will talk about product search in the “food and household essentials” category. Consumers shop for these items regularly, the needs are often urgent, and household spends in this category are less impacted (relatively) by downward trends in the economy.
I define “food and household essentials” as anything that consumers need to manage their everyday food and household needs for themselves and their families. These items are often repeat purchases and lower in consideration w.r.t to both time and cost. One can find these items in a typical Walmart, Target, Costco or Whole Foods store. It includes meals and snacks (fresh food, dairy, pantry, etc.), consumables (paper towels, wipes, baby and pet care, etc.), and health & wellness products (personal care, pharmacy, etc.).
Understanding consumer needs and problems
Even though consumer needs will vary by age, geography and income, there are several common traits to shopping in this category. Consumers often shop the same store(s) and have brand preferences. When searching online, consumers want to see relevant and matching products that are in-stock and that they can get as soon as they want it. I would rank this as the number one consumer need from product search engines and call it fundamentals that websites and search engines need to solve (includes products relevance, availability and fast fulfillment). Consumers also need help making decisions when they are exploring new types of products. This is an important problem, particularly, when consumers do not know a category well. Google and Amazon have set a high bar in this area through investments in search engine technology, and decision-making tools like consumer reviews and product markers like Amazon’s Choice.
Diving into areas of opportunity and growth
Even though the leading search engines offer relevant products for consumer queries, the products are often not personalized for the individual or the local area. In addition, in-stock information is often incorrect or not shown to consumers. Both of these areas offer great opportunities for companies to take their search engines to the next level.
Personalization can be extremely powerful in the “food and household essentials” category as consumers have preferences for brands or types of products and they are purchasing these often every week. Learning consumer preferences can be easier with more consumer data available. Investment in this area can offer a good return once the fundamentals of search have been fixed. Research shows consumers are more likely to use platforms and services that can personalize their experience. Even if building a search engine from scratch, personalization should be a consideration from day one. Keeping an experimentation mindset is key to success in this area. In addition, it is important to know and respect consumer data and privacy laws when developing these solutions.
Item availability on Google, Amazon, Instacart and Walmart has challenges. Often, the item one needs is out-of-stock or the in-stock information is incorrect. Alternatives and substitutes do not always make sense. Given the nature of this category — fast moving items, increasing multi-channel experiences (shop in store, shop on our site, shop on Instacart), and varying consumer preferences, the problems are not easy to solve. In addition, there are many technical challenges in managing inventory systems and keeping information up to date. Investment in this area can offer a good return if companies can offer accurate information, improve in-stock rates, and offer alternate products that make sense to the consumer and the category. Google shows in-stock information for products across a variety of stores, but it is unclear how accurate that information is.
Exploring new areas to increase consumer delight
Investing in search fundamentals, decision making tools, and personalization are critical foundations for a platform or retail search engine to thrive. However, the next generation of experiences will help enable discovery of new brands and items, help consumers solve problems, and recreate the fun and human elements of being in a store.
It is not easy for consumers to discover new brands, categories and seasonal items when shopping or searching online. Consumers might be interested in finding seasonal fruit and veggies, new types of dairy options, or trending household products. Helping consumers discover such options, while keeping their preferences in mind, can offer an increase in engagement and lifetime value. Keys to success would include partnerships between retail merchants and technology teams, experimentation and iteration, and investment in machine learning tools to scale such experiences.
Solving problems and answering questions via search is an area that has always been of interest to leading companies and AI experts. Imagine someone looking to cook “linguine and pesto” tonight or looking for “tools and items to disinfect their house”. In either case, the user might need an expert recommended list of tasks or activities along with items they need to complete those tasks. Google offers highly relevant results, pages and often answers to consumer questions like these and leads the market in this area through investments in machine learning and AI technologies. Retailers, including Amazon and Instacart, continue to use human curation and technology to offer such relevant meaningful experiences to consumers but not on demand yet (like Google does). Companies that will invest in this area could develop a competitive edge and grab consumer mindshare from other players.
Another area of opportunity is making online shopping fun or more human. Think of it as replicating the in-store shopping experience so consumers can interact with the store, browse and discover, enjoy a sample, or even connect with a store employee or another community member. With the pandemic still preventing many from visiting stores in person, this area has received more attention lately. However, real solutions might take years to come. While gaming has brought VR to our homes, Google maps has brought AR to navigation and Zoom and the likes are experimenting with replicating office experiences online, recreating in-store shopping online will take time.
The battle continues
“Food and household essentials” will continue to a battleground category due to the size of the opportunity and potential for growth. Already, Doordash has foraying into new areas in this category expanding beyond food delivery to convenience and grocery. Instacart recently raised another round to improve customer experience and support enterprise and ads businesses.
Players that will invest in improving availability and fulfillment challenges, personalizing search and helping consumers discover will lead the market. Answering customers questions and needs with products and solutions, and recreating in-store experiences online, will be icing on the cake.
