In the grocery shopping experience, few moments are more important than discovering new products. Customers feel genuine delight when they find a new brand of chocolate, explore a specialty foods section, or browse an international cheese counter. They are tempted to add something unique or interesting to their cart—something they might never try if they hadn't stumbled upon it in the store.

However, online grocery shopping lacks this sense of discovery, said Gary Hawkins, CEO of the Center for Advancing Retail and Technology. Online shopping feels more like an exercise in scrolling, searching, and browsing until customers find the items on their list. It's familiar and intuitive—but lacks inspiration.

At the same time, it's also very time-consuming, especially during the first few orders when customers need to familiarize themselves with the platform and build their baskets, noted Scott DeGraeve, COO and co-founder of e-commerce platform Locai Solutions and a former executive at online grocer Peapod.

Hawkins believes grocery retailers need to do a better job of helping online customers find relevant products faster and more easily.

"Some (retailers) are moving toward suggestive selling or trying to find a digital replacement for impulse purchases in physical stores, but the vast majority are not. They're just transactional," Hawkins told Grocery Dive.

Bringing the in-store experience online

Grocery retailers face several obstacles in improving their e-commerce experience. First, the sheer number of SKUs keeps retailers focused on inventory management and recreating the familiar department-based shopping experience.

"I think what we see is that when big companies or even new startups think about grocery e-commerce, they're actually bringing the in-store experience online," Ben McKean, CEO of online grocer Hungryroot, told Grocery Dive. "We believe the best companies... use their online relationship with customers to enhance the experience."

Second is the issue of advertising and monetization, which is often mistaken for personalization. Hawkins said large grocery retailers like Walmart, Albertsons, and Kroger have turned to digital advertising in an attempt to generate revenue and offer personalized product recommendations. But this misses the mark.

"In effect, they've turned their online shopping platforms into ad placement sites and then sold that back to brand manufacturers," Hawkins said. "Now, I'm not saying that's terrible; where I have a problem is that I think retailers should focus on the customer. If I'm a loyal buyer of Diet Coke, I don't want to see a Pepsi ad."

Research shows that consumers buy more when they shop online. But they don't shop online often—in a recent Gallup poll, only 4% of shoppers said they buy groceries online at least once a week. According to consulting firm Brick Meets Click, purchase frequency among online grocery shoppers was flat between 2018 and 2019.

For grocery retailers that don't personalize the online shopping experience, add more services, or make it simpler and more engaging overall, online grocery will drag on profits rather than boost engagement and sales.

"The threat retailers face is constantly changing customer expectations," Hawkins said.

Some grocers seem to be getting the message and updating their digital platforms. The Fresh Market recently updated its ordering website and app, adding filters and search options based on dietary preferences, meal occasions, and more. Wegmans also updated its digital storefront this month, offering more personalized search results and integrated digital coupons—though the launch didn't go as smoothly as the company hoped.

"When big companies or even new startups think about grocery e-commerce, they're actually bringing the in-store experience online."

— Ben McKean, CEO of HungryRoot

In November, ShopRite launched a pilot with CookIt, a service from Locai that provides shoppers with personalized recipe and ingredient recommendations based on items in their cart.

DeGraeve said the service keeps shoppers on ShopRite's e-commerce site longer and offers relevant ideas and products based on what they're already buying.

According to DeGraeve, grocery retailers have been working to improve several metrics in their e-commerce operations: basket size, purchase frequency, and retention. Because CookIt personalizes the shopping trip with one-click convenience, "we see a $20 lift in basket size for those using the CookIt module," he said.

DeGraeve said that while many retailers have recipe pages on their sites, engagement with those pages tends to be low due to a lack of personalization.

"Consumers shop online for convenience, but they also want to be inspired," he said.

Two online grocers built around discovery

Hawkins believes new companies and startups that put digital discovery at their core are a threat to traditional retailers. They're also a potential source of inspiration.

"They're meeting those changing consumer expectations that the world revolves around me," Hawkins said. "They cater to that, and that's powerful."

Thrive Market has been implementing a personalization strategy for six months that offers customers a unique subset of product recommendations. The online natural grocer offers a quiz when customers first visit its site to better understand their food preferences and needs.

Thrive co-founder and CTO Sasha Siddhartha told Grocery Dive that over 85% of people who start the quiz complete it. Using data gathered from shoppers' quizzes, Thrive can offer each person a more personalized shopping experience, helping them discover products that fit their needs.

Siddhartha said the average Thrive user adds 12 to 15 items to their cart across broad categories and a catalog of more than 6,000 products. The customized product mix the grocer presents based on a shopper's profile helps create a "personalized aisle" they can engage with.

"Then, over time, we want to be able to broaden the types of products people buy on the platform," he said.

Guiding customers to new products relevant to them has paid off for Thrive.

"We're seeing double-digit growth in member sign-ups, order placement, and long-term engagement," Siddhartha said.

Hungryroot, a direct-to-consumer grocer based in the U.S., has made personalization central to its operations since launching four years ago. The company started with a few Hungryroot private-label products and has since expanded to include items from Beyond Meat, Banza, and other emerging food brands. The service now offers nearly 100 different food items.

The SKU count is limited, but McKean told Grocery Dive that the curated product mix encourages shoppers to discover products they wouldn't otherwise find.

"It's kind of designed for discovery," McKean said. "It's designed to provide customers with healthy, exciting foods that they'll love, but that they might not actually know to pick."

When shoppers first visit Hungryroot, they share information about what foods they like, any dietary preferences, and their shopping goals. From there, the company sets up weekly deliveries for each customer based on the information provided.

Customers don't have to make any choices themselves, but if someone wants to swap out any product, they can. McKean said most shoppers keep the products Hungryroot recommends.

The approach seems to be working. McKean said the company had $30 million in sales in 2018 and has high customer retention.

How can grocery retailers improve?

While grocery retailers have the data to provide a more discovery-based online shopping platform, Hawkins said few are leveraging it.

"A lot of times, one of the reasons is they haven't thought about it, or they don't know the data is there, or more commonly, their systems can't accommodate all that data," Hawkins said.

But there's still an opportunity for retailers to capitalize on consumer discovery and develop "e-commerce 2.0," according to Hawkins. He said he particularly sees several regional grocers stepping back and assessing what they need to do next.

"They're starting to ask questions, they're starting to create a vision around what's next. I think discoverability is a key part of that," Hawkins said.

DeGraeve said artificial intelligence brings a new level of personalization that can help grocers move from static e-commerce to a dynamic shopping experience. Bill Bishop, co-founder and chief architect of Brick Meets Click, said there's been a "flood of innovation" in AI over the past few years, and grocers are beginning to embrace the technology's ability to predict demand broadly and for individual customers.

However, Hawkins noted that the key isn't just finding expensive tools to improve customers' online shopping experience. Retailers need intelligence and data to go along with the technology, or it won't be effective.

"The world and technology are moving at an incredible pace. New competitors, younger companies are entering the space. Traditional retailers have to move," Hawkins said.