Monthly E-Commerce News Brief – April 2021

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Albertsons Partners with Google to Enhance Omnichannel Experience

As we enter the post-pandemic world, consumers continue to look for ways to make shopping easier and more convenient. Albertsons Cos. has partnered with Google to create hyper-local interaction with shoppers that focuses on a stronger connection between them and the stores in their communities. Customers are discovering new, dynamic shopping journeys enabled through the innovation both companies have prioritized. Their efforts are making a big impact: Albertsons Cos. reported its fourth consecutive quarter of digital growth over 200% on April 26. The retailer’s total sales and other revenue reached $15.8 billion during the fourth quarter compared to $15.4 billion the prior year.

Regardless of how and when shoppers want to engage, Albertsons and Google have enabled the integration of Google Local Actions (Maps) and Google Pay, cutting-edge technologies like retail AI and vision AI, AI powered conversational commerce and predictive grocery list building via Google Cloud. The result is a better experience for shoppers who are ordering online and picking up groceries or having them delivered from Albertsons stores directly within mobile search results powered by Google Maps.

Additionally, the companies are exploring natural-language processing (NLP) technology to help in-store operations and enable more informed decision-making. In fiscal 2020 the company invested $1.63 billion in capital expenditures, which included digital and productivity initiatives and the completion of 409 store remodels. These initiatives are paying off now and the continued focus on the shopper experience should support long-term growth.

Our Take on the Opportunities

  • Albertsons continues to invest in online shopping and technology to win in the industry. Expanding investment in automated micro-fulfillment technology improves the overall economics of Albertsons’ e-commerce business.
  • Manufacturers will be expected to invest in these new, exclusive resources to build upon their Performance Media plans including search, targeted media and loyalty efforts.
  • We can expect Albertsons to continue to leverage its store data for manufacturers to better reach their target consumer and define how manufacturers will play in the NLP space.

Sources: “Albertsons, Google Team to Reimagine Grocery Shopping,” Progressive
Grocer and “Why Online Grocery Shippers Love Albertsons,” Progressive Grocer

Amazon Surpasses 10% of U.S. Digital Ad Market Share

Amazon’s U.S. advertising revenue in 2020 grew to $15.73 billion, up 52.5% from 2019, according to a new report from research firm eMarketer. Inc.’s share of the U.S. digital ad market grew to 10.3% last year from 7.8% in 2019. The company’s U.S. digital ad share is still small relative to Google’s and Facebook’s, which accounted for 28.9% and 25.2% of the business, respectively, in 2020. But the report predicts that Amazon will continue to inch up on the so-called duopoly of Google and Facebook.

As Amazon’s reach continues to increase, brands will continue to invest there. It is expected to make up 10.7% of the U.S. digital ad market this year, growing to nearly 12.8% in 2023, eMarketer predicts, noting that much of this growth will cut into Google’s market share, while Facebook’s share will remain fairly flat.

Our Take on the Opportunities

  • Q1 2021 shows signs of some consumer shopping trends returning to normal, but for
    many categories the shift to online shopping has been cemented. The acceleration of e-commerce continues in the foreseeable future as more shoppers visit Amazon.
  • With advertisers trying to reach shoppers who shopped online during the pandemic, more advertising dollars are being spent to reach this growing audience. This means spend on Amazon Search Advertising, which includes Sponsored Products, Sponsored Brands and Sponsored Display, plus Amazon Display Advertising is growing tremendously and brands need to invest where their consumers are.
  • Advertisers are not increasing their spend in response to higher conversion costs. Instead, they’re responding by shifting their investment to leverage the increased volume of e-commerce traffic.
  • Amazon Publisher Services recently acquired Sizmek, looking to invest heavily to advance programmatic capabilities off-Amazon and reach users across the web.

Sources: Wall Street Journal and eMarketer

Kroger’s New Ocado Centers Are Powerful. But Can They Deliver?

To no surprise, the COVID-19 pandemic was an extreme driver of growth in Kroger’s e-commerce platforms last year. Kroger’s digital sales more than doubled in 2020 to $10 billion, with delivery sales climbing 150%. Kroger’s new Ocado partnership is set to take Kroger’s e-commerce capabilities to the next level by supporting physical distribution of online orders.

To date, Kroger has committed to building 11 customer fulfillment centers (CFCs) with Ocado – with the first two already open in Monroe, Ohio and Groveland, Florida. These warehouses use robotic technology to pick and select customers’ orders, making the process much more efficient. Once built, Kroger delivery drivers will deliver to customers from the warehouse or to a store for pickup. These warehouses have a 90-mile delivery radius and will bring Kroger into markets like Florida, where there’s no brick-and-mortar presence today. Kroger’s largest challenge will be same-day delivery in new markets. Some are questioning if the retailer will continue to utilize third-party services such as Instacart and Shipt.

Our Take on the Opportunities

  • Kroger continues to invest in differentiating services, such as Ocado, that will allow it to continue to grow if it can win new shoppers based on these new offerings.
  • The Ocado partnership will continue to elevate the pickup and delivery platforms as Kroger enters new markets, making this retailer even more important for brands.
  • With Kroger’s 1P data from its loyalty card, we’ll gain insights into shoppers new to the market with Ocado. Targeting abilities within these markets will open up new opportunities for brands to connect with key shopper targets.

Source: Grocery Dive

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