Progressive Grocer Independent

FEB 2016

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Progressive Grocer: Why is it so important for independent retailers to go online? Brad Moran: Every retailer is aware of the booming online statistics and predictions, but in my opinion all this tells us is the effect and not the cause. Understanding the underlying cause of the consumer shift to online will not only give retailers a sense of why they need it, but what their entire business strategy needs to look like over the next three years. E-commerce is not a strategy as such, it is purely a channel or a consumer touch point, just like the store itself, their current website, even their circulars, and launching an e-commerce system will do virtually nothing to their business if it doesn't bring value to the customer. For most retailers, value is largely attributed to cost, when in fact there are two other equally important elements that drive value—Convenience and Experience. Consumer behavior has evolved much more quickly than most anticipated and long term, Independents will simply not survive if they try to compete on cost. To remain competitive in a highly commoditized market, Independents need to provide better experiences and better levels of convenience than their competitors. A quality online solution is a good start to this evolution in strategy. PG: What are the biggest barriers to getting a grocery business online? BM: In my opinion, the two biggest issues we see are under-capitalization and an un-educated vendor selection criteria. Many retailers see e-commerce as just "another thing" they have to do and more often than not they do not spend enough, nor A D V E R T O R I A L Talking with… Brad Moran Founder & Chief Digital Offcer, NoQ Commerce focus the right resources on it to make it work. Under-capitalization generates poor results in the initial stages of launch, which then creates further despondency at the management level and leads to even less capitalization long term. The other area where retailers struggle, through no fault of their own, is understanding what a good online solution looks like. What makes it even harder for them is the fact that they have no time, the market is full of feeting start-ups all saying the same things and they have no independent experts or successful established players to turn to. Retailers must refrain from putting the cart before the horse and get the basics right frst. Before worrying about things like big data and personalization, they need to focus on adopting an e-commerce solution that provides the key elements they actually need, such as a responsive website with credit card facilities and a native mobile app, as well as a fulfllment application that provides greater levels of effciency and detailed analytics on costs. PG: What do you think the common mistakes retailers make are? BM: The most common mistake is the failure to focus on making their system proftable. This is largely attributed to fulfllment and the lack of data that they possess about their processes. To say you cannot make money online is totally incorrect. Making proft is quite a simple equation—you charge more than it costs you to fulfll. While that statement seems obvious, there are two issues Independents have currently: a large proportion of them do not have streamlined picking processes and, even the ones doing it well, do not measure the process. At a three percent operating margin, retailers have just 18 minutes to fulfll an average ($100) online order and for every additional $1 online surcharge they buy six minutes of picking time. If their margins and their process cost do not line up, then retailers need to change one, or both. Q A &

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