The food industry is one of the UK’s largest sectors and yet it is the least disrupted by technology. However, going digital is increasingly presenting new opportunities for growth as food retailers engage with customers through online and offline channels, and provide valuable convenience. Advances in technology are making it possible to have the perfect multichannel platform with companies using data in new, innovative ways to increase engagement and drive their business. As a result, the online food market will be the fastest-growing online market segment in the years to come.

The overall food market in the UK was estimated at £174.5 billion in the year to April 2014 with online food retail making up £7.7 billion of this. Though the proportion of total online food sales may be hovering at the four percent mark it is set to change rapidly. The online spend in food stores increased by almost 15 percent year-on-year in January 2015, the largest growth in this type since April 2014.

Graze.com's CEO Anthony Fletcher says the firm crunches data to come up with new products within 24 hours. Image credit: Graze.com

This trend will become only more pronounced in the coming years as advances in technology make it easier to save time and ensure convenience. Mobile technology has already made it much easier and quicker to browse and complete purchases online and on the move. Clumsy phone screens that triggered accidental purchases or slowed down transactions are now a thing of the past, as improving technology has made it possible to translate the efficiency and clarity of physical supermarket shopping into the online retail space.

How to conquer the online food market

In order to fully leverage the opportunities of the online food market there needs to be a clearly defined strategy around building your brand, as well as listening to and understanding your customers. At graze.com we have developed our brand through direct interaction with consumers building a strong identity despite having no storefront or traditional retail presence. Our in-house developers and engineers have designed proprietary technology that analyses data collected from customers and responds to their needs and preferences by continuously creating new and innovative snacks.

Our unique taste algorithm DARWIN (Decision Algorithm Rating What Ingredient’s Next), tailors each grazer’s box and uses customer behaviour and feedback to determine the combination, type and portion of snacks. The algorithm is capable of capturing abstract clusters of data to analyse an individual’s dietary tastes and requirements, such as lactose intolerance, by looking at their behaviour when selecting product categories.

We receive over 15,000 product ratings an hour from our customers and use these to develop a new product in 24 hours. This allows us to enhance our customer experience by taking risks and surprising our customers with a product selection that they might like but not necessarily choose. This ability to respond quickly and engage with customers is one of the crucial benefits of having an online channel. However, even with technological advances and access to a sea of data, not all FMCG companies are able to develop a product so rapidly. In fact, few FMCG companies are embracing technology to enhance their customer engagement or create more flexible supply chains.

Having this direct relationship with consumers and being able to respond to them quickly is the key to fully benefit from the opportunities presented by technology. At graze we use the data we obtain from our customers to improve our products and services and our approach is more effective than data collected by larger retailers. For instance, we are able to record all customer website interactions, viewing and responding to product ratings and comments in real time. We know our customers and we listen to them.

Our vast bank of customer data analytics has helped us to produce products which are not available from traditional retailers and allow us to deliver new products fast. This unique model is how graze.com has been able to launch and redevelop our products for the US, and localise 40 percent of our range to the US consumer within seven months of our launch. Our unique technological approach allows us to deliver a highly differentiated product and meet new consumer needs as they occur.

To face the logistic challenges of a large country like the US, again we turned to technology and developed a self-learning logistics solution that we call ‘the brain’. This system crunches millions of historical and live data points and helps us determine the best and most efficient route to customers utilising FedEx and the US Postal Service.

The future of the online food market

The future of the online food market is set to change as tech-savvy consumers who already embrace multichannel are likely to try online grocery shopping, if they find a retailer that meets their needs. These customers are often busy professionals in urban centres for whom saving time and convenience is a key priority. In addition, online food shopping will have a strong appeal for families to get better deals and help with their busy schedules. To drive this growth, online retailers need to provide mobile solutions that are easy to use.

In the US, many of the large retail chains already offer a variety of apps that allow customers to find special offers, compare prices and order online. The online food retailers need to come up with similar ideas to connect with their customers and learn more about their needs or risk missing the opportunity to engage and earn their customers’ trust.

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