The retail migration to ecommerce seems to be starting with the lowest penetration items.

The retail migration to ecommerce seems to be starting with the lowest penetration items.

This chart makes complete sense to me.

Ecommerce provides the highest consumer value when the item you are looking for is hard to find (in geek speak, we would say it has a relatively low purchase incidence among the general population).  A compelling consumer value proposition would be most difficult for ecommerce in retail verticals where the purchase incidence is very high and therefore the items are very reliably found in nearby stores (in plain speak – everyone buys food, most people buy shampoo and toothpaste, so your neighborhood market or drug store is likely to carry what you need).

In the case of high purchase incidence product categories (food, toothpaste, toilet paper, shampoo) the cost of having to wait for the to be delivered vs. the benefit of getting exactly what you want  is higher than the cost of stopping in the store on your way home from work and having it within a few hours or a day of realizing you needed to buy more. You are also less interested in these items and are probably going to spend less time researching/browsing online than in other categories which have migrated to ecommerce faster.

Other than logistic challenges, this is why Grocery and Drug have been slow slow to migrate to ecommerce.

All ecommerce companies have to do is continuously improve that consumer value proposition to capture an increasing share of increasingly large retail sales…and they will.

Susan O’Neal Gear has over 20 years of experience at the intersection of consumers, marketing and technology. Passionate about all aspects of a consumer’s relationship with brands and retailers, we’re spending the next year looking for new, groundbreaking thought leadership  – if not disruptive solutions – with the potential to redefine the parameters of consumer loyalty. If you also want to see some game changing happen -then follow Upstream Insight, contribute your voice, share this post…do something!