HomeEconomyThree strategic realities for online grocery in the MENA
By Economy Middle East
SHARE
July 14, 2022 1:37 pm

Three strategic realities for online grocery in the MENA

Fixing the economics of online grocery is a priority for quick commerce
Grocery
Happy girl sitting among shopper bags

Management consulting company Bain & Company pinpointed three strategic realities that are expected to have a much bigger influence on the fate of online grocery incumbents and disruptors alike as they race to scale up capacity to meet rising demand.

The report reveals that omnichannel incumbents remain inherently larger than their challengers. But greater scale is not the only advantage of operating both a network of stores and an online grocery service. Omnichannel players also know more about the full breadth of customer needs because they are tapping the biggest market opportunity: the “full basket” shopping mission. It’s hard for quick commerce players to build the same customer intimacy because they are only serving targeted needs from a narrow selection of products.

Additionally, the analysis highlighted that fixing the economics of online grocery is an emerging priority for quick commerce as well. 

Bain & Company explained that today’s fast commerce faces an overall economic challenge, as the pandemic had turbocharged a channel that was structurally less profitable than in-store transactions for most grocers. Incumbent grocers could defend themselves against the threat of massive profit dilution by optimizing their omnichannel network, diversifying revenue streams, and removing unsustainable channel subsidies.

Moreover, the study forecasts that between now and 2025, online grocery incumbents and disruptors will be facing another common challenge. According to the company, they both need to expand fulfillment capacity to handle hundreds of millions of additional orders—and that’s on top of the 2020 lockdown demand peaks. Many grocers are likely to need multiple fulfillment models.