‘Disrupt yourself before someone else disrupts you.’
It’s the kind of maddening advice you read a lot in consultancy white papers on the ‘future of online grocery’ these days.
But there’s method to the madness: we’re entering a crucial new phase in the online grocery revolution.
Whereas the early days of online grocery were focused largely on making offline offerings work online (the websites of the major mults are good examples of this), the most interesting moves are now being made by players operating outside the traditional retail framework.
Think Graze, which proved an impulse buy can work online if you are nimble enough and have great consumer insight; or The Honest Company, the online health & beauty business backed by Hollywood actress Jessica Alba, which is reportedly now heading for an IPO.
They’re the disrupters the consultancy white papers are warning about, and they have one thing in common: they’re using the internet and social media to connect with and sell directly to consumers – no need for traditional retailers to get involved.
Inspired by the success of these upstarts (and possibly taking all those white papers about self-disruption to heart), major brand owners are now dipping their toes in the water too.
As we highlight in a special report on ecommerce this week, manufacturers are increasingly experimenting with direct-to-consumer channels, selling their products direct to the public rather than through their retail partners.
It’s not a huge business yet (certainly not in the UK), but it’s gathering pace. You just have to look at other markets to see the routes ambitious brand owners are going down: in the US, P&G sells products from across its portfolio directly to consumers through pgshop.com; and in Germany, Nestlé (a long-standing direct-to-consumer pioneer with Nespresso) runs consumer platform nestle-marktplatz.de, which sells a wide range of Nestlé products and delivers them straight to shoppers’ homes. That concept has proved so popular Nestlé has even opened a Marktplatz-branded shop in Frankfurt.
Farther afield, in Asia, online grocery markets like China and Korea are already dominated by direct-to-consumer platforms.
Retailers now face a difficult choice: do they trust these ventures won’t gain enough scale to really hurt them, or do they take a gamble and ‘disrupt’ parts of their business today, knowing such moves might cannibalise current sales?
For the most part, the UK mults appear to be sticking to the first option, but there are some signs of option two being explored. Tesco, for example, started trialling a subscriptions service for Gillette razor blades in October, offering savings of up to 20% on blades bought in store.
It’s just called time on that trial, but this is unlikely to be the last time we’ll be hearing about ventures like this.
With new players coming onto the online grocery scene all the time, the pressure to be bold and ‘self-disrupt’ will only grow.