Death By A Thousand Clicks: The Internet is Killing American Groceries

It has happened in other industries from book to retail, in every city across the country, something that would have been unthinkable just few years ago: More shoppers are ditching the local stores and shopping online, particularly shopping for groceries. With brick-and-mortar stores closing at a record pace, the retail crisis is coming to American groceries- leading to a tougher outlook for the already razor-thin grocery industry.

Price Wars

For years, offering the lowest prices has drawn shoppers to be loyal to a particular grocery brand. Price wars thus have become prevalent. A store would cut prices to lure customers, then competitors would follow suit, each cutting a little more than the others, eventually pushing prices down close to the unit cost. The price wars helped consumers with overall lower prices, but led to very thin margins for grocery stores.

Falling Food Prices

Then, there is the threat of grocery prices falling fast. As food prices fall, retailers become more aggressive in trying to sell higher volumes in order to maintain revenue. It becomes a downward spiral.

Tech-savvy Millennials

Complicating the threats is the ever-changing taste and different shopping behavior of Millennials. They are raising the bar on customer expectations and personalized shopping recommendations, with the mind for best prices available and instant gratification. Millennials are doing more research online and shopping for unique health-focused brands before heading to the brick-and-mortar stores, and are going in with willingness to spend a bit more for convenience and instant gratification. Millennials define convenience in terms of service offerings such as meal suggestions, recipes, digital personalization, alert when a favorite item is on-sale, or a notification when a new product based on their diet behavior is introduced.

This seems to be a paradox: Millennials are more informed and price conscious than ever but are willing to spend more on intangible value added services such as click-and-collect and home delivery from the grocers.

It is an intimating time for a lot of the grocery stores. Groceries are everywhere and Amazon is certainly hungry for groceries. Even as the percentage of grocers offering shop online and pick up in store has increased from 15% to 23% from 2015 to 2016, there is still a shocking 77% who do not have such initiative. The significant challenge that is facing these grocers who do not yet implement an online shopping initiative is the costs of a full e-commerce solution that includes pick up in store from any store location and home delivery option. Pathover team, which is made up entirely Millennials, understand the predicaments facing the industry and has designed and developed a solution tailored to overcome these challenges.

Grocery Re-invention: Grocery 360

Pathover’s new service, called Grocery 360 (G-360), provides an end-to-end solution: G-360 builds a product catalog for a grocer, connects that catalog to customer-facing point-of-sale systems, and uses artificial intelligence to generate optimal schedules for delivering products from grocery stores to their customers. By eliminating inefficiencies in the end-to-end delivery process, Pathover only needs to charge a flat fee of $0.99 on every order. There is no set up fee, monthly subscription fee or commissions for the grocers. As a result, grocers pay less to deliver groceries, and customers pay less to receive those items; meanwhile, grocers are insulated from the complexities of building and managing an ecommerce site, manually updating the product catalog, upfront investment in delivery fleet, and payment processing. G-360 provides a simple interface for automatically creating new ecommerce sites and integration with point-of-sale systems, but G-360 is also compatible with preexisting ecommerce frameworks. Thus, if a grocer already has an ecommerce site, then integrating with G-360’s logistics (pick up and delivery) feature is easy.

Online grocery is mission-critical. But selling online is not just about taking orders through a website. To do this well takes time and attention. Stores that succeed are good at selling direct to consumers – building technology from the ground up, integrating teams skilled at navigating online marketing’s ever-shifting terrain and managing the customer experience through fulfillment and delivery. G-360 automates most of these processes and applies artificial intelligence to help grocers manage large numbers of products, recommend up-and-coming products and manage customer post-purchase experience.

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With G-360, even small or niche grocers can reach large online audiences, and compete for the loyalty of consumers who are rapidly shifting their purchasing activity from brick-and-mortar stores to the online realm.

Accuracy, efficiency and sophistication: These are all values that Pathover focuses on to help grocers leverage their e-commerce platform. Click-and-collect and grocery home delivery will continue to grow as consumers demand more convenience and now is the right time for grocers to adapt to online innovation and disruption.

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Pathover helps automate all the manual processes to save time and cost so that any supermarket in the nation can offer its own online grocery shopping and free delivery to its consumers from its own website. Stores maintain their strong store brand while being able to use similar technologies as what Amazon or Walmart have built.

Join the movement at pathover.com or contact us at partnerships@pathover.com

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How Artificial Intelligence Can Save Grocery Stores

The biggest trade show Consumer Electronics Show (CES), which was held from Jan 5th – 8th 2017 in Las Vegas, has become a familiar event for many of the country’s top companies to scout the latest trends, from a connected magnet that can find a lost cat (it’s a joke!) to Intel’s mixed reality Project Alloy that can allow the users to see the world around them while remaining in the virtual space.

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Image 1: Lost Cat Magnet
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Image 2: Chris Bosh using Intel’s Project Alloy

The future of commerce lies in a digitally connected world. Artificial intelligence (AI) as a concept has existed over three decades, but it is only now that data, processing, and storage have become abundant that there has been a resurgence in interest. AI is software that is capable of doing cognitive functions that we associate with human minds, such as learning and problem solving at a speed where human minds simply cannot match.

AI in Grocery

Grocery industry is a $680B market, and like all giants at the pinnacle of their power, it is not clear the grocery stores are sufficiently paranoid about what might come next. As demonstrated in the recent launch of Amazon Go concept store which uses AI technologies like computer vision, voice-recognition, IoT sensor, etc to eliminate the need for cashiers and checkout lines, the surprising fact is that the technologies powering the experiences for this revolutionary change are all typical in any automated situations.

Machines may not be able to understand as well as humans yet, but they certainly illustrate how automation can and will eliminate certain repetitive and manual labor work. The conspicuous absence of comparable functionalities such as ordering online, same-day delivery, customer data analysis makes it hard to believe that majority of grocery stores are not falling behind Amazon Grocery. At the time where traditional in-store grocery sales is declining as more shoppers are moving online, there are two immediate areas of focus any grocery store should use AI for.

AI Focus 1: Turning Customer Data into Personalization, into Revenue

AI’s ability to sift through, remember, and learn from vast amount of information can get the brick-and-mortar grocery stores closer to dealing with the complexity of factors that can impact a consumer shopping behavior, from determining exactly why customers purchase at what time interval to geographical preference for products. Not only will this hugely benefit the grocery stores by encouraging more sales from those shoppers and helping them focus on high-margin products, but it could also be especially valuable for customers who choose to leverage voice-assisted devices to make daily purchases.

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Image 3: Google Home vs Amazon Alexa

Amazon’s voice-based assistant Alexa and its embodiment, the connected speaker Echo, may one day be able bring life voice as the new user interface, as in the ability to create a recipe, order the ingredients from its Amazon Go store, and send request to deliver an order to a customer’s home in two hours, all based on shouted instructions by the user to the wireless speaker. Imagine this: the consumer simply needs to say, “I am going to make an Italian dinner for two. Each meal should not be more than 500 calories. All ingredients need to be organic and gluten-free. I need the groceries by 6:30pm today.

AI Focus 2: Cutting Costs by Automation

One of the most promising applications for AI is to make a welcome impact in customer experiences. Traditional tasks such as finding logistics companies and managing customer services through call centers and emails are expensive. AI not only represents a blank slate for improving and innovating customer shopping experiences, with the right vision, companies can use it to thrust stores on an accelerated maturity path to increase efficiency and thus reduce costs.

Advanced software companies such as Pathover has successfully transformed the last mile delivery by enabling last-mile delivery to become more affordable. But last-mile process consists of more than just the actual delivery. Pathover includes other optimization methods to reduce grocery’s operating costs even further.

Chatbot / Virtual Concierge

Chatbots are virtual, intelligent conversation agents applied to variety of customer engagement scenarios. In short, chatbots are sophisticated computer programs designed to simulate conversation with humans online.

With the AI chatbot from Pathover, consumers could talk to a virtual agent from the stores they order the goods from via traditional SMS texts to inquire about the order status or to re-schedule package delivery without involving a staff member from the grocery store.

Mining Data

Pathover’s core competency lies in its self-learning systems to mine data (customer, sales, product, and travel data), comb through millions of combinations to find the cheapest delivery options and recognize patterns. With advanced machine learning, Pathover technology enables grocery stores to execute on actionable insights based on sales performance at any given time so the online store (and/or physical store) can evolve as fast as consumer preferences.

Stores that use Pathover software can see the last-mile delivery cost to be on average of $0.28 per mile, compared to $1.7 per mile directly from Postmates or $1.95 per mile from Uber without using Pathover. In addition to significant cost savings, stores using Pathover software enjoy at least two times the basket size as the order minimum.

And this is what happens when AI and machine learning come to the grocery store.

AI is not just a curiosity reserved for the large engineering powerhouses like Apple or Google; it is the technology most likely to disrupt the low-margin grocery industry as the need for manual work and human operations will rapidly become obsolete. AI technologies should not be treated as a cost center. It is an investment in the future. With imagination, AI can catapult any store to the frontier of innovation.

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Pathover helps automate all the manual processes to save time and cost so that any supermarket in the nation can offer its own online grocery shopping and free delivery to its consumers from its own website. Stores maintain their strong store brand while being able to use similar technologies as what Amazon or Walmart have built.

Join the movement at pathover.com or contact us at partnerships@pathover.com