Dive Brief:

• Most grocers that offer online shopping and rely on their stores to fill orders don't have adequate shelf tracking and inventory systems in place, according to a column in Frozen and Refrigerated Foods Buyer magazine that was reprinted on Retail Wire. Double-digit out of stocks are the industry norm, the publication notes, and can severely impact the customer experience.
• Technology that tracks shelf stocks in real time and offer inventory management exist, though they are expensive to implement.
• Walmart lets customers order by store and shows the level of inventory for each product in real time. Other retailers that offer similar technology include The Home Depot, Lowes and Office Depot.

Dive Insight:

Grocers face a dilemma with online ordering and fulfillment these days. They want to implement high-quality ecommerce platforms, but because it’s so difficult to profit off the venture, they’re reluctant to invest deeply.

The result can be savings on the front end and a lackluster customer experience on the back end. Inexact inventory systems, for instance, can lead to out of stocks as stores struggle to keep pace with two demand streams. Without the ability to closely track online and in-store purchases, stores can’t adequately replenish products and predict demand. The problem only compounds as ecommerce sales grow.  

With more and more chains offering home delivery and store pickup, and with overall demand still fairly low, ecommerce platforms have become a cost of doing business for many companies. But retailers need to consider the importance of the customer experience. Many view ecommerce mainly as a way of holding on to existing customers, but out of stocks, aisles crowded with online order pickers and other side effects of online order fulfillment can wear away at these relationships.

Many grocers, rather than handle online ordering and fulfillment themselves, are turning over the keys to third-party services like Instacart and Shipt. It's unclear how closely these services track store inventory. As online shopping demand continues to grow and the store experience becomes increasingly compromised, grocers will likely need to look beyond their aisles to maintain inventory.

Hy-vee, which had its own Aisles Online ecommerce platform, recently announced plans to build an ecommerce fulfillment center in Kansas City. Walmart, meanwhile, just opened a $300 million facility in Florida. In England and throughout Europe, grocers rely on so-called “dark stores” that are optimized for online order fulfillment. These are significant investments, but many retailers and industry experts see them as a necessary step to grow their online business while also keeping their store business stable.