01
Introduction

This report is the first piece to come out of our Modern Retail Index, a research framework that analyzes and ranks a set of major retailers across e-commerce experience, ease of fulfillment and financial momentum dimensions.

According to the U.S. Department of Commerce, e-commerce sales have grown in the U.S. from $53.2 billion in Q1 2012 to $225.5 billion in Q2 2021. Due to Covid-19, the percentage of e-commerce out of total sales accelerated as consumers were unable to venture to stores, and  retailers saw a major boom in e-commerce sales during the pre-vaccination era of the pandemic. And even as shoppers emerge from quarantines and stay-at-home orders and return to in-store shopping, shopping behavior has dramatically changed. Many customers have shifted many of their purchases from in-store to online, and expectations for a digital experience have increased. 

But e-commerce does not have a catch-all playbook. Consumers shop differently depending on each type of retailer. As a result, consumer behavior and needs dictate the type of e-commerce experience needed for each industry. Retailers must examine the idiosyncrasies of their industry, including how consumers shop in their stores, to determine how to assemble the best digital experience. 

With all of this in mind, Modern Retail has taken a deep look at the top retailers — from big-box stores to pharmacies to grocers — and analyzed the different ways they cater to customers’ online needs. In this Index, we drill down on the core components of every retailer’s business — and ways they’ve modernized digital platforms to stay relevant with customers. 

In a discussion about how brands are catering to new shopping patterns post-pandemic, Eileen Bennett, director of strategic partnerships, Global Pay Later at Paypal, noted that “retailers want payment partners to lean in to bridge that gap between online and in-store in a bigger, more meaningful way to offer flexible and seamless experiences.” But that’s only one example of customers’ evolving needs. Along with pay later technology, retailers have begun adopting a bevy of new digital tools, including contactless pickup, QR codes and touchless payments. With new customer behaviors and technologies, retailers have all vaulted further down the road to a new, more digital future.

Here’s how…

02
Methodology

The Modern Retail Index (MRI) collects data from a list of retailers, buckets and scores the data into dimensions and creates a total index average score as a benchmarking tool. Retailers are given a deviation percentage from the index average to denote above or below average performance. The average changes depending on the list of retailers and the time period of data collection to show a snapshot of the retailer space at specific points.

In essence, we analyze and rank retailers based on point in time data and their performance relative to the retailers in the index. The e-commerce dimension isn’t meant to be the final word in terms of which retailers have the best e-commerce experiences. There are other more difficult to quantify elements that play into digital experience — brand equity, assortment, etc. Instead, by diving deep into each of the sub-dimension the index creates a better sense for which retailers have made forward-looking investments and how they ladder back to their unique retail sectors and business models. And contextualizing that beside the other cohorts we analyze, creates a fuller picture into how the largest retailers in the country approach top-line strategies.

Within the e-commerce dimension of our rubric, retailers are measured on eight different sub-dimensions: site speed, virtual product experience, checkout, reviews, customer service, customer benefits, app and social commerce presence:

  • Site speed measures the retailer’s website’s load time on mobile and desktop devices.
  • Virtual product experience measures the performance and features of product display pages. These features on the product page can include the presence of different imagery and recommended products. 
  • Checkout measures the features within the checkout process and the speed a customer can finish the checkout process and the ease of checkout
  • Reviews measure the presence of a review feature and what features the site reviews have.
  • Customer service measures the presence of digital customer service features.
  • Customer benefits measure the presence of different touch points that require customers to volunteer data such as contact sign ups in exchange for perks or information.
  • App measures the incentives that retailers add to their apps to create new customer touchpoints, such as in-store integrations or customer engagement tools.
  • Social commerce presence measures the retailer’s presence and distribution through external social media sites, such as Instagram and Facebook.

Within the indexed retailers, five immediate cohorts were identified: Big-box, Drug Store, Grocery and Dollar Store/Off-Price. The index includes Amazon in its own cohort due to its unique positioning in the market. Big-box and Amazon came out as the clear above average cohort performers, with drug stores falling in the average range and grocery and dollar/off-price stores falling below average. 

03
Big-box excels across the board

The index defines big-box retailers by their large traditional brick-and-mortar store format. The retailers in this cohort sell across multi-brand and multi-product categories. Most notably for big-box stores, they follow a chain store format with nationwide locations as opposed to more regional locations as seen in other cohorts. The retailers in this cohort included: Best Buy, Ace Hardware, Macy’s, Walmart, Lowes, Target, Kohl’s and Home Depot. 

Despite having access to large-format brick and mortar stores, a large proportion of big-box consumers shop online. For example, Walmart announced in their second quarter 2022 earnings report that its e-commerce increased 103% on a two-year stack. And with Amazon’s growing dominance in e-commerce and along with pandemic-led online adoption, consumers have the expectation of high-touch experiences when shopping online, pushing these retailers to quickly bolster their e-commerce capabilities to retain customers. Compared to other cohorts, big-box stores also serve a higher volume of nationwide customers online which requires them to create a consistent experience. 

As a result of these pressures to adapt, the big-box cohort led the index. Big-box retailers over-indexed in virtual product experience and reviews compared to the other cohorts; big-box’s virtual product score — which looked at the presence of different product imagery on the product display pages — performed 19% higher than the drug store cohort and 119% higher than the grocery cohort. 

Customer behavior for big-box shopping has driven the cohort’s investment into virtual product presentation. For example, all retailers in the cohort invested in creating additional imagery for their product pages: styled flat lays and lifestyle imagery. Styled flat lays and lifestyle imagery allow consumers to see the product in action and in more context. The additional imagery on their product pages helps translate information consumers receive in store by physically seeing and touching the product in store to an online format.

Along with their additional static imagery, the big-box cohort also had the most retailers that use VR capabilities on their sites, which allows consumers to try on the product or see the product in a virtual space. This virtual product experience greatly brings the consumer as close to a physical product as possible in an online format. The cohort has adapted their sites to move in-store product experiences to an online platform.

These retailers also looked better in the index’s review cohort: big-box performed 75% higher than drug store and 688% higher than grocery in this sub-dimension. Similar to virtual product experience, reviews provide additional information about the products. For a customer, reviews provide (ideally) unbiased product information that does not come from the retailer or brand and feels more authentic. Reviews also create social proofing: if an individual sees another do a positive action or hold a certain belief, they are more likely to do the same. With a strong review feature on their websites, the big-box cohort creates an environment for credible social proofing. 

Big-box retailers compared

Best Buy led the cohort (and the index) within the e-commerce dimension. Amongst the big-box cohort, the primary differences in scores resulted from the retailer’s investments in checkout and app development. 

Checkout varied in experience. Retailers that performed well – such as Best Buy, Walmart and Lowes – had fewer clicks during the checkout process and allowed guest checkout which made checkout a quick and seamless experience. Notably, Target had among the shortest number of clicks to checkout. Its requirement for a customer to login to check out, however, which creates additional steps, lost it a top checkout score. With checkout as the final hurdle in a customer journey, shorter checkout time is key to getting the customer to complete their purchase – though there is a tradeoff in terms of user data not gathered from registration and login. 

Best Buy also provided a unique, best-in-class experience through its apps. Best Buy invested in VR capabilities that consumers can access via its app. The VR tool allows consumers to see how certain products, like TVs, would look in their space. This incentives consumers to download the app and provides an additional touch point to help the retailer remain top of mind against competitors. 

Home Depot also stood out in the app sub-category by focusing the app as a separate purpose from its main e-commerce platform. The app allows Home Depot users to look up DIY ideas combined with a VR tool that allows them to see product staging and measurements – and, of course, product recommendations – before starting their projects. Best-in-class apps like these provide a unique experience that extends beyond the primary shopping purpose in strategic ways.

Walmart also stood out as an e-commerce giant despite not performing at the top of the dimension. On Walmart’s Q2 FY22 conference call, Walmart’s president and CEO stated that “our global e-commerce sales are on track to reach $75 billion by the end of the year.” Its estimated e-commerce sales overshadow many of the index’s retailer’s annual sales across all platforms. However, even with high sales numbers, Neil Saunders, managing director of GlobalData, talks about Walmart.com and how “there is still a lot more work to do. The Walmart website can be hard to use, and it also lacks inspiration.” While not at the top of the index and showing room for improvement, Walmart’s movements into the digital space cannot be ignored. 

Key Takeaways

  • Industry Uniqueness: 
    • Consumers have shifted away from in-store and started moving online
    • Consumers tend to be more nationwide 
    • E-commerce giants like Amazon have forced consumers to expect high touch e-commerce capabilities from big-box counterparts
  • Findings:
    • Big-box invests highly in virtual products, so they can move information that the customer would have received by physically seeing and touching the product in store to an online format
    • They’ve adapted their sites to move in-store experiences online and create social proofing with review capabilities
    • Best in class retailers inched past competitors with fast checkout speed and providing unique app experiences
04
Drugstores balance two business models

The drugstore cohort is defined by its unique dual business model: pharmaceutical versus non-prescription products. While other retailers may also include a pharmaceutical branch, retailers in the drugstore cohort specialize in over-the-counter medication in their non-prescription model. The retailers in this cohort include: CVS, Rite Aid and Walgreens.

With their dual business model, drugstores had one of the most interesting cases for retailers in an online environment. Unique to the drugstore cohort, consumers have two different sets of motivations and needs. Consumers looking to purchase their prescription medication require high information due to the complexities of pharmaceutical products. As a result, they typically will take more time during their consumer journey for those seeking new medications. And in the case of refill medication and non-prescription products, consumers are looking for a quick in-and-out experience, often shopping for last-minute necessities (e.g. toothpaste, pain killers, toilet paper). These dual mindsets – and the business models they call for – dictate the investments that the cohort makes to address both sides through their e-commerce experience. 

Facing the challenges of maintaining two businesses, the drugstore trio scored similarly to each other, landing in the middle of the index ranking. Their middle position likely indicates the cohort’s efforts to focus on strengthening online experiences while still relying heavily on in-store experience. Not shockingly, they underperform when compared to big-box brands that have faced more e-commerce disruption, but outperform groceries where retailers remain even more in-store focused. 

While not at the top of the index, drugstores did outperform the big-box cohort in certain sub-dimensions. They performed marginally better in the checkout score and the customer benefits score, 6% and 8% higher than the big-box cohort respectively. For their non-prescription business, rather than attempting to move all capabilities from in-store to online, drug stores focused on transitioning key experiences: namely quick checkout and loyalty programs. 

Fast checkout reflects the drugstore customer’s focus on quickly buying last-minute products. Unlike the big-box or grocery cohorts, drugstores typically carry the same products and brands, resulting in a potentially agnostic approach to choosing a drugstore for any non-pharmacy purpose. Without much differentiation between last-minute utility products like toilet paper, loyalty programs can play a key role in attracting repeat customers. Their loyalty programs drove the cohort’s high customer benefits score. It’s often these programs, then, that allow drugstores to stand out against their competitors and become more than a generic utility play. 

Interestingly, despite offering medical products that potentially require the consumer to do more research, the cohort fell behind in the reviews sub-dimension when compared to big-box. For OTC products, consumers likely look to experts – doctors, medical websites or, increasingly, influencers – for information, indicating that the consumer learns and researches about the product before landing on the retailer’s website. This need for expert information likely reduces the importance of social proofing in the customer journey. 

While this makes sense for medical products, reviews still play a key role for non-medical products. At the cost of neglecting some added benefits for non-medical products, the retailers in this cohort have focused their e-commerce experiences on their primary business: medicine and prescription products. 

Drugstore retailers compared

The drugstores measured in the index all performed reasonably well and showed a focus on moving their business in a digital direction. CVS and Rite Aid scored very evenly, while Walgreens trailed behind in third. 

Within the drugstore trio, Rite Aid had the highest checkout score, putting the lowest number of steps between consumers and check out within the group in addition to featuring a number of additional checkout features such as cross sell. This helped it stand out by focusing heavily on recreating the fast in-and-out experience of an in-store drugstore.

While placing last among the cohort, Walgreens had the most robust review features in the category. Both Walgreens and CVS pull in reviews from external sources (e.g. pulling in reviews for a Maybelline lipstick from Maybelline.com) to increase product credibility on their site, but Walgreens outscored CVS by allowing additional features in its reviews, such as imagery. As drug stores continue to increase online capabilities, adding features like this that bolster their non-medication products could be key to attracting more customers to their digital platforms for general use.

There were clear differences in how the cohort approached their prescription model than in the past. For prescriptions, consumers have typically relied on going in-store to their nearest pharmacy, but as digital grows brands like Capsule have popped up to provide online prescription services and delivery. Other entrants into the space, such as Amazon’s acquisition of Pillpack, have also given pharmacies a run for their money and an added incentive to focus on digital.

As a result of this disruption, legacy drugstores have started shifting prescription services to allow users to handle prescriptions online and moving the in-store capabilities online as much as possible. Arielle Trzcinski, senior analyst at Forrester covering digital health, told Modern Retail that “pharmacies like CVS, Walgreens, Costco and Walmart have done a better job in recent years of allowing customers to more easily do all of the steps of ordering medication online.” 

Although the cohort scored low on apps, the retailers each focused their apps on pharmaceutical abilities that allow consumers to schedule delivery times and refills. Beside medication delivery, their apps also had Q&A features that allowed customers to interact with a medical profession to learn more about their prescription, helping customers get answers for products that do not rely on social proofing and reviews. These features are likely to continue to appear in other spaces as digital competition continues to increase.

Key Takeaways

  • Industry Uniqueness: 
    • Drug Stores have two business models – standard shopping and prescriptions/pharmaceuticals
    • Consumers in standard shopping look for quick in-and-out last minute necessity products
    • Consumers in prescriptions require more information due to the complexities of prescription medicine
  • Findings:
    • Drug stores performed well in checkout and customer benefits scores: Rather than move all capabilities from instore to online for standard shopping, drug stores focused on moving key experiences online including quick checkout and loyalty programs 
    • The cohort fell behind in reviews, which can cost them for non-medical products.
    • For prescriptions, legacy drugstores have started shifting prescription services online. In particular with apps that focus on pharmaceutical abilities that allow consumers to schedule delivery times and refills.
05
Grocery’s online business surges, but digital capabilities lag

The grocery cohort had the clearest definition among all cohorts: large scale retailers that specialize in selling produce and other food products. While other big-box retailers, like Walmart and Target, can also sell food products, it is not their primary focus. The grocery cohort included H.E. Butt Grocery (H.E.B.), Wakefern (Shoprite), Kroger, Albertsons, Costco, Aldi, Meijer, Ahold Delhaize USA (Stop and Shop) and Publix. 

Unlike other cohorts, grocery has historically struggled with moving online, and the cohort remained mostly based in brick and mortar: a group of grocery companies had a meteoric rise in the late 90’s but failed during the dot-com crash, resulting in a slow down of grocery stores going online. This tradition of in-store shopping has created difficulties as customers are accustomed to buying groceries in person at their local grocery store at planned times. Along with customer shopping habits, the product itself, fresh produce and other perishable food, creates a difficult barrier of entry for e-commerce options: Fresh produce’s shelf life makes shipping difficult.

Consumer behavior for the grocery cohort only saw incremental increases pre-pandemic, until Covid finally put heavy restrictions on in-person shopping. The pandemic accelerated the cohort’s shift to e-commerce as customers started relying on online purchases: digital orders accounted for around 3% of total grocery sales pre-pandemic and that has increased to double digits. Consumer interest for online groceries has increased, as seen in the increase in Google search volume for digital grocery service terms. 

But even with the seismic shifts due to the pandemic, the grocery cohort still struggles with e-commerce. Because of grocery retailers pre-pandemic (and enduring) catering to local customers, most do not ship nationwide, instead focusing on other fulfillment options, primarily curbside pick-up or local delivery. Some grocery retailers rely on third-party platforms such as Instacart to power their e-commerce operations, resulting in barebone websites that focus heavily on store locators. Companies within the cohort varied in their approaches between creating their own shoppable websites and partnering with a third-party website for fulfillment, creating a mixed bag of varied online capabilities.

This high degree of variation means that, as a whole, the cohort did not have any particular sub-dimension in which it excelled, generally performing below average. While the cohort performed below average in the Index, the category will continue to grow with demand. Despite different investments in their websites, the cohort collectively did not invest in on-site review functionality. Understandably, this cohort did not invest in on-site reviews since product quality of fresh produce and other food products can vary greatly. Currently they do not have a standardized e-commerce playbook and the cohort will continue to see more experimentation of moving their model online.

Grocery retailers compared

The cohort’s below average performance relative to the total index should not overshadow its top two performers, H.E. Butt Grocery and Shoprite. These two grocers led the pack, with each having strong results in sub-dimensions within the cohort. 

HEB was one of the few grocery retailers that dabbled in social commerce and included a focus on social media, selling on both Facebook and Instagram, an investment more commonly seen in the big-box cohort given their wider distribution networks – HEB primarily services the Texas region in the U.S. Its social feed on those platforms featured multiple shoppable posts. And while the posts were accessible to a global audience, several specifically feature Texas or the culture around the state which resonate, keeping their efforts in social commerce locally grounded. 

The other leader in the cohort, Shoprite, stood out with its investment in its app and recipe hub. The app features in-store integrations (such as barcode scanning), but also features additional content particularly focused on recipes. These recipes are also housed on their site in a robust hub featured on the site’s main category banner. The recipe hub on Shoprite resembles a product category page, with search functionality, filters, sort by time, and quick add-to-bag buttons that make the recipes shoppable. 

Similarly, Kroger partnered with Whisk, an app focused on recipes and meal planning, to make Whisk recipes shoppable on Kroger’s website. Similar to Hope Depot’s DIY tutorial approach in its app, pushing consumers toward adjacent activities that its products can help them complete seems like a common element in many e-commerce playbooks. 

As grocers continue to expand into e-commerce, the cohort will continue to experiment with different digital tools – but they still have a long way to go.

Key Takeaways

  • Industry Uniqueness: 
    • Traditionally in-store focused
    • Consumers are more locally based
    • Covid heavily shifted the way consumers grocery shop
    • Shipping is difficult for fresh produce
  • Findings:
    • Instead of casting a wide net Grocery stores focus on pick up capabilities or local delivery. 
    • The grocery cohort also underperformed for on-site review functionality. Understandably this cohort did not invest in on-site reviews since product quality of fresh produce and other food products can vary greatly.
    • Some grocery retailers relied on third-party platforms such as Instacart to power their e-commerce which resulted in barebones websites that focused heavily on store locator
    • The cohort does not have a standardized e-commerce playbook and the cohort will continue to see more experimentation of moving their model online.
06
Dollar and off-price stores are still on the ground floor of e-commerce

Dollar and off-price stores are defined in the Index as retailers that purchased off-season, discontinued or liquidated products at a discounted rate and sold to consumers at a lower than retail price. The cohorts included: TJX companies Dollar General, Dollar Tree and Ross Stores. 

Due to the business model of the cohorts, the retailers involved do not have a consistent product assortment. The model also creates a unique scenario in which margins can look drastically different than other cohorts, especially for dollar stores. While this creates difficulties and limitations, it also creates a unique shopping behavior for consumers. 

With inconsistent product assortment at a cheap price, consumers go in with a “treasure hunt” mentality. Customers want to wander the aisles looking for a unique find or a product at an affordable price, or a “steal”. Neil Saunders, managing director of data analytics firm GlobalData, explained that “it is much harder to replicate [a treasure hunt] online, as it is nowhere near as easy to browse through loads of products and pick out interesting things.” 

This was reflected in the cohort’s performance, which saw fluctuating scores at the lower end of the Index, with some landing in the average range while others scored below average. This inconsistent spread results from the dramatic diversity of retailers’ approaches to e-commerce. While TJ Maxx has shown significant investments in e-commerce, Ross has completely forgone any online shopping capabilities and doubled down on in-store. And with dollar stores’ unique position due to their low prices and correspondingly low product margins, they have less incentive to invest in online shopping where shipping costs can outweigh revenue obtained from each product sold. 

While other retailers in the cohort fell behind, TJ Maxx stood out and earned itself a position in the middle of the ranking. The retailer invested particularly in three areas: checkout, virtual product, and app. Besides having a quick checkout process, it was the only retailer to feature product cross-selling and recommendations at checkout, commonly used to increase average order value. Its virtual product score had good performance by featuring different product imagery to assist in a customer’s “treasure hunt” journey. TJ Maxx’s app also supports the “treasure hunt” mentality by offering a tool called “Maxx Lens” where a customer can take a picture of an object and the app will show items of a similar style. While the retailer fell behind compared to other cohorts, it stood out in its cohort by taking the plunge into e-commerce.

As a whole, the group has not figured out what e-commerce means to them yet, and only a few have visibly tested online platforms.

Key Takeaways

  • Industry Uniqueness: 
    • The cohort does not have a consistent product assortment
    • Dollar stores have a unique structure due to their product margins, with low priced products at a dollar
    • Customers shop in these retailers with a “Treasure Hunt” mentality
  • Findings:
    • The cohort is in flux. As a cohort, this group has not figured out what e-commerce means to them yet.
    • Investments in e-commerce has varied across the board
07
Amazon’s internal ecosystem makes up for its weaker points

The Modern Retail Index explains how well first-party retailers create digital experiences – the list of retailers does include third-party marketplace retailers, such as Walmart with Walmart Marketplace and Target with Target+, but they represent a minority in the list. As a result, Amazon was confined to a separate category and landed below big-box retailers due to some of the tradeoffs that come from focusing on a third party marketplace.

With Amazon, unlike other retailer-brand relationships considered in this report, product sellers have to self promote and pay for their own marketing rather than falling back on the retailer as in the big-box cohort. While Walmart, Target, Kroger, and other retailers also feature advertising networks and platforms, they are not as prominent as Amazon’s and the retailers still pay for marketing in their relationship with the brands. Also unique to Amazon is the retailer’s capabilities to create e-commerce tools and programs or outright acquire companies who already have the technology rather than partner with tech providers as seen in other cohorts. 

The resulting unique internal ecosystem that the e-commerce giant has created has prompted some customer behavior and expectations that influences the other cohorts. In particular, Amazon’s one click to checkout has prompted other retailers to reduce checkout time. And with its extensive product categories and expansion into other industries such as grocery and pharmaceuticals, customers expect Amazon to meet the majority of their needs. Amazon’s impact on this Index is through constantly heightening the arms race. 

While Amazon didn’t top the charts across the board, there were some clear bright spots. Its app had the highest score amongst all retailers studied. However, the retailer fell behind in other omni-channel touchpoints: Amazon had the lowest score for customer benefits and social commerce. Both sub-dimensions point to control – especially around marketing – that Amazon abdicates to the seller. 

The customer benefits sub-dimension focuses on loyalty plans, which third-party marketplaces traditionally struggle with due to not having a centralized seller system. And social commerce would require Amazon to partner with external platforms like Facebook or Instagram to set up shoppable pages to promote their products. But, due to the third-party marketplace structure, sellers are in the position to make these marketing connections on their own.

Despite low social commerce performance, Amazon has created internal tools that use a similar model as social commerce through its affiliate program, Amazon Live and its social media “clone”, Amazon Posts. 

Amazon’s affiliate program incentivizes influencers to add an Amazon storefront URL to their posts to drive viewers to Amazon to shop. The affiliate program in particular bypasses any cuts that a social media platform takes when a product sells through their social commerce platform. 

Amazon’s Live feature allows brands and influencers to host a live stream to sell products on the Amazon platform. Launched in 2019, Amazon Live competes directly with other live streaming features social media platforms host, such as Instagram, Facebook, and TikTok. William Gasner, a co-founder of influencer marketing agency Stack Influence, who has worked with influencers on Amazon Live says that “Video content has been shown to convert three times higher than digital display impressions so naturally this space is growing at an exponential rate.” With the growing trend of live streams, Amazon Live will likely grow as a space to launch new products. 

Meanwhile, Amazon Posts also has an experience similar to Instagram. Clark Kleinman, a senior brand partner at the e-commerce agency Pattern, described how Amazon Posts “feature products against a ‘beautiful background’… Posts is largely available inside the Amazon app, though some social posts also appear in browsers. Mostly, they appear at the bottom of a product page, under a category called ‘Related Posts.’” Also featured on the product pages under the description, Amazon has also started adding influencer-created videos on product pages. Instead of going to YouTube or Instagram, the social commerce tactics allow Amazon to keep customers on its site and maintain control over their purchase journey.

All of these programs have yet to be widely adopted but underscore that Amazon is taking social commerce seriously. Amazon’s ability to create its own ecosystem more than makes up for its lack of external partnerships. By creating their own features and tools, Amazon can control the customer’s purchase journey and extend the amount of time a user browses through the website. As Amazon grows, the platform will continue to build out competing features that retailers rely on 3rd parties for. 

Key Takeaways

  • Industry Uniqueness: 
    • 3P Marketplace where the sellers have to self promote for marketing rather than relying on the retailer for marketing like in the case of the big-box cohort
    • Amazon has more capabilities for creating ecommerce tools than other cohorts
    • Customers expect instant gratification due to the Amazon Prime shipping program which has influenced other cohorts
    • Customers view Amazon as a one size fits all with its expansive services and categories
  • Findings:
    • Amazon excels at creating an internal ecosystem for its site, but fell behind in other omni channel touchpoints
    • Amazon’s app had the highest score amongst all retailers indicating its ability to create compelling and unique ecosystems.
    • On the opposite end of the spectrum, Amazon had the lowest score for customer benefits and social commerce
08
Conclusion

Customers have a growing number of universal expectations for e-commerce experiences: fast delivery, smooth site experience and a low number of clicks to checkout, among others. However, different retailers respond to – or ignore – those expectations in ways rooted in their core strengths and purpose. Each cohort is home to unique consumer behaviors and product assortments that shape the specific way they shape their online platform. 

Big-box is the most aligned with the standard e-commerce expectations. Customers expect big-box retailers to ship nationwide and have high quality online touchpoints similar to Amazon, their biggest disruptor in the space. This is a good cohort to watch to see where consumer e-commerce expectations are headed and how larger retailers are reacting to meet them.

Drugstore retailers balance a dual business model: non-prescription and prescription. Their non-prescription e-commerce playbook adheres to many big-box tactics, but the needs of their prescription business to create synergies has prioritized different online tools for them. With disruption from new DTC competitors into the pharmaceutical industry, drug stores have shifted much more focus into creating an internal ecosystem, seen through the cohort’s app development focusing on medication delivery and Q&A. The drug store cohort will likely continue to evolve the e-commerce aspect of their prescription business as more competitors, like Amazon, enter the market.

Grocery store customers have traditionally not held the cohort to e-commerce expectations – until the pandemic shifted behaviors from in-store to online. With customers now accustomed to the new demands of online shopping and perishable products that require specialized shipping methods – grocery retailers are between a rock and a hard place. As grocers build out their online infrastructure, they have had to make the decision to either build the infrastructure in-house or partner with third-parties to fill in the gaps. Cost and margins will play the key role in determining future e-commerce investments.

Dollar and off-price stores have the most uncertain path ahead in their e-commerce journey. With retailers like TJX with a healthy online presence and Ross doubling down as an in-store-only experience, as a cohort, this group has not figured out what e-commerce means to them yet. The future for e-commerce for this segment remains to be seen – and some low-margin retailers may choose not to move online at all.

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