Top 3 Challenges in Relaunching Online Grocery Store: Case Study

Introduction

Going omnichannel doesn’t only include implementing technology and investing in marketing. Incorrect implementation and lack of support from tech providers can continuously cause a grocery business to lose money.
This article explores common challenges retailers face during this process and demonstrates how advanced technologies and strategic implementation can lead to a successful relaunch. Drawing on a detailed case study, we highlight real retail issues, actionable solutions, and transformative outcomes.

Challenge 1: Poor Customer Experience

Many online grocery platforms struggle with creating a seamless customer experience, resulting in high cart abandonment rates. In fact, the global cart abandonment rate for e-commerce, including groceries, is a staggering 69.8%, with complicated checkout processes being a significant contributor. Additionally, studies have shown that 88% of online consumers are unlikely to return to a website after a poor user experience, making customer-centric design a priority.

A notable gap exists in personalized recommendations for grocery shoppers, despite their potential to improve satisfaction. McKinsey's research indicates that 71% of customers expect brands to use their data for personalized interactions, but 76% feel frustrated when this expectation isn’t met. Grocery retailers who fail to address this personalization gap risk losing repeat business to competitors offering tailored solutions.
Poor mobile optimization also remains a critical issue, especially as 77% of global e-commerce traffic originates from mobile devices and 68% of orders are completed from the same type of devices. Platforms that lack responsive design or mobile-friendly features alienate a significant portion of their potential audience, emphasizing the importance of mobile-first strategies.

Challenge 2: Inefficient Warehouse Operations

Inefficiencies in warehouse management can dramatically impact delivery speed and accuracy. Studies reveal that nearly two-thirds of customers expect fast delivery - within 24 hours, and any delays can negatively affect satisfaction. Streamlined warehouse processes, such as automated inventory tracking, are essential to meet these expectations.
Picking errors in warehouses are another major challenge, with over 80% of warehouses worldwide still relying on manual processes, leading to higher error rates (Yango Tech Retail research). Each picking error not only results in additional costs but also diminishes customer trust when incorrect or missing items are delivered.
Capacity constraints during peak demand further strain operations. For example, during the COVID-19 pandemic, online grocery demand surged, exposing significant inefficiencies in many retailers’ warehouse operations. This highlights the need for scalable solutions like AI-driven demand forecasting to handle fluctuations more effectively.

Challenge 3: Low User Retention and Order Frequency

Retaining users in the competitive online grocery market is difficult, with only 30% of first-time customers returning for a second purchase (https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/coping-with-the-big-switch-how-paid-loyalty-programs-can-help-bring-consumers-back-to-your-brand ). This low retention rate stems from factors like lack of loyalty programs, inconsistent service quality, and limited engagement with customers post-purchase.
The frequency of purchases is also a concern, as many online grocery users shop sporadically rather than making regular orders. Research indicates that around 75%of online shoppers are one-time buyers. Building robust loyalty programs can help incentivize repeat purchases and enhance customer lifetime value.
Pricing sensitivity further impacts order frequency. A study found that 83%of online customers compare prices across multiple platforms before making a purchase, leading to lower loyalty unless retailers can demonstrate superior value. Offering subscription discounts or bundling options could help combat this challenge.

Solving Challenges in Online Grocery Store Relaunch: Case Study

Relaunching an online grocery store is a daunting but necessary move for many traditional retailers navigating the complexities of modern e-commerce. One of our omnichannel clients had a large issue in providing the same high-quality service online as offline. Read on to see how we solved their burning issues and what results they achieved.

Poor Customer Experience

A seamless shopping experience is critical, yet many retailers struggle to deliver this due to high rates of missing items and canceled orders. In one case study, 65% of orders had missing items, and 6% were canceled, creating significant dissatisfaction. These issues often stem from disorganized inventory systems, outdated product management processes, and inconsistent updates between online stock and warehouse availability.
Customers expect their orders to be accurate and delivered promptly. When these expectations are unmet, businesses risk losing loyal customers to competitors. For example, frequent stockouts, delayed updates, or errors in product descriptions can lead to frustration, as shoppers may receive incorrect items or find their orders canceled after checkout.

Inefficient Warehouse Operations

Warehouse inefficiencies are a critical bottleneck, with metrics like 1.8 orders per hour (OPH) for preparation and 1.2 OPH for delivery reflecting serious operational delays. Disorganized picking routes, lack of real-time inventory visibility, and manual errors in fulfillment processes contribute to these inefficiencies.
These challenges not only prolong the Click-to-Eat (CTE) time—measured here at over 120 minutes—but also increase costs and waste. Without streamlined processes, warehouses struggle to keep pace with demand, leading to delays and stock mismanagement.

Low User Retention and Order Frequency

Low retention rates and infrequent purchases reflect a failure to create value for customers. Issues such as unreliable delivery windows, inadequate promotions, and poorly managed loyalty programs can drive shoppers away. For instance, 88% of orders containing missing items discourage repeat purchases, highlighting the importance of consistency in customer service.
Shoppers are more likely to return if their experience is hassle-free, reliable, and engaging. Without addressing these key touchpoints, businesses risk stagnation despite investing in new online platforms.

Implemented Solutions and Advanced Technologies

Retailers like the one in our case study successfully transformed their operations by leveraging cutting-edge solutions. The results demonstrate the importance of tailored technology and strategic implementation.

White-Label Store App

The deployment of a White-Label Store App offered customers a user-friendly experience enriched with smart categories and rich content. Features like advanced search capabilities, personalized recommendations, and responsive design addressed customer pain points and improved satisfaction.

Product Information Management (PIM) System

A robust PIM system ensured accurate and comprehensive product details across all channels. This solution enabled real-time updates to inventory levels, streamlined product categorization, and facilitated the introduction of dynamic promotions.

Fulfillment Solution

The combination of a Warehouse Management System (WMS), a Picker App, and intelligent batching algorithms transformed warehouse efficiency. These tools optimized picking routes, reduced errors through barcode verification, and enabled real-time monitoring of order progress.
Smart algorithms also predicted demand and adjusted stock levels accordingly, ensuring popular items were readily available.

Business Intelligence

Analytics tools provided actionable insights into customer behavior, operational inefficiencies, and market trends. Customizable dashboards allowed the retailer to adapt strategies quickly, from promotional pricing to delivery routes, improving both performance and profitability.

Discount Management Tools

A dedicated Discounts Admin feature streamlined promotional campaigns. This tool helped design, implement, and track the effectiveness of discounts, ensuring competitive pricing while maintaining profitability.

More information here: Discount Admin Panel: Discount Creation

Auto-Replenishment Solution

With real-time inventory management and demand forecasting, the auto-replenishment system minimized stockouts and overstocking. This feature aligned stock levels with sales velocity, reducing waste and ensuring optimal availability.

Results

The case study’s results illustrate the profound impact of these technologies and strategies:
Improved Efficiency: Delivery CTE was reduced to 30-60 minutes, while picker OPH increased by 87%, positively affecting courier OPH by 20%.
Higher Sales: Monthly orders rose by 85%, and GMV increased by 40% within two months of relaunch.
Fewer Errors: Missing items dropped by 56%, and canceled orders declined by 36%. Write-offs due to excess stock decreased to 3.5-4%.
Sustainable Growth: Over one year, GMV tripled, showcasing the long-term benefits of these interventions.

Conclusion

Relaunching an online grocery store is an opportunity to address longstanding operational inefficiencies and redefine customer experiences. By embracing advanced technologies like WMS, PIM, and auto-replenishment systems, retailers can build scalable, customer-centric platforms that drive growth.
This case study underscores the importance of strategic partnerships, tailored technology solutions, and a customer-first approach in achieving e-commerce success.