Aldi’s e-commerce challenge

Despite its successes, some experts believe Aldi’s BB #:116756 model does not lend itself well to online sales, representing a potential weakness for the chain.

“No one is really making money in ecommerce in food right now, and Aldi is a no-frills, low-cost environment,” said Jim Hertel, senior vice president at Inmar Analytics in Winston-Salem, NC.

If the chain does take the plunge, he believes it will be approached very cautiously, “because it will be hard to deliver value at a very low cost in this venue.”

That said, the company has entered the online space by partnering with Instacart in four metro areas: Atlanta, Chicago, Dallas, and Los Angeles.

“Instacart has done well in our research in terms of shopper satisfaction, with the various touchpoints of the online shopping experience,” said Brian Numainville, principal at Retail Feedback Group, who believes the partnership will provide a positive experience for Aldi customers.

“In a cross-shopping environment, a lot of what Aldi does well involves convincing more shoppers to move a portion of their full shop to its cheaper alternative,” said Simon Johnstone, director of retail insights at Kantar Consulting, Boston, MA.

“Where it seemingly ‘fails’ is convincing shoppers to switch a higher proportion of their spending to Aldi. As a result, the chain has recognized it cannot grow shopper acceptance, penetration, and basket size by solely focusing on price alone. Aldi has been shifting its marketing message from strength in simplicity to strength in surprise.”

As a result, Aldi is trying to build more awareness of price with “lowest-price” offers, strengthening quality by adding more brands in key categories (including fresh) and educating shoppers, and focusing on more effective promotions to drive excitement about weekly offers.

This is an excerpt from the most recent Produce Blueprints quarterly journal. Click here to read the full version.

Despite its successes, some experts believe Aldi’s BB #:116756 model does not lend itself well to online sales, representing a potential weakness for the chain.

“No one is really making money in ecommerce in food right now, and Aldi is a no-frills, low-cost environment,” said Jim Hertel, senior vice president at Inmar Analytics in Winston-Salem, NC.

If the chain does take the plunge, he believes it will be approached very cautiously, “because it will be hard to deliver value at a very low cost in this venue.”

That said, the company has entered the online space by partnering with Instacart in four metro areas: Atlanta, Chicago, Dallas, and Los Angeles.

“Instacart has done well in our research in terms of shopper satisfaction, with the various touchpoints of the online shopping experience,” said Brian Numainville, principal at Retail Feedback Group, who believes the partnership will provide a positive experience for Aldi customers.

“In a cross-shopping environment, a lot of what Aldi does well involves convincing more shoppers to move a portion of their full shop to its cheaper alternative,” said Simon Johnstone, director of retail insights at Kantar Consulting, Boston, MA.

“Where it seemingly ‘fails’ is convincing shoppers to switch a higher proportion of their spending to Aldi. As a result, the chain has recognized it cannot grow shopper acceptance, penetration, and basket size by solely focusing on price alone. Aldi has been shifting its marketing message from strength in simplicity to strength in surprise.”

As a result, Aldi is trying to build more awareness of price with “lowest-price” offers, strengthening quality by adding more brands in key categories (including fresh) and educating shoppers, and focusing on more effective promotions to drive excitement about weekly offers.

This is an excerpt from the most recent Produce Blueprints quarterly journal. Click here to read the full version.