When grocery retailers were publishing their sales figures one of the common trends was an increase in online revenues.

This was good news as sales in brick-and-mortar stores were generally down.

Tesco reported a 0.3% drop in like-for-like sales, but grocery home shopping sales rose by 12.9% in the six weeks to January 3.

Similarly Sainsbury’s saw sales drop by 1.9% in the 14 weeks to January 3, and though it didn’t break out online sales it did report a strong performance with 110,000 orders taken in the three days up to December 23.

In order to ensure that online sales continue this upward trend, grocery retailers need to be hot on customer acquisition.

In the battle for new customers much of it will be driven by existing loyalty and brand affinity, but what steps are grocery retailers taking to win new online shoppers?

In this post I’ll look at the different incentives on offer from the UK’s major players, but for more on this topic read our posts on why grocery retailers need to catch up to consumer expectations on mobile and what online grocery retailers can learn from Singapore’s Redmart.

Waitrose

Waitrose is currently giving new customers £65 off their first five online shops – an offer being promoted in its PPC ads and on a homepage carousel.

It’s staggered so new customers get £15 off their first shop, £20 off the second one, and £10 off the next three.

Offering a greater discount on the second shop is a clever move as it increases the likelihood that people will use the service more than once, which edges them towards becoming a regular shopper.

The catch is that you need to spend more than £100 each time and the codes are only valid until April 28 2015.

This offer will only appeal to certain demographics, such as parents with several kids, but then they are probably more likely to shop at Waitrose anyway.

Looking at the small print, Waitrose’s standard rules are that customers get free delivery but have to spend a minimum of £60 on all ecommerce orders.

Click & collect orders are subject to a £40 minimum spend.

Tesco

Tesco’s opening offer is £12 off your first online grocery shop when you spend £60 or more before February 28.

The really small print at the bottom of the page reveals that the £60 minimum spend excludes purchases of infant milk formulae, tobacco products, stamps, National Lottery Scratchcards, Delivery Saver subscriptions and delivery or collection charges.

It’s advertised on a carousel on the grocery section of the website, which inevitably moves too quickly for shoppers to actually read all the information.

Tesco’s standard T&Cs are difficult to find, but there’s a minimum spend of £25 and if customers fail to hit this figure they have to pay a £4 charge.

I couldn’t find any mention of delivery charges so I can only assume it’s free, in which case it’s odd that Tesco doesn’t make a bigger deal of it.

Sainsbury’s

Sainsbury’s doesn’t currently have any incentives for new customers which, coupled with its out-dated website, might see it lose out to the competition.

Its standard T&Cs offer customers free delivery after 2pm on Monday to Thursday, but only on orders of more than £100.

There's a £25 minimum basket spend and orders under £40 are charged a delivery fee of £6.95. Orders for more than £40 are charged a delivery fee of between £2.99 and £5.95. 

Personally I don't find this to be a particularly compelling offer, and I'm a loyal Sainsbury's shopper.

However Sainsbury’s does try to encourage loyalty through a delivery pass that acts like a quarterly or annual subscription.

So, for example, customers can pay £60 for an annual ‘anytime’ delivery pass, or £35 for an annual ‘midweek’ pass that’s valid from Tuesday to Thursday.

However even the delivery passes require customers to spend a minimum of £40 per order.

Asda

Asda isn’t currently offering an incentive for new customers and is also extremely vague about its fulfilment costs.

The minimum spend is £25 for ‘the majority of our stores’ but ‘this does however vary in certain parts of the country’.

Similarly, ‘delivery charges can vary, slots that are at less popular times and days will be cheaper’.

On the plus side, click & collect is a free service and in certain stores you can order by midday and collect the same day after 4pm.

Asda also offers monthly, quarterly and annual delivery passes to try and tie in customers.

The options are a bit confusing though. You can buy ‘anytime’ passes for one or three months, or an annual ‘midweek’ pass for £2 per month.

Why can’t you buy an annual anytime pass? Or a one-month midweek pass?

Presumably these options were selected as the result of user testing, but it does seem a bit restrictive.

Morrisons

There’s no incentive to new customers from Morrisons, while the T&Cs are vague and badly written.

Apparently you need to spend ‘?40’ before you can check out, rising to ‘?60’ if your order slot is over the Christmas period.

Furthermore, the answer to the FAQ about delivery charges begins, ‘Our description of our delivery charges’, before failing to even give a range of the potential costs.

Fulfilment is a very important part of ecommerce and a good customer experience can be a big factor in driving loyalty and good word-of-mouth.

These T&Cs are a terrible first impression from Morrisons.

In conclusion...

As mentioned at the top, special offers and cheap delivery aren't the only factors at play in getting people to shop online.

People will already be partial to one particular brand or tied into a loyalty scheme, but it's still interesting to see what's on offer from the UK's major retailers.

It’s clear that some grocery retailers are making more of an effort than others to attract new shoppers, but then customer acquisition might not be a priority for all of them.

Waitrose probably has the most compelling offer for first-time shoppers and it’s aimed at getting people to shop more than once, with the hope that it will become a habit.

The retailer is making good use of PPC to promote the offer, and bidding on its own brand term is probably relatively inexpensive.

That said, the £100 minimum spend will be a barrier to entry for some people.

Looking at the other brands, the delivery passes are a good idea as they tie people into using the service for anything up to a year.

Amazon’s Prime service has been a big success, so it could have a similarly positive result for online grocers.

Overall though, I think these retailers should all be doing more to make their T&Cs clear upfront as I had to do a lot of searching to find the delivery information.

Now if you’ll excuse me, I have to go and do my first ever online shop with Waitrose...

David Moth

Published 4 February, 2015 by David Moth

David Moth is Editor and Head of Social at Econsultancy. You can follow him on Twitter or connect via LinkedIn

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