Online grocery boom: EDI for food & beverage industry

It took two decades for online grocery to go from zero to around 7% of total UK grocery sales. This growth ballooned due to the pandemic, with the market share increasing from 7% to 13% in just eight weeks.

Growth is also recorded in parts of Europe that have previously been slow to adopt ecommerce. Researchers at Bain estimate that both German and Italian online grocery sales doubled during the pandemic. They note that German online grocery now accounts for 2.9% of total sales, with Italian online grocery growing to account for 4.3% of total sales.

The main obstacle, however, is the resources required for home grocery delivery. Sainsbury’s chief executive Simon Roberts summarised recently, that COVID-19 was “moving sales out of our most profitable convenience channel and driving a huge step-up in online grocery participation, our least profitable channel”.

The profit margins on moving perishable items around the country are relatively slim. They typically account for just 3% to 5% of earnings before interest and tax. This means that the more online products that are delivered, the greater they will cannibalise net profit.

This conundrum regarding grocery home delivery is only set to intensify:

• Disruptor brand, Amazon is promising free grocery delivery by the end of 2020.
• 71% of UK respondents said they will shop online as often or more after the pandemic (UBS)
• between 35% – 45% of the recent increase in online is estimated to be permanent (Bain)

So, what should F&B retailers do as they face increasing challenges around profitability?

One very effective strategy is the digital transformation of supply chain management. These pressures on the retail sector constitute the perfect storm for which advanced EDI solutions were designed.

EDI for the F&B industry transforms the time-consuming and error-prone manual processes that impact profitability. EDI solutions provide digitisation and automation to efficiently manage the processing of orders, invoices, ASNs and other vital documents.

EDI for food & beverage ensures orders are efficiently processed through the retailer’s trading partner network. Food EDI covers the whole order cycle: from manufacturer, to wholesaler, to distribution hub, and to store before they go out to the customer.

Cloud-based EDI from a SaaS provider, simplifies the the set up of EDI for food & beverage businesses. They manage the mapping and testing of EDI messages between trading partners. It can even be integrated into existing business systems for greater data visibility, such as an ERP or accounting software.

EDI speeds up document exchanges required to complete transactions. It provides an accurate, immediate view of proceedings.

Find out more: The benefits of EDI

Cloud-based EDI enables rapid onboarding of new trading partners. Connections are added to the network in a fraction of the time compared to fragmented email and Excel-based processes.

This means F&B businesses have supply chain agility to swiftly change trading partners, ringfence slim profit margins and ensure continuity of supply.

Changes in EDI technology and its pricing models, mean it is no longer reserved for the bigger brands. They are now within easy reach of tier two and three suppliers.

COVID-19 and other factors are intensifying the trend to online home delivery. Uncertainty around Brexit continues. Therefore, the F&B retailers that do not automate their order processing risk losing competitive advantage at a time offering few opportunities for growth.

Transalis eDI Instant™ is the ideal solution for efficient supply chain management for smaller businesses. This EDI solution offers easy set-up, quick connectivity, simplified order and invoice processing and for a low cost. Food and Beverage suppliers can be online with their chosen major grocery retailer in as little as 24 hours.