Thursday, 28 June 2012

Habit Forming in Online Grocery Shopping

This email was brought to my attention by the Alchemy Worx Favourite email article, so I won't go into detail about the email itself but focus on the mechanism they have to create a shopping habit.

As you can see , Tesco are offering a saving of £20 on your groceries.

This is how it works though, you actually have to make 3 individual shops and spend £40 each time to get the money off. So essentially spend £120 and get £20 off.

Then logic behind this is quite simple. As we all know in online shopping , the second purchase is sometimes harder than the first - which may have been prompted by another offer..( see Ocado examples).

I'm guessing that for Tesco, getting the 3rd shop is also a key tipping point as you are now getting into the habit of shopping with them.

Below we see how Ocado focused on the second shop a couple of years ago
Another grocery retailer I worked with actually established that 5 was the magic number.

So Alchemy Worx were right to place the email in the Strategy Award.. but Tesco only get my vote if they have targeted the email at a segment of their base that need nudging from the odd shop or two , to much more of a habitual Tesco online shop.

It does seem to be going to existing customers, because of the personlization of the products, but I feel that perhaps the introductory copy could have been more explicit about how these customers have tried the service already

One very complicated way of doing this is highlighted by the way that Waitrose promoted their home shopping in their in-store publication Waitrose Weekend  .

I prefer the Waitrose mechanism as it rewards each individual shop with the reward increasing as the relationship grows, and it equates to a 20% discount in comparison to Tesco's 16%. You could argue that Waitrose have more margin to play with.

Maybe we'll see that mechanism appear at some point in email, although it would greatly simplify things for the customer if they only had to enter 1 code at the start of the series of shops and the e-commerce system just gave the ever increasing discount each time they shopped!

It's interesting to note the difference in the spend target each retailer is aiming for - a reflection of the average basket value for the majority of their customers and their cut off point for ensuring a profit on the service

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