Peapod Customers Are Buying More, and More Often—Here's Why

According to Carrie Bienkowski, CMO of online grocery delivery service Peapod, basket size and purchase frequency are the leading factors that can make or break a grocery ecommerce company. “The only way to have a financially viable business that will survive for the long haul is to have a robust, larger basket and high purchase frequency,” she told eMarketer’s Tricia Carr. Bienkowski went on to discuss the Peapod features and industry trends that cause its customers to spend more. 

eMarketer: What factors are driving the growth of grocery ecommerce this year?

Carrie Bienkowski: More consumers are choosing to cook at home instead of eating out. There are a lot of industry reports that reinforce this. We also did research of our own and found that in 2017, over one-third of US consumers are planning to cook dinner at home more often. Interestingly, this trend is driven by millennials. While they may not have grown up learning how to cook at home, they’re very interested in home cooking and meal preparation.

Also, online grocery shopping is quickly becoming the norm. It’s not a niche service for the urban millennial anymore. Based on our infrastructure and our association with our parent company Ahold USA, we’re not limited to those dense urban ZIP codes. In fact, our business is about equally split between suburban ZIP codes and urban ZIP codes.

eMarketer: Are Peapod customers buying more of their weekly groceries online?

Bienkowski: Our customer base is increasing their basket size. Most Peapod customers use our service for their weekly or biweekly stock-ups and weekly grocery trips. Our average basket is over $150.

We’re also reducing our customer churn rate. Our existing customers are ordering more frequently. That’s critical because unlike other categories, grocery is not a discretionary spend. People buy groceries every single week. In theory, there’s a lot of headroom with frequency.

eMarketer: What types of personalization does Peapod use to offer the most relevant products to customers and increase basket size?

Bienkowski: We have personalization tactics built into pretty much everything that we do. If you’re an existing customer, you essentially get a custom homepage every time you log in to Peapod. Over half our emails are personalized in some way based on transaction behavior. We want to make almost all of our emails personalized, because we see higher engagement.

We’re also focused on identifying customer segments. By looking at transaction behavior, we can understand what’s important to customers, what motivates them and what unites them. For example, we have a segment of customers that are in search of natural and organic products, and we [can show them items from] our brand of organic products, Nature’s Promise.

eMarketer: What else has driven basket growth recently?

Bienkowski: One of the biggest basket builders over the last year has been the launch of our meal kits [in select markets]. We see individual customers add one, if not two or three, meal kits to their cart.

Meal kits tend to be 90% incremental. Customers who add meal kits to their purchase still buy the same amount of items they normally do for their refrigerator and pantry. Meal kits are a perfect example of how we’re changing our product assortment to meet the trend [that more people plan to cook at home].

eMarketer: What’s the breakdown between desktop and mobile? Where do your customers spend the most?

Bienkowski: About one-third of our orders are mobile-only [which includes smartphones and tablets], and over half are touched by a mobile device [at some point]. That said, it’s critical to have a consistent, multidevice user experience for online grocery.

Grocery ecommerce has a unique dynamic, because it’s not based on a single transaction. Customers edit their order multiple times. The average order has six sessions, meaning, people come back to update their order six times before they actually buy.

Mobile plays a big role in solving for that use case. But interestingly, when we look at the value of each session, desktop is the workhorse. Dollars per session on desktop are 50% higher than smartphones, and 20% higher than tablets. You need to be device agnostic—you can’t choose mobile vs. desktop. That always-on accessibility is critical.

eMarketer: Do your customers still shop for groceries at the brick-and-mortar level, too?

Bienkowski: Because we are part of Ahold USA, we can see how a customer shops online and in the brick-and-mortar store. The pure online shopper is rare. Most people use online shopping in addition to the physical store, and I don’t think that will change dramatically.

When we look at our data, the omnichannel shopper spends three times more across Ahold and Peapod brands than a pure brick-and-mortar or online shopper. We know that the average customer shops from five different retailers. Ecommerce will continue to grow, but I think it will always be part of the broader retail set that a customer uses. 

Photo Credit: Peapod