Grocery retail stands apart in the world of e-commerce. While digital transformation has unlocked new opportunities for many sectors, grocery faces a distinct set of profitability challenges—thin margins, high return rates, and the operational complexity of rapid fulfillment for perishable goods. As digital channels claim a growing share of grocery revenue, the imperative is clear: sustainable e-commerce profitability requires tailored strategies, operational innovation, and the right technology investments.
Recent research underscores the challenge: grocery is among the least likely sectors to expect improvement in e-commerce profitability. Over half of grocery retailers report that their e-commerce business is less profitable than in-store operations, and only 61% expect profit growth in the coming year. The reasons are clear:
To address these challenges, grocery retailers are prioritizing two key areas:
Robotics are transforming in-store operations. Automated inventory management systems—powered by AI and robotics—ensure shelves are stocked, reduce shrinkage, and free up associates to focus on customer service. Robotics for cleaning and picking not only improve efficiency but also support rapid fulfillment for online orders, a critical need in grocery.
MFCs are compact, automated warehouses located close to customers, often within or adjacent to existing stores. They enable rapid picking and packing of online grocery orders, reducing last-mile delivery costs and improving freshness. For grocers, MFCs offer a scalable way to meet digital demand without overburdening store staff or sacrificing in-store experience.
Accurate demand forecasting is essential in grocery, where overstocking leads to waste and stockouts mean lost sales. AI-powered tools analyze sales data, local events, weather, and even social trends to predict demand at the SKU and store level. This enables grocers to optimize inventory, reduce spoilage, and ensure the right products are available for both online and in-store shoppers.
Understanding the true cost of serving each customer segment and product is vital. Cost-to-serve analytics provide granular visibility into the profitability of different order types, delivery methods, and product categories. For example, heavy or low-margin items (like bottled water) may only be offered for delivery as part of larger orders or bundled in subscriptions, protecting margins while meeting customer needs.
While returns are less common in grocery, they are costly when they occur. AI can help identify high-risk products and customers, enabling grocers to refine return policies and processes. Incentivizing in-store returns or exchanges, and using digital tools to streamline the process, can minimize losses and even drive additional sales.
Personalized offers, search, and recommendations—powered by unified customer data—drive loyalty and increase average order value. In grocery, this means surfacing relevant promotions, meal suggestions, and replenishment reminders based on past purchases and preferences. Omnichannel loyalty programs that reward engagement across digital and physical touchpoints are especially effective in this sector.
Modernizing IT infrastructure is foundational. Cloud-based platforms enable real-time inventory visibility, rapid deployment of new features, and seamless integration of robotics, AI, and customer-facing applications. Investments in IT modernization typically pay back within two to three years, delivering ongoing cost savings and supporting future growth.
Publicis Sapient, in partnership with Salesforce, brings deep expertise in digital business transformation for grocery. Our approach combines:
Grocery e-commerce profitability is achievable—but it requires a holistic, technology-enabled approach tailored to the sector’s unique challenges. By investing in robotics, micro-fulfillment, AI-driven analytics, and unified customer experiences, grocers can unlock new efficiencies, delight customers, and build a foundation for long-term digital growth.
Ready to transform your grocery e-commerce business? Discover how Publicis Sapient and Salesforce can help you modernize operations, optimize profitability, and lead in the digital age.