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Despite consumer interest in online grocery shopping, retained adoption is only about 5% because grocers aren't delivering a perfect operational experience and bringing fresh food inexpensively to customers doorsteps

If it seems like grocers are scrambling now to monetize online ordering and delivery, thats because theyre in a very tough spot.Grocers are reallystruggling in an $800 billion business, most are barely profitable and only about 3% of sales come from online orders. While theres definitely interest from consumers in online grocery shopping, retained adoption is hovering at a measly 5% because no grocer is delivering a perfect operational experience and bringing fresh food inexpensively to customers doorsteps.

The fact is, figuring out all of the mechanics of grocery ordering and delivery is still extremely difficult, and the technology has just not come far enough yet from the major tech players in this space, like Amazon and Instacart.

If we look back, when online grocery ordering really started to catch on, it was back in 2016, and Instacart became one of the go-to tech vendors grocers used to automate the whole process.But the economy of picking and delivering is challenging and quite expensive for grocers, so those costs got passed onto the consumer. For mid-market grocery shoppers, its just not feasible or affordable to go the online grocery route for weekly shopping, and while theyre quite interested in trying it, they just cant afford to do it regularly.

Grocers cant simply rip out Instacart and similar solutions and replace them with their own technology, pickers and drivers. For one, those jobs are union ones for grocers and arent simple or inexpensive for grocers to negotiate.

So grocers started exploring robotics to improve efficiency and control costs.Beyond therobotsrecently introduced to stores for taking inventory and cleaning up messes, grocers have started looking toautomationto fill online orders and speed up delivery.While this could potentially improve just the pick efficiency, grocers can only really begin to make money on this when they start getting around 4,000 online orders a week connected to the automated location, which could be challenging.

Additionally, robots cant pick 100% of all SKUs; grocers will still need manual picking for items like produce.Finally, robotics still does not address one of the biggest challenges grocers have in the ecommerce economic equation: delivery. So the reality is that robotics is really just a stopgap, or a partial solution to fixing the real economic issues of grocery ecommerce.

The true promise of ecommerce is that it should be cheaper and more convenient to get your products delivered right to your doorstep than at the brick-and-mortar store, with no fees.

Consumers patience begins to wear thin, and they continue to do their grocery trips in person or use curbside pickup, another compromise.The true promise of ecommerce is that it should be cheaper and more convenient to get your products delivered right to your doorstep than at the brick-and-mortar store, with no fees.

To accomplish this will require a direct-to-consumer technology company to come in and restructure the entire ecommerce framework within the constraints of a single small ecommerce warehouse inventory control to reduce substitutions, manual or automated pick to reduce costs, and last-mile logistics to doorstep with its own drivers.

Robotics and curbside pickup arent going to fulfill the promise of ecommerce for the grocery industry; theyre just temporary solutions in encouraging more online ordering with better efficiency.To truly deliver on the promise of grocery ecommerce is going to require a completely different infrastructure and new technology to get food from local and national suppliers to customers doorsteps, on time, fresh, and more cheaply than if they went to the store.

Pradeep Elankumaran is the co-founder and CEO of San Francisco-based Farmstead, a fast-growing, tech-first digital grocer. Read More

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