TopShelf Spotlight: Five Ways to Make Grocery eCommerce Profitable

There’s no such thing as “set-it-and-forget-it” in eCommerce.

Profitability isn’t something you achieve overnight—it’s an ongoing process that requires constant optimization.

While grocery eCommerce systems are sometimes portrayed as simple “plug and play” solutions, where implementing the right technology will instantly turn a profit, the reality is much more complex.

Achieving and maintaining profitability demands a strategic approach that goes beyond merely introducing an eGrocery platform into your service offering. It takes meticulous measurement, effective communication, and a technology partner committed to guiding the growth of your online business.

In the second episode of our special two-part TopShelf Spotlight series, Mark Fairhurst, Chief Growth Officer at Mercatus, and Lee Lambeth, VP of Retail Operations at Mercatus, continue their conversation on optimizing eCommerce operations for greater profitability.

Lee uses his 30+ years of retail experience to provide these five recommendations for grocers looking to ensure profitability from their eCommerce operations:

1. Create an eCommerce P&L Statement and Set a Budget

Optimizing eCommerce operations begins with an understanding of what actually needs to be improved.

This involves a full analysis into the financial impact of eCommerce activities. Only with this insight can you make the necessary adjustments to enhance efficiency, cut costs, and ultimately boost profitability.

The first step to this is developing a detailed eCommerce profit and loss (P&L) statement. This statement should run parallel to your company’s overall financials, allowing you to see the direct impact of eCommerce activities on your bottom line.

Engage with your accounting and finance teams to ensure that all relevant costs are accounted for, including items like bags and wraps as a percentage of sales, labor, margin rates, and overhead. By thoroughly analyzing these factors, you can gain a clear understanding of where efficiencies can be gained and what costs need to be controlled.

It’s equally important to create a specific eCommerce budget for each store—just as you would for traditional departments like meat or produce. This ensures that every revenue-driving area of your business, including eCommerce, is carefully managed and optimized for profitability.

2. Implement Internal Scorecards

Having a clear understanding of where efficiencies can be gained and where costs need to be controlled is great, but it doesn’t make a difference if the information isn’t acted upon.

To effectively manage and optimize eCommerce operations, it’s crucial for retailers to develop simple, visual tools—like internal scorecards—to stay on top of KPIs such as sales, budget adherence, order accuracy, percent of total distribution relative to the store, and units per hour picked.

By implementing a simple, tactical scorecard——using a green light, yellow light, red light system—you can define the cadence of work, reinforce expectations, and visualize the impact of various eCommerce activities:

• A green light shows which current tactics are working well and should be continued day-in and day-out;
• A yellow light indicates areas that require caution or further observation moving forward; and
• A red light signals challenges that need immediate attention.

This approach not only makes it easier for store teams to understand where they stand but also drives continuous improvement by clearly communicating where action is needed. This emphasis on clear communication also applies to our next recommendation.

3. Get the Entire Organization On Board

Profitable eCommerce operations require buy-in from the entire organization, especially for local grocers transitioning from traditional in-store service to online operations.

This requires communicating the importance of eCommerce clearly and consistently throughout the organization, demonstrating its value in both messaging and actions.

• Make eCommerce roles—managers, leads, and pickers—desirable positions by linking performance to incentives, such as annual bonuses for store managers.
• Invest in training that defines what great customer service looks like in an eCommerce context, particularly for curbside pickup where you have more control over customer experience.
• Actively support and promote your eCommerce initiatives, externally as well as internally, to reinforce its importance.

Embracing and championing eCommerce across your organization will achieve the buy-in necessary for eCommerce to expand your customer base and drive long-term profitability.

4. Make Service Your Strongest Marketing Tool

Even with a fully optimized eCommerce system supported by an entire organization, a grocer still needs customers to actually use it.

And with significantly larger basket sizes compared to in-store shopping, retailers should be driving their customers to eGrocery. That requires collaboration with your marketing team to create a unified approach to marketing eCommerce so that it spans both online and in-store environments.

Use in-store promotions like stanchion signs, floor decals, and shelf talkers to raise awareness of your eCommerce offerings. For online, leverage automated marketing messages to reach a wide audience with timely, relevant product recommendations.

Always keep in mind, though, that in eCommerce, exceptional service is your most powerful marketing asset.

When service shines, your employees become the best ambassadors, driving customer acquisition and retention, and ultimately making profitability easier to achieve. Ensure your staff are well-trained and enthusiastic advocates for online shopping. Equip them with branded apparel and call-to-action messages, turning them into walking billboards for your eCommerce platform.

5. Find a Tech Partner, Not Just a Tech Provider

Look for a technology partner who offers more than just a product.

Achieving eCommerce success doesn’t just require reliable technology—it demands a true partnership between your grocery management team and your technology provider.

This partnership should extend beyond the initial setup, guiding you through the complexities of eCommerce operations and helping you continually optimize for success.

10-Step Checklist to Make Grocery eCommerce Profitable:

To increase the profitability of your grocery eCommerce operations, follow this 10-step guide:

1. Create a specific eCommerce P&L statement to track financial performance.
2. Develop an eCommerce budget for each store.
3. Implement internal scorecards to track KPIs.
4. Use visual tools to communicate performance.
5. Tie eCommerce performance to store manager incentives.
6. Train staff to ensure understanding and buy-in of eCommerce goals.
7. Promote your eCommerce offerings through in-store marketing.
8. Use automated marketing messages to boost customer engagement.
9. Keep refining your eCommerce processes based on metrics and feedback.
10. Collaborate closely with your technology providers for seamless implementation and ongoing optimization.

Final Thoughts

Achieving eCommerce profitability requires more than just implementing the right technology—it demands a holistic approach that includes optimized operations, the right tools, an engaged organizational culture, and effective service promotion.

Above all, it calls for a technology partner that is deeply committed to your success, providing ongoing support, training, and best practices for seamless implementation and continuous optimization.

This special two-part TopShelf Spotlight series reflects Mercatus’s commitment to being more than just a tech provider. We’re an active partner in driving success for your grocery business.

To learn more about the continued commitment we provide our retail partners, reach out to Mercatus today.