Loblaw's eCommerce Strategy: A New Online Marketplace

Recent years have seen an increase in the number of retailers using online marketplaces to reach new customers and expand the footprint of their businesses. Platforms such as Amazon's marketplace can help smaller businesses get noticed in the swirling maelstrom of online options.

Online marketplaces are loved by customers as well. Fifty-three percent of paid units sold on the Amazon platform as of Q3 2019 were through third-party sellers and on Amazon's Prime Day 2019, 33% of total sales for the day were from marketplace sellers. Nearly half of Amazon sellers generate 81% - 100% of their revenue through the platform and 73% of businesses with one to five employees sell on it.

This popularity is starting to capture the interest of other retailers, with George Weston Group-owned food retailer Loblaw being one of the latest.

Loblaw

As Canada's largest food retailer, the Loblaw brand encompasses several sectors, including corporate and franchise supermarkets operating under 22 regional and market segment banners, baby products, pharmaceuticals, cellular phones, general merchandise, financial services and more.

Loblaw has had an amazing year up until now. The brand has expanded its click and collect offering from 200 stores to more than 700 and added several of its Shoppers Drug Mart stores and GO Transit locations as additional grocery pickup sites in the Toronto area.

As part of its quest to take the fight to Amazon by blanketing Canada with ecommerce options, Loblaw has also expanded its premium home delivery service. The service, facilitated in partnership with Instacart, has been expanded from eleven markets to 16, making sure more Canadians than ever can access superior ecommerce options and stealing just a touch of the Amazon market share.

However, despite its recent successes, Loblaw hasn't finished its blanket yet, and now has its sights set on taking a slice of the online marketplace pie from Jeff Bezos' ecommerce behemoth as well.

Online Marketplace

Launched in November 2019, Loblaw's marketplace will be curated to included products and brands which the company hasn't previously stocked. This is in an effort not only to boost the diversity of items available through its brand but also to provide opportunities to third-party sellers, thereby helping the retailer compete with Amazon for a share of the Canadian market.

(Image source: delimarketnews.com)

"We've curated an assortment of products for our customers, based on the belief they are looking for the increased convenience of buying complimentary products from complementary brands while they shop with us," said Communications Manager for Loblaw, Catherine Thomas.

The marketplace features a wider range of vendors and products than were previously available through Loblaw's online portal and is an expansion of the brand's existing PC Express platform which the company launched to allow its customers to purchase their groceries online for in-store collection or home delivery.

The service is available for Loblaw's Real Canadian Super Store, Atlantic Super Store, and Loblaws customers. Customers will earn PC Optimum points on purchases. The service is not yet available in Quebec, but plans are in motion to expand the service after the initial rollout.

The idea behind the marketplace is to boost customer spend per shop with Loblaw. By including products one would necessarily expect to buy when purchasing groceries - say furniture - Loblaw increases the chance of customers adopting a "we might as well grab that while we're here" mentality and picking up those extra and often big-ticket items.

"For example, as new parents prepare for a baby with diapers and formula, they would probably find it very convenient to able to order blankets, wash cloths or even a crib through us," said Vice President and General Manager of Digital and Marketplace for Loblaw, Hesham Fahmy. "The new marketplace expands the company's general merchandise offering, which it already sells in store, with complementary goods that strengthen the core offering and enhance convenience and loyalty."

The initial offering from the Loblaw marketplace included baby products such as blankets, cribs, and strollers, as well as additional products in the toy, home, kitchen, and pet categories. Future names to be added to the marketplace include home decor brand Umbra and Lennox Furniture Inc.

Final Thoughts

Marketplaces can mean big business, both for the companies hosting them and the sellers peddling their wares through such platforms. Amazon presently dominates the game, but we'll have to wait and see if Loblaw can make a dent in it. By leveraging the opportunities of selling to people already shopping with the brand for groceries, it has a better than reasonable chance.

You can hear Richard Down, Director of Data Science, Loblaw Digital, Matt Cebulski, Strategic Innovation and Partnership Success, Loblaw, and Lysianne Planche, Director, Marketing Intelligence, Loblaw Digital all speak at eTail Canada 2020, taking place in May at the Hyatt Regency Toronto, ON.

Download the agenda today for more information and insights.