Will Farmstead’s ‘Smart Shopping List’ give it an edge in online grocery competition?

Discussion
Photo: Farmstead
May 10, 2019
Glenn Taylor

Glenn Taylor, Senior Editor, Retail TouchPoints

Through a special arrangement, presented here for discussion is a summary of a current article from the Retail TouchPoints website.

Farmstead, an online grocer of locally sourced produce based in San Francisco, has introduced a Smart Shopping List feature designed to predict what products customers need based on factors including weekly shopping history, buying signals and what’s already in their cart.

The grocer uses proprietary AI and machine learning technology to predict grocery trends and consumer purchasing habits. The technology helps Farmstead keep prices for certain products below the averages in Bay Area supermarkets.

The Smart Shopping List’s algorithms incorporate data from customer wellness preferences along with the collective behavior of other customers who buy similar products.

In trial mode, Farmstead found that more than 40 percent of customers chose to shop via Smart Shopping List when presented with the option. When they did, they were 3.5X more likely to add suggested items to their list.

“One of the biggest challenges to buying groceries online is to build your shopping cart rapidly,” said Farmstead co-founder and CEO Pradeep Elankumaran in a statement. “Since there are no physical aisles to walk through like a traditional supermarket, and only so much scrolling one can take, it’s a true challenge to help customers find the right products at the right time, while also suggesting new ones they’ll love in the few minutes they spend each week tapping buttons online.”

Farmstead’s algorithms also take complex factors into account, such as day of the week and seasonality (for example, recommending heavy cream during Thanksgiving) or compatible products (show the cream cheese you normally buy when you buy bagels). The algorithm also can programmatically identify seasonal products (fresh local strawberries in the summer).

The feature launch comes three months after Farmstead debuted an automated order replenishment offering called Refill & Save, which lets customers set up weekly subscriptions for their grocery staples such as milk, eggs, fresh fruit, fresh vegetables and bread.

DISCUSSION QUESTIONS: What do you think of Farmstead’s use of AI and machine technology to help customers develop their grocery shopping lists and explore new items? Can algorithm-driven suggestions bring the browsing benefits of in-store shopping to the online grocery experience?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"I believe this innovation will positively impact loyalty and help increase basket size."
"The grocery sector is so ripe for being re-engineered. Shopping for groceries hasn’t changed very much for centuries."
"While AI will need previous shopping data to deliver most value for individual shoppers, the seasonal suggestions should benefit all consumers."

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10 Comments on "Will Farmstead’s ‘Smart Shopping List’ give it an edge in online grocery competition?"


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Kevin Graff
BrainTrust

The grocery sector is so ripe for being re-engineered. Shopping for groceries hasn’t changed very much for centuries … make a list (80 percent of which is the same each week), drive to the store, walk the aisles, pay, drive home, unpack. It seems a bit silly when you look at it like that.
Hats off to Farmstead for pushing the innovation envelope. Consumers will love the time saved that can be invested in their lives and families. And Farmstead will reap better loyalty and sales.

Art Suriano
BrainTrust
I’m going to go out on a limb here and comment with a different approach. Over the past few years there have been many attempts to perfect online grocery shopping, and for many reasons the customers by large numbers still prefer shopping in-store. I see the convenience for online shopping especially for that busy person who does not have the time to get to the store. However, we now have online shopping and, for the most part, it’s terrific. Shouldn’t grocers be focusing more on how to make the in-store shopping experience better? How can we get the customers in and out of the store faster? How can we make the stores more appealing and the shopping experience more pleasurable? I ask these questions because online grocery shopping may be convenient for the consumer, but it is very costly for the grocer. The grocer loses out on impulse buying which is enormous in the grocery industry and often resulted from sampling. How can you possibly sample product online? Then there’s the cost of fulfillment once… Read more »
Nir Manor
BrainTrust

The Smart Shopping List approach provides value to shoppers by saving them time and reminding them of products they may need. This is definitely a good use case for AI since the solution should learn what each shopper bought and preferred, and combine that information with many other factors in creating recommended items. The system will improve itself with more data and feedback accumulated. I believe this innovation will positively impact loyalty and help increase basket size.

Camille P. Schuster, PhD.
BrainTrust

For the consumers doing online shopping with Farmstead, the suggestions are likely to be very effective. Will that encourage more people to use Farmstead? Probably not because the AI is not effective until there is a database of your past purchases.

Ryan Mathews
BrainTrust

Honestly it seems like a good idea for existing customers, but not a huge draw for attracting new shoppers. And that assumes it works. Many AI/ML tools, like those used by Amazon, don’t really do a very good job of effectively personalizing offers. So if the best this does is remind you to buy you kale-infused, organic eggnog during the holidays, it won’t even be of that much value to existing customers. The entire value of algorithm-driven suggestions depends on their accuracy.

Doug Garnett
BrainTrust

Lord. I am so, so tired of retailers thinking they can predict what I want to buy. It’s absurd.

There’s no reason to believe online grocery will be able to predict my interests better than Amazon can predict my book interests. Yet Amazon recommends so poorly that they regularly recommend to me that I buy the book I wrote (despite my being the registered author of the book).

Shep Hyken
BrainTrust

I like the idea. It’s the way of the future. The consumer has to participate by letting Farmstead have access to their grocery shopping habits. A “smart refrigerator” that knows the consumer’s usage patterns, when items run out, etc. will help. Plus with enough customers on board, AI will have enough data to predict trends and create a more personalized experience. This is the beginning of our future. We have a long way to go, but this is what it will look like.

Mark Price
BrainTrust

Outstanding application of predictive modeling. Suggesting products based on consumer behavior and seasonal specials permits customers to have the “fun” of impulse shopping along with expedited repeat purchasing. This approach will continue to show growth in revenue, as well as repeat and retention (the two metrics that are the most critical for online shopping). Well done.

Patricia Vekich Waldron
Staff

While AI will need previous shopping data to deliver most value for individual shoppers, the seasonal suggestions should benefit all consumers.

Ken Morris
BrainTrust
Ken Morris
Retail industry thought leader
8 months 9 days ago

The purpose of online shopping for groceries and building shopping list is to make shopping more convenient. However, it is often a cumbersome process. The traditional approach to building your order or shopping list includes sifting through long lists of products or multiple clicks to narrow down your options.

A “smart shopping list” that uses AI is a smart idea if it truly makes the list building easier and faster. The advances made in AI have been tremendous and this is a perfect use case. Grocery is one of the most rapidly changing segments in retail and it is prime for automation as its products are replenished by consumers on a fairly predictive schedule and product affinities are also very predictable. It will be interesting to see what the grocery shopping experience is like in the next 5-10 years.

wpDiscuz
Braintrust
"I believe this innovation will positively impact loyalty and help increase basket size."
"The grocery sector is so ripe for being re-engineered. Shopping for groceries hasn’t changed very much for centuries."
"While AI will need previous shopping data to deliver most value for individual shoppers, the seasonal suggestions should benefit all consumers."

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