Will H-E-B repeat its brick & mortar success online?

Discussion
Nov 13, 2015

In its home state of Texas, H-E-B has proven it can go up against the likes of Kroger, Walmart and others and, not only compete, but succeed. Now, the largest regional grocery store operator in the U.S. is looking to replicate its brick & mortar success online with newly launched e-commerce capabilities that will allow the retailer to deliver shelf-stable foods, general merchandise and health & beauty care items (50,000 total) to all states within the continental U.S. (except for California) as well as American military bases across the globe.

H-E-B plans to promote its Texas roots with popular local brands sold in its stores. The H-E-B site will include a "Totally Texas" page (heb.com/texas) that includes items such as Whataburger Whatafries and Spicy Ketchup, Franklin Barbecue Sauce made in Austin and H-E-B own brands.

"We’ve been receiving calls for decades from Texans around the country that miss their favorite foods from home like H-E-B Texas Shaped Corn Tortilla Chips and H-E-B Café Ole Taste of Texas Coffees," said Martin Otto, chief merchant and chief financial officer of H-E-B, in a statement. "Now, even if you move outside of Texas, you’ll still have a ‘neighborhood H-E-B’ just a click away."

H.E. Butt

Source: heb.com/texas

One of the key differentiators for H-E-B at the store level is the consistency of service its customers receive. The grocer is looking to do the same online with prices that match those in its stores and a "no hassle" return policy. Items ordered on heb.com can be returned to any H-E-B store for a full and immediate refund or sent back at no charge using free shipping.

What will H-E-B need to do to achieve the same level of success online that it has in stores? How likely is the grocer to become a significant force in e-commerce over the next five years?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"What an excellent way to expand your market. It seems unclear whether H-E-B has plans to become a significant force in e-commerce or if it wants to be a significant force in Texas e-commerce with an added ability to ship specialty items outside of Texas."
"H-E-B needs to morph its terrific in-store experience to online shopping. Research has shown that the grocery shopping experience must match other experiences on the Internet (Amazon-like)."
"I’m not sure that any established brick-and-mortar retailer is having the same level of success online as they do in-store, but over time, H-E-B will do well. Their website and loyalty engine is driven off of the Coupons.com platform."

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8 Comments on "Will H-E-B repeat its brick & mortar success online?"


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Zel Bianco
Guest
6 years 6 months ago

What an excellent way to expand your market. It seems unclear whether H-E-B has plans to become a significant force in e-commerce or if it wants to be a significant force in Texas e-commerce with an added ability to ship specialty items outside of Texas. They will need to define their strategy and goals early on to achieve the most success.

Richard J. George, Ph.D.
Guest
6 years 6 months ago

H-E-B needs to morph its terrific in-store experience to online shopping. Research has shown that the grocery shopping experience must match other experiences on the Internet (Amazon-like). The experience needs to be both fast and fun. Price does matter (competitive and transparent).

If H-E-B is able to offer a bonafide omnichannel experience for its customers it has a real probability of being successful. Remember, omnichannel is not about channels. It is about your customers and how they interact and access your products and services.

Roger Saunders
Guest
6 years 6 months ago

H-E-B has a history and a belief in the people of their organization. That positions those associates to press the envelope on innovation in multiple ways.

The Prosper Monthly Consumer Survey provides a list of 22 reasons as to why consumers choose to shop at a particular grocer MOST often. H-E-B outshines other grocers among their customers in 18 of 22 of those reasons.

Moving beyond the perishable food items of bakery, deli, meat, etc., H-E-B shines in price, quality, trustworthy retailer service, unique products, gluten free products and knowledgeable associates. Those are characteristics that will serve the H-E-B march into e-commerce.

Watch them lead the way among grocers.

Kevin Sterneckert
Guest
6 years 6 months ago
H-E-B’s move to open its doors to the virtual world is brilliant and I predict it will grow to represent a growth channel for the company. I recall a supermarket news article published in the ’90s that loosely stated that every advance in grocery can trace its roots to H-E-B. True e-commerce retail grocery as introduced by H-E-B has the potential to once again lead the way for other retail grocers. Grocery (staple and fresh) is a major industry and one that is ripe for transformation. Amazon and Jet get it, and they have made huge advances. Other grocers have chosen the path of click-and-collect, an they has been successful where the promise to the customer has been delivered consistently. H-E-B’s move will certainly cause other grocers to take note. H-E-B will succeed if they extend their success formula to online commerce. That formula is: amazing service, differentiated products and services that are localized with very competitive prices. Achieving these ingredients online will be challenging. As a former H-E-B partner, I believe the company is… Read more »
Mark Heckman
Guest
6 years 6 months ago
I’m not sure that any established brick-and-mortar retailer is having the same level of success online as they do in-store, but over time, H-E-B will do well. Their website and loyalty engine is driven off of the Coupons.com platform (as is that of Winn Dixie/Bi-Lo). If they leverage this engine to enhance the visitor’s online experience, they will be well on their way to success. Fifty thousand items online might even be overkill given the notion that most shoppers who are looking for delivery or pickup tend to pick items with a relatively small subset of that 50,000, but H-E-B could be smart to start with large variety and pare it down as demand dictates. The other departure point for H-E-B compared to others venturing into e-commerce is both the opportunity and challenge of engaging Hispanic shoppers online, given H-E-B’s presence in heavily Hispanic markets. Finally, due to their lack of an existing shopper database and heavy dependence on paper coupons throughout the store, H-E-B will likely face a bigger challenge than most converging their… Read more »
James Tenser
Guest
6 years 6 months ago

I see H-E-B’s non-perishables-only online store as a slightly lucrative sideline, but not a solution for managing the home pantry. The investment in a dedicated fulfillment center in San Antonio is evidence of commitment, but it also defines the business model — for better or worse.

An online store is a plus for the brand, and it’s likely to contribute the volume of several large stores. However, this is not really omni-channel retailing, with its shared global inventory and unified customer experience. It’s more like extra-channel retailing, with a larger, differentiated product mix.

Accepting returns at any H-E-B store is a righteous customer policy, but that’s not omni-channel either. It is more about reinforcing a pro-shopper stance, and I imagine the proportion of instances will be small.

I’ll go out on a limb and predict that only returned high-ticket hard-line items will be returned to inventory. Inspecting and re-shelving packaged food or HBC items won’t be worth the labor costs. Of course, shoppers who live outside H-E-B’s brick & mortar trading areas won’t be making any in-person returns anyway.

Todd Hale
Guest
Todd Hale
6 years 6 months ago

Nielsen research illustrates that while a small percentage of households are buying groceries online today, a much larger percentage are willing to buy online in the future. While deliveries to home are important, interest in click & collect models are high too. Retailers like H-E-B can compete with the bigger e-commerce players, but all of this activity will drive higher costs in the area of order fulfillment. Retailers who better manage the shift from more expensive and inefficient “paper-based” communication budgets to less costly and more efficient digital communications, will be the leaders.

Bill Bishop
Guest
Bill Bishop
6 years 6 months ago
H-E-B’s move into online grocery shopping reflects a well thought out and innovative way to grow their business. To me this is less about how their online will compare with their excellent store-based performance, it’s more about identifying and satisfying growth opportunities in a profitable way. When customers shop online for groceries it’s usually to get something they couldn’t get from shopping the store; i.e. it’s an activity that complements their regular shopping. So why would we expect this to be successful and profitable? Order size will be larger than otherwise would be the case. The reason is that, in addition to hard to find items, there’s a broad assortment of products that can easily be combined into a larger order turning what would otherwise be a “spearfishing expedition” into a larger transaction. H-E-B’s online sales will largely be incremental either coming from those shoppers who don’t have an H-E-B store nearby or from those who do and are looking for another option. Now they have it, shopping H-E-B online. Order fulfillment can be done… Read more »
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Braintrust
"What an excellent way to expand your market. It seems unclear whether H-E-B has plans to become a significant force in e-commerce or if it wants to be a significant force in Texas e-commerce with an added ability to ship specialty items outside of Texas."
"H-E-B needs to morph its terrific in-store experience to online shopping. Research has shown that the grocery shopping experience must match other experiences on the Internet (Amazon-like)."
"I’m not sure that any established brick-and-mortar retailer is having the same level of success online as they do in-store, but over time, H-E-B will do well. Their website and loyalty engine is driven off of the Coupons.com platform."

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