Below is a SNAP Online Basics Webinar that summarizes the SNAP Online Program as well as gives you firsthand experience from Jimmy Wright, owner of Wright's Market, who has implemented the SNAP Online Program in his store.
"You only get one chance to make a good first impression."
The online grocery shopping experience gives new life to this old saying. Food retailers need to be prepared to provide online shoppers with a flawless online shopping experience from the day they launch eCommerce.
Before you consider implementing online shopping, you may want to begin by considering how well your store manages the basics of food retailing. Keep in mind that strengths and weaknesses within the walls of your physical store may only be visible to the population visiting your store, while online shopping may amplify both the positive AND negative aspects of your overall operations and reputation.
What are components of a well-run and respected physical grocery store and how might they transfer to online shopping? Let’s start with a few basics and examine both the physical and online aspects of each shopping experience.
- Item Pricing. Consider that while your store item pricing is only visible to shoppers in the store, your online shopping platform makes your entire pricing philosophy visible to all online shoppers AND competitors. How confident are you that your store item pricing is competitive?
- POS & Retail Technology Management. Great stores often have great POS/Scan coordinators. Since online shopping platforms are “mirror” copies of the store POS scan/item database, the accuracy of your scan coordinator is critically important for the online platform. Additionally, will management of the online platform be a task your current scan coordinator is able to take on, or will additional staff be needed?
- Store Layout & Merchandising. Think of how your store’s product offering is presented to shoppers in the store. For an online shopping platform, a website presentation that is easy to comprehend and navigate is also critical. Much of the online store layout has been programmed into the technical capabilities of online platforms, but extending the store shopping design to the online shopping experience is important.
- Inventory Management and Replenishment. Since stores often fulfill online orders from the store shelf stock, are you prepared to manage additional ordering and inventory levels with the addition of online sales?
- In-store Grocery Checkout. Shoppers hate standing in line to checkout – either at cashier-attended lanes or self-checkout. Physical stores that emphasize customer service and fast checkout will in most cases connect with more shoppers. Just as balancing the number of open checkouts in the physical store is important, making sure you have staffing flexibility to process fluctuations in online shopping volume is important. Most online shopping platforms do provide retailers with the capability to determine how many online orders they will accept and process in a day.
- Customer Service. How well do your store staff handle customer issues? There is a level of quality required for interactions with customers in the physical store setting, and consideration of how your store will manage customer service for online customers is also critical.
There are other aspects of physical store operations that when well done in the store can also be carried over to the online shopping experience. As you begin your examination of offering online shopping, you may want to consider the addition of the service as a “new” business operation within your existing business. If you are already dedicated to being the best physical grocery store possible, that dedication is likely to carry over into your online shopping services too.
Please note that while this information may help provide more context and understanding of the SNAP Online process, FNS and NGAF cannot speak to what is right for your business specifically. Furthermore, FNS and NGAF do not endorse any specific price for items sold by your store, SNAP eligible or otherwise. Each retailer’s financial situation is unique and any decisions made to accept or not accept SNAP Online are yours alone.
Many retailers already offer their shoppers the option to purchase online but may not yet provide the capability for SNAP participants to use their benefits online. If their eCommerce provider already has the capability to accept SNAP EBT payments, the retailer’s next step is obtaining FNS authorization to accept online SNAP payments. If the retailer’s eCommerce provider is not currently capable of processing online SNAP EBT payments, the retailer will need to discuss the addition of this capability with their eCommerce provider. A retailer may also want to consider changing to an eCommerce provider capable of processing SNAP EBT transactions.
If a retailer is not already offering online shopping and would like to add the capability for all shoppers, including SNAP participants, selection of an eCommerce provider who has gone through an approval process for SNAP Online with FNS should be considered (but is not required). If an eCommerce provider who has not yet developed a SNAP online purchasing platform is selected by the retailer, the retailer’s solution will require submission of a Business Requirements Document (BRD) to FNS and a demonstration to FNS of the solution, in addition to the usual testing phase. The eCommerce provider must use an approved online PIN solution provider (TPP). In some cases, the TPP used in the brick & mortar store may be different from the TPP used for the eCommerce solution.
Making changes to your website and receipts and contracting with an additional TPP for an online PIN solution to accept SNAP Online is an investment retailers will want to consider carefully. SEMTAC has developed a tool that may help retailers who are not currently offering online shopping to determine the potential return on investment - though retailers are encouraged to use whatever tools or calculations they deem appropriate.
The SEMTAC tool uses a break-even analysis. A break-even analysis for a food retailer online shopping program can be a helpful tool in determining how many online orders the food retailer needs to achieve to cover its costs for the program during the first year. This break-even point also provides a window into the operational aspect of how much store staffing will be required to fulfill orders. A basic break-even model is provided below, and retailers are encouraged to examine their own internal costs and data to develop their specific model.
Assumptions:
Using these variables, the break-even point (in terms of number of online orders) can be calculated as:
[Equation]Example Calculation:
Suppose a food retailer has the following first year projected costs and revenue figures for its online shopping program:
Using the formula:
First Year Break Even (Orders)= $75,000 / $75-$17 =631
Thus, the food retailer would need approximately 631 online orders in the first year to break even on its online shopping program.
This simple example doesn't account for other potential costs and factors, such as the cost of goods sold, or incremental storage costs, but it provides a basic framework to begin the analysis. Adjustments would need to be made based on the specific context and variables of the food retailer.
You can use this Feasibility Tool on our Resource Page to plug in your retailer expenses.
Please note that while these tools may help provide more context and understanding of the SNAP Online process, FNS and NGAF cannot speak to what is right for your business specifically. Furthermore, FNS and NGAF do not endorse any specific price for items sold by your store, SNAP eligible or otherwise. Each retailer’s financial situation is unique, and any decisions made to accept or not accept SNAP Online are yours alone.
