Online grocery sales hold opportunity for produce retailers

08/22/2013 02:57:00 PM
Amelia Freidline

“Working with one-solution providers and partners doesn’t work anymore,” Schwartzhoff said. “Providers that can integrate services to their customers are coming out on top.”

C.H. Robinson’s research on heavy produce consumers showed 52% had bought groceries online, and that home delivery was the most popular way to receive purchases. The majority of consumers surveyed found the idea of an online grocery service appealing or very appealing, Schwartzhoff said, and that most would prefer to buy groceries online from the retailer whose brick-and-morter stores they usually shopped.

Schwartzhoff said consumers gave high ratings for the freshness and quality of online produce purchases, but didn’t rate the price value as high.

In that regard, he said the consumer perception of online grocery retailing is a complex picture. Consumers like going to the store to shop, he said, but most are open to letting other people pick out their produce for them through online shopping.

Freshness, quality, discounts and variety are consumers’ perceived benefits of in-store shopping, while convenience, speed and access to hard-to-find items make online shopping attractive, he said.

Retailers should emphasize new benefits of the digital marketplace, “things that meaningfully move the needle of consumers wary of buying online,” Schwartzhoff said.

Peapod

“The customer that is online is a little different than the customer in a particular brick-and-morter store,” Stallone said.

He said online grocery shoppers buy more produce, and more organic produce, than in-store shoppers, are very brand-loyal and have a large basket size, typically $160 or higher. Education, rather than income level, is the defining characteristic of online grocery shoppers.

Grocery is the fastest-growing online retail category, Stallone said, but is a lot different than other online retailing because customers buy a lot of unrelated products and have about 50-60 items in each basket, versus a few similar products such as books or movies.

“One thing everyone is always buying is produce, so you need to take advantage,” he said.

Peapod started in 1989, before the advent of the Internet, and has seen double-digit growth across the market in the past four years, Stallone said. The retailer sells more produce than any other item, he said.

“Online grocery shopping is all about reinforcing a positive experience,” he said, and so is selling produce.



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