Is online shopping ready for checkout?

12/30/2013 09:23:00 AM
Tom Karst

Tom Karst, National EditorTom Karst, National EditorI saw a link on the Drudge Report the day after Christmas that the “Christmas overload” of online shopping resulted in some unfulfilled promises for deliveries from online marketers.

The Wall Street Journal’s Shelly Banjo wrote in the story “Shipping overload leaves many giftless” that “many shoppers are blaming online retailers for stealing Christmas.”

Online companies Amazon.com, Kohl’s and Wal-Mart overpromised and under delivered, resulting in some empty wrapped presents with only a promise of the coming gift.

That was not my experience. I ordered a several things from Amazon on Dec. 20 and Dec. 21 and received them all before Christmas Eve night. Being a member of Amazon Prime, the selections were sent without a shipping charge.

The bliss I felt in ordering these items online was wonderful. I didn’t have to point my car to the vast and un-welcoming mall, with its slushy parking lots, distracting crowds, over-picked merchandise and long checkout lines. The packages arrived on my doorstep magically, as if delivered by brown-clad elves.

I have to admit I like this online shopping. It suits me.

But does it suit consumers of fresh produce? The expansion of Amazon Fresh into the San Francisco market grabbed headlines recently and sparked conversation about the future of online retailing of fresh foods and grocery items.

In coverage for The Packer, I talked with Bill Bishop, chief architect of Brick Meets Click and chairman of Barrington, Ill.-based Willard Bishop Consulting, about the emergence of online retailing. He said online buying and home delivery may appeal to a mix of customers, including time-starved working parents, millienials and some older shoppers.

Yes, but is online ordering and home delivery really poised to become a viable business model? It appears so, more and more.

Statistics from Brick Meets Click show about 11% of shoppers have purchased food online in the past month. Online grocery shopping accounts for about 3% of purchases across all banners now, but that share could expand to anywhere from 7% to 17% by 2023, according to projections from Brick Meets Click.

I recently asked members of The Packer Market for their observations about online retailing.

The question I posed was this: How big will online shopping/home delivery be for fresh foods in the next 15 years? Will Amazon Fresh become dominant online fresh food retailer?

Here are a few excerpts of what was said in that forum.

One member said:

“I was one of those guys who said bag salads were not going to make it. Whoops!! I underestimated how lazy people have become. In the city, I can see it more than the outer areas.”

Another wrote:

“Bigger than anyone thinks and it is not going to take 15 years. Check out Lufa Farms in Montreal. They grow in greenhouses on roofs in the city. ‘Click and collect’ at a weekly shopping mall parking lot. They can not grow fast enough to keep up with demand. They just built their second facility and they are planning a third. Home delivery and online shopping is here now and growing fast. Amazon only wants to get a piece of the action. Farmers are cutting out the middleman and going to ‘farm direct marketing.’”

A retailer writes:

“I think that online fresh food will be commonplace in the next five years — at least in the major cities. As a retailer, my best strategy will be to provide the best customer service I can, as well as try to compete with pricing — pretty much what I’m already doing. Amazon won’t have a physical presence other than the brown box that shows up at your doorstep. I feel that going into a store and having someone to talk to will always be appreciated and wanted by customers.”

And what about wrinkles and tweaks in the model?

“Consistency is the goal more so in this business. If the home deliveries consistently provide the quality that each customer is willing to pay for, then it will be very common. Human interaction is a habit, which can also change if it hasn’t already started curving toward less and less. There is a new app called Boxed Wholesale Delivery. It only deals in dry goods, but the idea is firm. If someone can figure out how to sell certain vegetables through the Web (to be) home delivered by USPS in two to three days, then that would be something.”

Those are just a few of the comments on the topic. Please join the conversation at The Packer Market and share your thoughts on the issue.

If the online threat is indeed real, the implications for all parts of the supply chain are immense. How would sales of produce be changed if a greater and greater percentage of consumers ordered fresh fruits and vegetables online for home delivery? Would impulse sales increase or decrease?

What are counter-measures traditional brick retailers can implement to keep their customers loyal? How can grower-shippers and/or wholesalers transform their company so they might partner with an online retailer? For online shoppers, is branding more or less important?

There is much to weigh. Consumer habits are not quickly changed, and the expansion of home delivery will be modest relative to the entire consumer market.

As a new convert to online shopping, however, I have to say that the appeal of one-click convenience cannot be overstated.

tkarst@thepacker.com

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