When it comes to shopping, more and more people tend to do it online. But why do people change their behavior? The key is convenience. With just one click, consumers can access full details of a product and compare content and price whenever and wherever they want. In addition, the products could be delivered directly to their doors.
The food, beverages and consumer product industry is one of the most-important and largest- sectors of the economy in general. In Germany, for example, annual spending on food and beverage amounts to more than 240 billion Euro. Yet only 1.1 billion Euro are generated by the online grocery market. In order to react to the evolution of consumer behavior, many supermarkets have also stepped in the e-food sector.
The European E-food market has reached around 15 billion Euro last year and the growth is expected to reach an average rate of 11.3% per year. In 2018, Intershop customer Coop has reported that its online sales rose by 240%, while they are increased by 40% at supermarket PLUS. In addition to these two supermarkets, Jumbo has also revealed its online share risen by 4% last year. The potential of e-food sector is readily apparent but there are still some challenges to be solved.
Customers have usually two delivery options: in-store pick-up or home delivery. Both create additional costs but they can be either offset through pricing or charged to the customer separately. Beside the cost issue, there are still challenges with logistics, packaging and returns.
For perishable products, delivery must be fast, ideally on the same day, which is typically fulfilled by the closest store. For packaging, retailers need to ensure total integrity of the cold chain from store to door. Another important point is the policy on returns. In Germany, the online consumers can return the products within 14 days. Although the period is shorter in the case of perishable food, this policy still applies to the confectionery, beverages, etc.
Beside the existent supermarkets, the world’s largest online retailer Amazon has also expanded its business in e-food sector with AmazonFresh and its acquisition of Whole Foods. These moves have also prompted the other retailers like Walmart and Kroger to integrate technology. As the competition in this market increases, how to grow the online customer base and how to keep the customers royal has become a high priority.
Nowadays people tend to spend more and more time on their mobile devices, which makes it a great business opportunity. The online stores need to have not only a strong mobile presence, but also a user-friendly format with effective search functions and filters. Search functions could help customers find what they are interested in and with filters they could isolate certain products. If these functions are not well-developed, customers would just give up their online shopping carts and turn to other channels. Beside the importance of technology, understanding what customers need through multiple channels and making sure they have great online shopping experiences also play important roles. After all, customers are the ones who decide the life or death of the stores.
Do you want to read more? We have a whitepaper digging deeper into the challenges and opportunities in the e-food sector. Download it here!