We know about some of the failures of e-grocery stores. However, there are success stories out there too, and much of the success lies in the habits of younger generations living in areas that are tight in retail space. Most inefficiency occurs at the retail level, and the cost of retail increases based on the lack of availability of space. Of course NYC comes to mind as having the lowest availability of retail space in the U.S. Fresh Direct operates out of Queens, NY and has seen success in the past year. I myself have used FreshDirect a few times while living in NYC, and although the prices were a little high, they are high everywhere in the city, and I saved the trouble of shopping in crowded, cramped spaces and lugging the groceries home. FreshDirect also brands itself as "Fresh from the Farms," by selling organic, local products, a concept that is becoming increasingly popular. You can see how they brand themselves on their website:
After starting six years ago, the company became profitable for the first time last year estimating sales at $240 million in 2009, up from $215 million the year before. Some important factors in their success include decreasing delivery errors, which is obviously terrible for business, and also increasing average spend through up-selling techniques. I am also guessing that grocery shopping online is like any other kind of e-commerce; it takes a little while to gain momentum because of the time it takes to change consumer habits. People used to be afraid to shop online, but we now see the enormous success of Amazon. I think that the same is possible for groceries. The new generation is used to shopping online, and if online grocers can provide quality food for a decent price, I'm sure it will catch on. FreshDirect is now planning on testing new markets in Boston and Philadelphia, so we will see how they fare.
Looking outside of the U.S., it's also possible that online grocery shopping will popularize in China. Younger people are used to buying everything online, and are often dissatisfied with take-out but want a convenient, healthier option. Check out this article about a recent 6-month online groceries test by two major e-commerce companies. http://enovatechina.com/blog/online-groceries-a-recipe-for-success/
Shopping for groceries online is a another great option available for consumers. Recently I received an email from beachgroceries.com, a company that delivers in miami! This wasn't that popular here but I am sure that as in NY, people will start considering the option. Once again, the fact that the business world is transformed everyday by the internet, is evident.
ReplyDeleteIn my opinion online grocer's have been one of the best results of e-commerce. I lived in NY for a year and a half, and did all my shopping online via FreshDirect.com. For me it was less expensive and more convenient than having to go to a brick and mortar grocery store. For me it was basically my only option for grocery shopping, given that I worked full time and didn't have a car. If I were to shop at a brick and mortar store I would have to do my shopping over several visits to the store just because I had no way of carrying all the groceries back to my apartment. As you can see online grocery stores have numerous advantages other than just cost advantages.
ReplyDeleteFor me internet grocery has a limited market because people like to choose and see what is going to eat (squeeze the melon). Also I don't think so that the future is in the Chinese market, where it has a tradition in the art of the cooking where some of the key factors to cook an spectacular meal lies in the selection of ingredients.
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ReplyDeleteThere is definitely a trend towards grocery delivery becoming a more viable alternative to shopping at a supermarket. The questions of quality and spoilage are being addressed adequately by companies offering satisfaction guarantees. This will lead to higher confidence levels and more revenues. The number of online delivery businesses is constantly growing as can be seen on this website: http://grocerystoresthatdeliver.com/
ReplyDeleteThis is an interesting business idea that has obviously succeeded in large cities like NYC where there is a large population density, good spending power, and people looking for convenience. I think its a great idea and not only in the 'organic products market', but any type of supermarket product. For example, you can call lots of companies now a days to deliver alcohol and cigarettes to just about any metropolitan area in this country. But to concentrate on a market niche like organic products has proven to be very unique and successful because of the type of custoemrs they have. Unfortunately, many companies like Publix, Safeway, or Giant had invested heavily into making this type of business and failed. Being that it is a niche market gives they more room for success.
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