What is going on with food e-sales?

In November 2012, Berlin hosted the 4th online trade conference with more than 90 papers from top experts. Let’s take a look at some highlights in the e-sales of food.

It is important to understand the developments on consumer markets, our rivals’ activities and the technological facilities developed for us by various logisticians and IT companies, from smart phones and tablets to modern applications. If we know why, we will also know how to make use of our competitive qualities.

What is going on with food services on the Internet?

Picture source: www.apartmenttherapy.com

Food sales through the Internet are expanding in view of the increasing supply, improving delivery models and the rise of new customer generations with different priorities.

These customers are looking for greater flexibility and mobility, hate traditional shopping (car travel, waiting in queues) and want to shop as cheaply as possible. These are mostly young people who go shopping only 170 days a year unlike older people who on average go to the shops 267 days a year, as shown by a GfK study.

The arrival of a (new) child into the family means additional costs, even less free time and greater care about food quality. All these requirements are well met by online offerings.

In addition, shops have pulled out of the countryside. Smaller ones remain but with a less varied service, which makes online services very useful.

The two most important things about placing online and mobile food orders are trustworthy product quality and reliable delivery, especially when it comes to fresh food. Online orders cause additional stress since one has to be at home for the delivery. Owing to the convenience of collecting orders from the actual store, various models of online ordering and in-store or drive-through pick-up (also called click and collect) are gaining popularity everywhere. There are now over a thousand food pick-up points in France.

There are quite a few niches

In the food market, there are quite a few niches that will sooner or later be filled by online providers: vegetarian and vegan, low-calorie, gluten-free, organically or naturally produced fresh local food, ready-made food, meals for one- or two-person households …

In 2008, a small crisis in a Swedish family (left one afternoon with a baby and no meal) gave rise to a company that served a hundred thousand meals that year and almost a total of 26 million meals to date.

Picture source: www.linasmatkasse.se

The website www.linasmatkasse.se offers the delivery of all products needed to prepare a meal from an attached recipe. With weekly fresh recipes, a considerably more varied diet has been ensured as well. Their primary marketing is done by word-of-mouth advertising and through social networks. They are five times bigger than their runner-up. This year, they have also received the European start-up award. The business has also branched into Germany and Great Britain with highly localized solutions.

Picture source: www.barcoo.com

There are now quite a few food-related mobile services (www.goodguide.com, www. fooducate.com, www.barcoo. com) that can be used by customers online or in stores to check the composition, quality, nutritional value and (also) price competitiveness of food by means of QR codes on the packaging.

Another special segment of the food market is ready-meal delivery to offices where microwave ovens have been set up in many places.

In Germany today, less than half a percent of overall food sales is created online. In the next ten years, the sales will grow to approximately six billion euros, which will still amount to less than four percent of overall food sales.

What should always also be taken into consideration are the indirect effects of online presence (product range information, promotions, social networks), sales through physical channels and improvement of brand reputation.

How to make use of

Adjustments of retailers to new developments are certainly vital. However, they are not so very simple to make, since the market includes many customer segments we can cater to (we cannot cater to all) and providers come from various starting points, which means there are several different pathways (strategies).

In terms of cost, drawing up a specific plan mostly does not account even for one per mil of a company’s five-year sales. It is a small investment that can later protect tens of percentage points in future sales. We should consider not only price pressures but also user experience pressures.