Online Grocery
This document was uploaded by user and they confirmed that they have the permission to share it. If you are author or own the copyright of this book, please report to us by using this DMCA report form. Report DMCA
Overview
Download & View Online Grocery as PDF for free.
More details
- Words: 2,149
- Pages: 12
PreView
™
Online Grocery Drivers, Barriers and Opportunities for Online Grocers
Industry Briefs
Online Grocery Introduction Almost a decade after the dot.com bubble burst, online grocery is beginning to show a resurgence. While the US online active universe has roughly doubled (from roughly 100 million to roughly 200 million people) since 2001, the online presence of grocers has increased more than 13x in the same time frame. More than 13 million US Internet users visited a grocery site in July 2009. In this industry brief, we will delve into the key drivers behind the revitalized online grocery movement, including the ways consumers use the Web, social media and other online tools to plan and execute purchases, how retailers and consumer package goods companies can maximize opportunities and launch themselves into this re-emerging market, as well as what US grocers can learn from the successful adoption of online grocery shopping in the UK.
This industry brief will examine the following areas: • The online grocery landscape ––Hits and misses over the years ––Sizing the market ––Who are key online grocery shoppers? • Drivers and Barriers of online grocery purchases • What can US retailers learn from the UK? • Emerging trends & opportunities for US-based grocers
2 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery Poised for Growth In the current retail and economic environment, Online Grocery is poised for growth as it sits at the nexus of four macro-trends:
Convenience
Gen Y Online Grocery
Broadband
Customization
• Convenience: Convenience has become a critical need and expectation of consumers. • Generation Y: Generation Y (generally defined as consumers born between 1983-92) are coming into the grocery-buying age. • Broadband: As of July 2009, broadband is currently estimated to be at or above 2/3 U.S. penetration. • Customization: The web platform allows for a consumer-centric grocery browsing and purchasing experience.
3 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery The Online Grocery Landscape In the brief history of online grocery services, two distribution models have emerged as viable: use of regional warehouses for comprehensive product offerings and use of national shipments for primarily shelf stable items. Players in the space have included online pure-plays (Webvan, FreshDirect), online retailer generalists (Amazon) and traditional grocery retailers moving online (Safeway, PublixDirect).
Company Learning Phase Today
Online Only?
Product Assortment
Distribution Model
Peapod
Yes
All Food & Bev
Regional warehouses
Omaha Steaks
No
Meat, Meals, Gifts
National ship
Webvan*
Yes
All Food & Bev
Regional warehouses
Safeway
No
All Food & Bev
Regional warehouses
PublixDirect*
No
All Food & Bev
Regional warehouses
FreshDirect
Yes
All Food & Bev
Regional warehouse
Amazon
Yes
Shelf stable only
National ship
Yes
Shelf stable only
National ship, directly from manufacturers
Alice Source: Company websites *No longer exist.
In the US, 2008 online food and beverage purchases were estimated to be $3.5 – 4.0B, or less than 1% of the total category. Although the bulk of grocery purchases take place offline, online grocery transactions tend to be larger than those made offline on average, shoppers tend to spend twice as much online as offline. Drivers of this phenomenon include the following: • Free shipping and minimum order thresholds • Upscale shopper profile drives premium/niche item purchases • No lugging of heavy groceries leads large packages of storable items to thrive online
4 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery Profile of an Online Grocery Shopper Based on an examination of online grocery shoppers within Nielsen’s online and HomeScan panels, a picture emerges of households which are: • Older, affluent and smaller - thus more willing to pay shipping fees in exchange for convenience • Geographically correlated with the distribution of online grocers (upscale urban/suburban neighborhoods)
Large households represent untapped opportunity – grocers will need to ensure that their online presence is easy to use, customizable and convenient enough to address the hectic lifestyles of large families.
Online Food & Beverage Buyer Index Demographic
Index
HH Age <35 35 - 64 65+ < $25K $25K - $49K $50K - $99K
Under index
$100K+
Over index
Not a High School Graduate College Graduate HH Size 1–2 members HH Size 3-4 HH Size 5+ No Children in HH Any Children (2 - 17) Cosmopolitan Centers Affluent Suburban Spreads Plain Rural Living Source: Nielsen Online Panel
5 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery Drivers of Online Grocery Purchasing According to a recent Nielsen survey, over 70% of respondents reported having a positive experience purchasing groceries online, while only 3% disliked the experience.
Drivers of Online Purchasing Avoid crowds Find products I can’t get at Local Store Easy Special promos/deals Save on fuel costs Takes less time Better selection Avoid bad weather Less work Useful info on the website Easy way to stock up Stick to a budget/avoid impulse buys
39% 38% 36% 33% 32% 31% 27%
21%
24% 24%
13% 12%
Source: Nielsen Custom Survey, March 2009
A few core drivers of positive experiences emerge from the survey results: • Convenience ––Consumers fill up their grocery carts with the click of a button, at any time of the day or night, at work or at home ––Consumers stock up on staples without having to lug heavy packages ––Consumers need never run out - automatic replenishment options make for convenient re-ordering ––Consumers avoid driving to stores or lugging bags on public transit, navigating crowded aisles, hunting down specific products and waiting in line • Selection and product information ––Virtual shelf space allows for a wide product assortment and in-depth product info ––Especially important for those with special dietary needs • Pricing ––The online grocery shopping experience facilitates price and product comparisons ––Running shopping-cart tallies help deter impulse buys
6 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery Barriers to Purchasing Online The main barriers (pricing, fees, delivery) to online grocery purchasing are, in some sense, the flip side of some of the main drivers for online grocery:
Barriers of Online Purchasing Shipping costs
65% 41%
Waiting for delivery 36%
Security, privacy 31%
Can’t use coupons
30%
More expensive 31%
Confusing Can’t inspect products
17%
Just not in the habit of doing
17%
Concerned products will be damaged
14%
Source: Nielsen Custom Survey, March 2009 • Delivery fees and product pricing ––Higher prices than offline-purchased items and delivery/shipping fees can be perceived as hard to justify ––Consumers dislike not being able to use coupons they could easily use in a grocery store • Lack of control ––Consumers cannot physically inspect products before purchase, which can be perceived as critical in categories such as produce ––Having to wait at home during set times for a delivery counters the key benefits of buying groceries online - time-savings and flexibility - especially when the same items could be purchased nearly immediately offline • Behavior ––Some consumers do not yet feel accustomed to buying groceries online ––Some consumers enjoy grocery store shopping ––Some consumers are unable or unwilling to plan ahead to the degree necessary to make online grocery shopping effective
7 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery Learning from the UK Online grocery penetration in the UK is roughly double US penetration. Given this relative maturity of the marketplace, there are a few lessons to be learned.
Online Grocery Shopping Penetration Rate 16% 12% 10% 8%
US - Current
UK - Dec 06
UK - Dec 07
UK - Dec 08
Source: Nielsen Homescan As we observed in the US, online grocery shoppers in the UK tend to have higher income levels. However, unlike the US, UK online grocery buyers tend to have larger, younger households, reinforcing the growth opportunity for US retailers to move beyond the current niche purchaser profile.
UK online grocery shopper attitudes have also matured in recent years, moving from apprehension about the experience to more practical concerns. This provides US online grocers with visibility to evolving shopper concerns.
Comparing a January 2009 survey to October 2006 illustrates that: • Almost a quarter of shoppers have “no concerns” related to purchasing groceries online • Irritation with delivery charges and delivery times is growing over time • Concerns about purchasing groceries online – and having someone else select produce – have subsided
8 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery Learning from the UK (Continued) Why is online grocery shopping more popular and more mature in the UK than in the US? What else can US retailers learn from the UK market? • Strong retailers and competition require strong marketing - with 4 major players in the UK – strongly led by Tesco which created and then drove the market through heavy marketing – others were forced to follow suit, including national TV advertising • Infrastructure improvements matter – distribution networks, product availability, substitution mechanisms, delivery times, prices all contribute to customer satisfaction • Price wars create interest – the battle between Tesco and Asda has driven down consumer price while driving up consumer interest • Alternative offers create value – “switch and save” mechanisms for easy substitutions (usually private label) achieve a 40% click-through rate • National home delivery is an opportunity – major supermarkets use online to fill-in regions where they are thin on the ground – where demand existed but supply didn’t, representing an even larger opportunity in the (much larger) US • Online customer service must be as strong as in-store – free delivery, flexible delivery time slots, fewer bags to be more green
9 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery Insights and Opportunities In examining the behaviors of online grocery shoppers, we have been able to determine that these consumers are more than 2 times as likely to: • Read and/or post online product reviews • Download coupons • Search for recipes online • Access the internet via mobile phone
These insights provide an interesting context from which to build connection and engagement with online shoppers, in 3 key ways: • Inform –– Provide product information –– Create a framework for consumer product reviews –– Editorial reviews in key categories • Inspire –– Recipes and meal planners –– Video – cooking demonstrations, celebrity chefs, product/produce guides and ideas • Customize –– Consumer-created shopping lists with an intelligent suggestion engine –– Coupons – mobile coupons are a best practice –– Advanced filtering, including dietary needs –– Automated replenishment mechanisms
10 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery Summary • Online grocery in the US is a small but expanding market, with plenty of room for innovation. The more mature UK market provides both causes for optimism as well as watch-outs for US players entering the space. Expanding the market will require both building awareness and establishing the value proposition of online grocery services. • The current US online grocery shopping HH is older, wealthier and smaller. The UK market points to younger, larger families as a key area of opportunity for the US. Ensuring the shopping process is easy and convenient for larger, time-starved families will drive growth among this group. Educating shoppers about the benefits of shopping online – saving time and money – will also be critical. • Convenience is a key driver of shopper satisfaction, while delivery fees, waiting times and general uncertainty about the experience are key barriers to purchase. Survey data from the UK illustrates that, over time, shopper attitudes will evolve from conceptual concerns to pragmatic concerns. • Online grocery sites must engage shoppers; value is not limited to grocers with transactional sites. Supporting the in-store experience through digital coupons, shopping lists, store availability and more is part of this evolution. • Emerging media platforms can inform, inspire and customize the online grocery shopping experience.
learn more To learn more about the data sets and products referenced in this study, please email: [email protected] This brief was based on a Nielsen Online webinar entitled: Online Grocery: Take Two. Click here to download and view the complete presentation.
11 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
About Nielsen PreView™ Exclusive industry intelligence. Led by the community. Built by Nielsen.
FEEDBACK? CLICK HERE
[email protected]
www.nielsen.com Copyright © 2008 The Nielsen Company. All rights reserved. Printed in USA. Nielsen and the 12 Copyright © 2009orThe Nielsen Company • Confidential and Proprietary Nielsen logo are trademarks registered trademarks of CZT/ACN Trademarks, L.L.C.
www.nielsenpreview.com
™
Online Grocery Drivers, Barriers and Opportunities for Online Grocers
Industry Briefs
Online Grocery Introduction Almost a decade after the dot.com bubble burst, online grocery is beginning to show a resurgence. While the US online active universe has roughly doubled (from roughly 100 million to roughly 200 million people) since 2001, the online presence of grocers has increased more than 13x in the same time frame. More than 13 million US Internet users visited a grocery site in July 2009. In this industry brief, we will delve into the key drivers behind the revitalized online grocery movement, including the ways consumers use the Web, social media and other online tools to plan and execute purchases, how retailers and consumer package goods companies can maximize opportunities and launch themselves into this re-emerging market, as well as what US grocers can learn from the successful adoption of online grocery shopping in the UK.
This industry brief will examine the following areas: • The online grocery landscape ––Hits and misses over the years ––Sizing the market ––Who are key online grocery shoppers? • Drivers and Barriers of online grocery purchases • What can US retailers learn from the UK? • Emerging trends & opportunities for US-based grocers
2 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery Poised for Growth In the current retail and economic environment, Online Grocery is poised for growth as it sits at the nexus of four macro-trends:
Convenience
Gen Y Online Grocery
Broadband
Customization
• Convenience: Convenience has become a critical need and expectation of consumers. • Generation Y: Generation Y (generally defined as consumers born between 1983-92) are coming into the grocery-buying age. • Broadband: As of July 2009, broadband is currently estimated to be at or above 2/3 U.S. penetration. • Customization: The web platform allows for a consumer-centric grocery browsing and purchasing experience.
3 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery The Online Grocery Landscape In the brief history of online grocery services, two distribution models have emerged as viable: use of regional warehouses for comprehensive product offerings and use of national shipments for primarily shelf stable items. Players in the space have included online pure-plays (Webvan, FreshDirect), online retailer generalists (Amazon) and traditional grocery retailers moving online (Safeway, PublixDirect).
Company Learning Phase Today
Online Only?
Product Assortment
Distribution Model
Peapod
Yes
All Food & Bev
Regional warehouses
Omaha Steaks
No
Meat, Meals, Gifts
National ship
Webvan*
Yes
All Food & Bev
Regional warehouses
Safeway
No
All Food & Bev
Regional warehouses
PublixDirect*
No
All Food & Bev
Regional warehouses
FreshDirect
Yes
All Food & Bev
Regional warehouse
Amazon
Yes
Shelf stable only
National ship
Yes
Shelf stable only
National ship, directly from manufacturers
Alice Source: Company websites *No longer exist.
In the US, 2008 online food and beverage purchases were estimated to be $3.5 – 4.0B, or less than 1% of the total category. Although the bulk of grocery purchases take place offline, online grocery transactions tend to be larger than those made offline on average, shoppers tend to spend twice as much online as offline. Drivers of this phenomenon include the following: • Free shipping and minimum order thresholds • Upscale shopper profile drives premium/niche item purchases • No lugging of heavy groceries leads large packages of storable items to thrive online
4 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery Profile of an Online Grocery Shopper Based on an examination of online grocery shoppers within Nielsen’s online and HomeScan panels, a picture emerges of households which are: • Older, affluent and smaller - thus more willing to pay shipping fees in exchange for convenience • Geographically correlated with the distribution of online grocers (upscale urban/suburban neighborhoods)
Large households represent untapped opportunity – grocers will need to ensure that their online presence is easy to use, customizable and convenient enough to address the hectic lifestyles of large families.
Online Food & Beverage Buyer Index Demographic
Index
HH Age <35 35 - 64 65+ < $25K $25K - $49K $50K - $99K
Under index
$100K+
Over index
Not a High School Graduate College Graduate HH Size 1–2 members HH Size 3-4 HH Size 5+ No Children in HH Any Children (2 - 17) Cosmopolitan Centers Affluent Suburban Spreads Plain Rural Living Source: Nielsen Online Panel
5 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery Drivers of Online Grocery Purchasing According to a recent Nielsen survey, over 70% of respondents reported having a positive experience purchasing groceries online, while only 3% disliked the experience.
Drivers of Online Purchasing Avoid crowds Find products I can’t get at Local Store Easy Special promos/deals Save on fuel costs Takes less time Better selection Avoid bad weather Less work Useful info on the website Easy way to stock up Stick to a budget/avoid impulse buys
39% 38% 36% 33% 32% 31% 27%
21%
24% 24%
13% 12%
Source: Nielsen Custom Survey, March 2009
A few core drivers of positive experiences emerge from the survey results: • Convenience ––Consumers fill up their grocery carts with the click of a button, at any time of the day or night, at work or at home ––Consumers stock up on staples without having to lug heavy packages ––Consumers need never run out - automatic replenishment options make for convenient re-ordering ––Consumers avoid driving to stores or lugging bags on public transit, navigating crowded aisles, hunting down specific products and waiting in line • Selection and product information ––Virtual shelf space allows for a wide product assortment and in-depth product info ––Especially important for those with special dietary needs • Pricing ––The online grocery shopping experience facilitates price and product comparisons ––Running shopping-cart tallies help deter impulse buys
6 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery Barriers to Purchasing Online The main barriers (pricing, fees, delivery) to online grocery purchasing are, in some sense, the flip side of some of the main drivers for online grocery:
Barriers of Online Purchasing Shipping costs
65% 41%
Waiting for delivery 36%
Security, privacy 31%
Can’t use coupons
30%
More expensive 31%
Confusing Can’t inspect products
17%
Just not in the habit of doing
17%
Concerned products will be damaged
14%
Source: Nielsen Custom Survey, March 2009 • Delivery fees and product pricing ––Higher prices than offline-purchased items and delivery/shipping fees can be perceived as hard to justify ––Consumers dislike not being able to use coupons they could easily use in a grocery store • Lack of control ––Consumers cannot physically inspect products before purchase, which can be perceived as critical in categories such as produce ––Having to wait at home during set times for a delivery counters the key benefits of buying groceries online - time-savings and flexibility - especially when the same items could be purchased nearly immediately offline • Behavior ––Some consumers do not yet feel accustomed to buying groceries online ––Some consumers enjoy grocery store shopping ––Some consumers are unable or unwilling to plan ahead to the degree necessary to make online grocery shopping effective
7 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery Learning from the UK Online grocery penetration in the UK is roughly double US penetration. Given this relative maturity of the marketplace, there are a few lessons to be learned.
Online Grocery Shopping Penetration Rate 16% 12% 10% 8%
US - Current
UK - Dec 06
UK - Dec 07
UK - Dec 08
Source: Nielsen Homescan As we observed in the US, online grocery shoppers in the UK tend to have higher income levels. However, unlike the US, UK online grocery buyers tend to have larger, younger households, reinforcing the growth opportunity for US retailers to move beyond the current niche purchaser profile.
UK online grocery shopper attitudes have also matured in recent years, moving from apprehension about the experience to more practical concerns. This provides US online grocers with visibility to evolving shopper concerns.
Comparing a January 2009 survey to October 2006 illustrates that: • Almost a quarter of shoppers have “no concerns” related to purchasing groceries online • Irritation with delivery charges and delivery times is growing over time • Concerns about purchasing groceries online – and having someone else select produce – have subsided
8 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery Learning from the UK (Continued) Why is online grocery shopping more popular and more mature in the UK than in the US? What else can US retailers learn from the UK market? • Strong retailers and competition require strong marketing - with 4 major players in the UK – strongly led by Tesco which created and then drove the market through heavy marketing – others were forced to follow suit, including national TV advertising • Infrastructure improvements matter – distribution networks, product availability, substitution mechanisms, delivery times, prices all contribute to customer satisfaction • Price wars create interest – the battle between Tesco and Asda has driven down consumer price while driving up consumer interest • Alternative offers create value – “switch and save” mechanisms for easy substitutions (usually private label) achieve a 40% click-through rate • National home delivery is an opportunity – major supermarkets use online to fill-in regions where they are thin on the ground – where demand existed but supply didn’t, representing an even larger opportunity in the (much larger) US • Online customer service must be as strong as in-store – free delivery, flexible delivery time slots, fewer bags to be more green
9 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery Insights and Opportunities In examining the behaviors of online grocery shoppers, we have been able to determine that these consumers are more than 2 times as likely to: • Read and/or post online product reviews • Download coupons • Search for recipes online • Access the internet via mobile phone
These insights provide an interesting context from which to build connection and engagement with online shoppers, in 3 key ways: • Inform –– Provide product information –– Create a framework for consumer product reviews –– Editorial reviews in key categories • Inspire –– Recipes and meal planners –– Video – cooking demonstrations, celebrity chefs, product/produce guides and ideas • Customize –– Consumer-created shopping lists with an intelligent suggestion engine –– Coupons – mobile coupons are a best practice –– Advanced filtering, including dietary needs –– Automated replenishment mechanisms
10 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
Online Grocery Summary • Online grocery in the US is a small but expanding market, with plenty of room for innovation. The more mature UK market provides both causes for optimism as well as watch-outs for US players entering the space. Expanding the market will require both building awareness and establishing the value proposition of online grocery services. • The current US online grocery shopping HH is older, wealthier and smaller. The UK market points to younger, larger families as a key area of opportunity for the US. Ensuring the shopping process is easy and convenient for larger, time-starved families will drive growth among this group. Educating shoppers about the benefits of shopping online – saving time and money – will also be critical. • Convenience is a key driver of shopper satisfaction, while delivery fees, waiting times and general uncertainty about the experience are key barriers to purchase. Survey data from the UK illustrates that, over time, shopper attitudes will evolve from conceptual concerns to pragmatic concerns. • Online grocery sites must engage shoppers; value is not limited to grocers with transactional sites. Supporting the in-store experience through digital coupons, shopping lists, store availability and more is part of this evolution. • Emerging media platforms can inform, inspire and customize the online grocery shopping experience.
learn more To learn more about the data sets and products referenced in this study, please email: [email protected] This brief was based on a Nielsen Online webinar entitled: Online Grocery: Take Two. Click here to download and view the complete presentation.
11 Copyright © 2009 The Nielsen Company • Confidential and Proprietary
Industry brief: Online Grocery, September 2009
www.nielsenpreview.com
About Nielsen PreView™ Exclusive industry intelligence. Led by the community. Built by Nielsen.
FEEDBACK? CLICK HERE
[email protected]
www.nielsen.com Copyright © 2008 The Nielsen Company. All rights reserved. Printed in USA. Nielsen and the 12 Copyright © 2009orThe Nielsen Company • Confidential and Proprietary Nielsen logo are trademarks registered trademarks of CZT/ACN Trademarks, L.L.C.
www.nielsenpreview.com
Related Documents
Online Grocery
June 2020 1
Grocery
April 2020 39
Grocery
April 2020 39
Grocery Circular
May 2020 28
Grocery Optimization
May 2020 36