Online grocery shopping
After reading and reacting on the blogpost about Picnic, I was wonder how the industry of online grocery is currently developing. Customers are increasingly exposed to the internet these day. And, of course, this will change the way we live. Lots of companies try to adapt their strategy to the current situation. Also the Fast Moving Consumer Good (FMCG) companies try to optimize their performance within the online channel. About 15% of their budgets are spend on marketing and research in order to win some share in e-commerce. Currently, 2% of all the groceries are ordered online in the Netherlands. In October 2015, ING published a research in with they expect that this will be 20% in 2020.
In the UK, 22% of the household shopped online for groceries over the past 12 months and even these still spend 75% of their money in an off-line environment. As you can see in Figure 1 and Figure 2, the total e-commerce spending’s are grown from 1.1% in 2003 to 5.1% in the UK. The online grocery market is being worth £ 5.6 billion, compared to the whole grocery market of being worth £ 157 billion. The biggest online grocer of the UK, Tesco, has a share of 2.4%.
In the Netherlands, 1 out of 5 customers (19%) buys some groceries online ones in a while. People under the age of 40 and families with young children are represented above average (32% and 34%). This 19% will double to 38% in the close future, since lots of people indicate that they are willing to buy their groceries online. Most of the customers think that online shopping can replace the weekly trip to the store. However, to buy fresh or forgotten product, visits to the physical stores need to be done. The three most convenient advantages people experience with online grocery shopping are that they are able to do their groceries before or after the opening hours, they do not have to carry the heavy groceries anymore and it saves them time.
Although the prediction of growth, not every person is a fan of doing groceries online. A few reasons for this are that it is boring to do groceries online, it is complex (one has to be at home at delivery time, one has to go the shop for miscellaneous articles and one has to check the billing) and it is more expensive due to the delivery cost.
Nowadays, Ahold and Jumbo are the major companies that offer, besides the physical stores, also the opportunity to buy the groceries online in the Netherlands. What will happen when Picnic becomes one of their competitors? Will they change their strategy?