It's increasingly apparent with each passing day that Internet-based grocery retailing is at great risk, and that perhaps none of the pure on-line plays will survive much longer.
y markets. But, as was inevitable, that flow of riches ceased when it became apparent that selling low margin, high bulk product over the Internet, for subsequent home delivery, just wasn't ever going to be the way to go. That doesn't mean there's no place for Internet sales. There is a place, and the place is the same one occupied by catalog retailers, which is what Internet-based sales propositions really are. It will work well for products that don't require an elaborate logistical system for fulfillment. Products that are "dollar-dense," such as travel, books, computer software and the like, will probably be sold over the Internet for years to come. What such products have in common is that they are small, high ticket and can be delivered either entirely on-line (travel and maybe software) or by common carrier.
So what place is left under the sun for on-line grocery propositions? I had a chat in Chicago not long ago with Bill Bishop about that very question. Bill, principal at Willard Bishop Consulting, is a well-known figure in the trade. He frequently makes presentations at industry functions, and is an indefatigable researcher.
Bill recently partnered with Pedi, Moesta & Associates to conduct a study of consumers who use on-line food-shopping services in the Chicago market. They would be customers of Webvan or Peapod. Preliminary results of the study suggest that consumers find value in the Internet experience as it relates to food shopping, and, in a way, seek the value there that they don't find when shopping in person at a supermarket.
Here's a synopsis of what the study suggested about Internet users and food shopping: Convenience, as measured in terms of time, isn't the main offer that Internet-based food shopping holds out. Indeed, food shoppers who use the Internet are likely to spend more time shopping than if they had gone to a supermarket. That's because going to the Internet forces order on the process: The family member contemplating going on-line often polls other family members to see what items they want, and what meals they might like to see during the course of a week.
Many shoppers weather what might actually be seen as the labor-intense experience of going on-line because they find something of value on-line that doesn't present itself in the supermarket, namely information. Many on-line shoppers are a little disquieted about the lack of time they put into meal planning and preparation, and their lack of knowledge about the nutritional content of food products. It's quite difficult to obtain much information about meal planning, preparation and nutrition in a typical supermarket. But this information does come to hand by way of the Internet.
So, if those two discoveries were to be put together, what conclusion might be reached? The conclusion is that the Internet may afford considerable opportunity for brick-and-mortar retailers, probably more opportunity than third party home-delivery businesses have been able to find.
Clearly, the opportunity for traditional supermarkets is in providing information about meal planning, preparation and nutrition on-line. And, a map to find product in the store could easily be offered. In effect, the Internet can be the way supermarkets can effectuate Solutions Selling without completely refiguring the physical store.
