SAN DIEGO -- On-line grocery merchants are doing a poor job of targeting women, the supermarket business' primary clientele, said Mike Gardner, coordinator, Bashas' Groceries on the Go, Chandler, Ariz., while speaking at the iGrocer conference here last month.
Women control 75% of all household finances, and e-commerce web sites need to be more appealing and easier to navigate to attract and engage them, Gardner said. "Our target market should be women, but we are not doing a great job with it. When you look at how much money they spend and how much of the household finances they control, you can see that we are really missing the boat," he said.
He pointed to Bashas' first web page design as an example. "You could tell that it was written by a man, because it was pure function with no form whatsoever. It worked like a charm, but it was ugly and difficult to navigate unless you really wanted to sit down and play with it for awhile," he said.
Citing research from Cyber Dialogue, New York, he said 90% of women surveyed want security guarantees that their credit card information is going only to the retailer and that their purchasing decisions will be kept private. "It's amazing what we know about our customers. We know if there is a brand-new baby in the household. We know if somebody has a cold. We know if they have a dog. We know if there is a cat. People want their privacy protected. Women are just as concerned about that, if not more, than the average man," Gardner said.
Cyber Dialogue also found that 67% of women wanted clearly posted privacy policies. "Not only do they want them posted, but they want them adhered to and they want them to be easy to understand," he said.
The on-line merchants also have been missing the boat on direct marketing, with some spending between $50 and $400 just to attract one customer, justifying the expense with the need to build brands, Gardner said. "But with a traditional direct marketing campaign, they could attract customers for less than $10 per customer. We think we are in a brand-new world, so new rules apply. Maybe last year they did, but we've seen the world dramatically change in the last 18 months. Now it's time to go back to our roots," he said.
"There's a lot that can be learned from traditional direct marketing. We don't have to reinvent the wheel on this stuff, let's just go back to what we know," he said.
In his presentation, Gardner offered a wide ranging critique of the on-line grocery business, ultimately concluding that traditional retailers, like Bashas', have an advantage entering the Internet-ordered, home-delivery business.
Unattended delivery offers retailers, like Streamline.com, a lot of flexibility, as they don't have to be concerned with tight delivery windows. But among the challenges with this method are how to deliver the groceries if there is no garage and what to do when alcohol or tobacco deliveries are limited by law, he said. Streamline also is "trying to be all things to all people. It's domestic outsourcing," he said.
Same-day delivery is very attractive to consumers, he noted. "This is an instant gratification society. But it is outrageously expensive because there are no economies of scale." It may mean repeat trips the same day to the same neighborhood. "That's a lot of trips, a lot of gas, a lot of wear and tear, and a lot of labor cost," he said.
Some services, like Kozmo and PDQuick (formerly Pink Dot), offer to deliver within 30 minutes, which is "a nice idea," he said. "You have the same problems as with same-day delivery, but now they are accentuated."
Pure-play Internet grocery retailers like Webvan Group and HomeGrocer.com, which recently merged, are not affiliated with any traditional retailers, "but they are making a go of it. They are selling groceries and they are doing quite well. They aren't making any money, but it is a business model that is out there," Gardner said.
With their attended next-day deliveries, he noted that Webvan "started with just groceries, but now they are expanding into other product lines. They want to be Amazon."
Commenting on Peapod, which was recently acquired by Ahold USA, Chantilly, Va., Gardner pointed out that it offers attended and unattended deliveries, grocery pickup depending on the area, varying fees, and is both retail store- and warehouse-based. "Peapod is all over the place. They are still trying to figure out what they want to be when they grow up."
Gardner found the clicks-and-mortar model to be the most promising. "For Webvan to come into Phoenix, it is going to be very expensive for them to start. For Bashas' or Albertson's or Safeway to start [on-line ordering and delivery], it's a very easy entry into the marketplace," he said.
On the issue of serving the market out of one warehouse, he pointed out that it's takes an hour-and-a-half to go from one end of the Phoenix metropolitan area to the other. Even with three warehouses, it would still take 30 minutes to go to the most distant point, one way. "But if I have stores scattered throughout, it's very easy for me to penetrate the market. Not only can I take the orders out to the customers' houses, but the customers can also come to me," he said.
As previously reported, Bashas', with a total of 98 stores, now delivers out of eight stores -- six in Phoenix and two in Tucson. Additional locations, store pick-up and a site redesign are also on the drawing board for the near future, he said.
Human contact will always remain an important aspect in retailing, on-line or otherwise, he said. "As much as this is turning into a virtual world, there comes a time when I have to turn around and yell at somebody. In my traditional retail store, I can walk in the store and yell at the store manager. Customers do it and we need to listen to them," he said.
"But the same thing happens in the virtual world. If you are not listening, if there is not someone there at the receiving end of that yelling, they are not going to come back. The yelling will still occur, but you are just not going to hear it," Gardner said.
"Our customers are talking to us each and every day either through their action or inaction. It's our job to listen to what they have to say. It might not be that guy who is picking up the phone and yelling at us, that's not the kind of listening we are talking about.
"But it is looking at the data, it's watching people's paths through our site, it's finding out how people hear about our sites -- that kind of listening needs to happen on a regular basis. And we can't just sit on that information. We have to do something with it. We have to invent a way to give the customer what they want, and then we have to make sure that customer feels like we are doing it just for them -- personalize," he said.
Gardner singled out Tesco in the United Kingdom as having an especially effective program, although he noted that it was not quite Internet-based in the same way that the other on-line merchants are. Customers have to get a disk from a store, install it on their computer, and then place the order through a dial-up connection, which is faster than Web ordering. Data is saved on the customer's computer instead of the retailer's host computer.
Tesco services the orders out of 234 stores. "That's an amazing amount of fulfillment stores. But it's also an amazing amount of labor in each of those fulfillment stores waiting for that order to come in so they can shop," he said.
