Online Grocery Shopping
How it works
As people’s lives are being more and more oriented toward high-tech and a smart living, many researches were conducted showing the customer’s point of view regarding this issue, as well as the management issues that arise from adopting this trend.
Researches and studies varied between identifying the triggers that encourage both customers and companies to enter this world, the effect of introducing online selling on the company’s management and the future of both the online shopping and the traditional shopping.
While some researches talked about the importance of online grocery shopping, other researches were totally against it. Some researches took cases in certain countries such as Saudi Arabia, UK and others in order to show how different cultures, values and believes react differently to innovation and expansion. Moreover, the capabilities and needs of different countries to handle this type of innovation was researched.
Whether to enter the online shopping world or not, is a critical decision for companies. Hence researches and studies regarding online grocery shopping linked this decision to the advantages and disadvantages it implies on the supermarket.
Triggers and Implementations
Showing how important it is for companies to introduce online grocery shopping, Andrea Pozzi (2013b) emphasizes that it is very important for companies seeking market expansion to enter the online market. Pozzi (2013b) finds the importance of travel costs and distance when it comes to consumers purchasing grocery from different areas. It is important to identify the trigger that will lead any customer to do his or her grocery shopping online and to find the important factors that a customer considers before going through this shopping experience. Her research was conducted on a large supermarket that introduced e-commerce services and was able to examine whether the shopper would spend more or spend less at the retailer using e-shopping. The chosen retailer was a huge retail shop that operates physically over more than 1500 stores in US. Transportation costs were recognized as a main factor that lead customers to consider shopping online. As the customer no longer has the transportation cost of driving toward a large supermarket located far away from their place of living, he now considers to shop from this supermarket online and reduce his cost of arriving physically to the supermarket. Hence, the supermarket itself is now handling the transportation cost on the behalf of the customer. And by handling transportation costs, it means that the supermarket initiates a free delivery. Furthermore, the study shows the importance that online service plays in gaining a competitive advantage, especially in a field as competitive as selling groceries.
Chris et al (2008) also conducted a study under the tittle” Online grocery shopping: the influence of situational factors”. This study aimed to find the situational factors that will encourage a consumer to do his grocery shopping online and even to stop doing his grocery shopping online. The research was used explanatory data to help understand the online grocery shopping situation in the minds of the consumer as well as a sample of 32 people living in London, aging above 25 years old and with different occupations and statues were questioned in order to find out what triggers them to do their grocery shopping online and what stops them from doing their grocery shopping online. The results of this study points to the importance of situational factors when it comes to online grocery shopping. By situational factors, Chris et al (2008) named some factors such as moving to a new house, having a baby, leaving work, and working late for some time. These factors are discussed as main triggers for shopping online and that might disappear after a short period of time
Chris et al also pointed that these factors are also beyond management control. When it comes to the management of the grocery shop, it is not in their capacity to control the factors that might change between a period or another. However, the research discussed the factors that the management can be responsible for in order to reduce the number of people cutting of the online grocery shopping experience. The results showed that management can benefit from situational factors by targeting the proper segment of the market when it comes to marketing techniques. Nevertheless, management has an important role to play that helps reduce the loss of online customers. These techniques include the decline in error when it comes to picking and packaging products for delivery, never forget to include the offers found in the store online as well, and make sure prices are the same as well. Even though the shop itself does not have a huge impact on the circumstances that encourage the adoption of online grocery shopping, it can still work towards the retention of consumers that start it.
Pozzi (2011b) researches the difference in the impact that e-commerce has on small supermarkets versus large supermarkets. She also researched the possibility of the consumers purchasing online being already loyal customers of the shop or are new customers that are stolen from the competitors who do not have this service. The study was conducted on a large chain supermarket that sells groceries online and through its stores as well. And on a number of 10,000 households visiting these chains in-store or online between June 2004 and June 2006. This supermarket has around 1500 stores in the US and sells online as well. She studied the average visits of consumers to the shop, the average visit to shop through the website, the availability of online shopping in the areas, and the consumer expenditure using traditional shopping and using online shopping. After gathering all the data, the data was compared and resulted in how large multi store chains are rising on the expense of smaller stores, and the importance that the reduction of travel cost and variety of products have on the choice of consumer of where to purchase their groceries.
As a conclusion, this research pointed that online grocery shopping is a disadvantage for small stores that do not have this service since it renders them losing their advantage of being located near the consumer. Especially that using online shopping, the consumer no longer has to think about the travel cost to reach the large stores that are located in the suburban areas to benefit from their variety and special prices. Every consumer can benefit now from the special prices that large supermarkets get due to economies of scale and the huge variety due to the spaces they have. The consumer will be able then to reach these stores easier and hence these store will be gaining new consumers by stealing them from the competitors, which are in the case the smaller supermarkets that do not have the online shopping service. Pozzi (2011b) ensured that 60 to 70% of a stores online selling is from new customers, while 30 to 40% only are from their existing customers.
Challenges and drawbacks
Realizing the huge shift people are making towards online shopping, management is in need to adjust in order to follow the new market demand. Mkansi et al (2018) conducted a study that aims to understand the challenges that online grocery shopping might face in order to help traditional supermarkets prepare themselves before entering the e-grocery shopping world. The study aims to identify these challenges and then point the therapies that could be done for management to manage efficiently and effectively the e-grocery shopping process. Mkansi et al (2018) used a multi case study analyses where interviews were done with managers at strategic, tactical and operational levels of four e-grocery retailers that are leaders in the market.
The main findings of this study divided the main challenges faced by management into four groups: managing inventory, balancing supply and demand, and managing roles and responsibilities. When it comes to managing inventory, Mkansi et al (2018) found that six out of 15 interviews believed that products availability is one of the main challenges that e-grocery is facing and that is mainly due to the products shelf lives and investment in inventory. Nevertheless, substitution and related costs, dependency on other departments, picking efficiency and others are also challenges under managing inventory levels. As for the challenges arising in meeting between supply and demand, companies focused mainly on logistics problems that are related to traffic, van sizes, routing mechanisms along with any van breakdowns, and van’s safety. And finally, for managing roles and responsibilities, the issue of limited number of staff specially the ones with specialist skills makes e-grocery shopping harder to manage. As well as the human error that might happen in the picking process, the retention of drivers, and technological challenges are very critical and hard to manage.
As a conclusion, Mkansi et al (2018) researched the solutions that grocery shops can adopt when starting their e-grocery shopping. And these solutions are in terms of naming the challenges and working internally on each specially that most of these challenges are internal challenges. By changing policies and practices, efforts from managers, proper Human Resources management and proper stock management e-grocery shopping can be successful and can increase sales and revenues for supermarkets if done properly.