The Online Grocery Industry

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The Online Grocery Industry

• By Prof. Karen Clay

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Major Players in Online Groceries
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A Sample Front Page
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Basics

• Consumers sign up online with grocery company
• Can shop anytime anywhere that they have access
  to web interface
• Log in, select a basket of groceries, pay using a
  credit card, and arrange for delivery

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A Sample Signup Page
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A Sample Grocery Store
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Online Groceries

• Who are the customers
• Streamline.com, Inc. ("Streamline" or the
  "Company") simplifies the lives of busy suburban
  families Our typical customer tends to be a
  dual income household with at least one child and
  access to the Internet. (Source Streamline,
  10Q, Nov. 1999)

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Online Groceries

• Peapods slogan is Smart shopping for busy
  people, which tells you something about who
  their customers are.
• Peapod's typical members are females
  between the ages of 30 and 54, households
  with children and dual income households.
  Median income exceeding 60,000 per year.
  (Source Peapod, 10K 1999)

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Online Groceries

• How to they attract customers
• Referrals (Webvan, Peapod 20, Homeruns 10,
  Streamline)
• School programs (Webvan donates a percentage)
• Group affiliation (HomeGrocer)
• Word of mouth (all)
• Media advertising (all)
• Direct mail (all)

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Online Groceries

• Value added
• The basic value proposition is having your
  groceries delivered
• Books/magazines/office supplies
• Stamps
• Flowers
• Gifts/toys/games
• Nonprescription drug items

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Online Groceries

• Additional value added
• Not having to be home for delivery
• Streamline and Shoplink install refrigerators and
  shelving in your garage, so they can deliver any
  time
• Other services
• Dry cleaning, film processing, shoe repair,
  packages (SL, ST)
• Videos (ST)
• Bottle and can redemption (SL)
• Alcohol and Tobacco (WV, PP)

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Online Groceries

• Sample prices for some markets
• Per delivery
• Webvan (free gt 50, 4.95 otherwise)
• HomeGrocer (free gt 75, 9.95 otherwise)
• Homeruns (free gt 60, 10 otherwise (min 30))
• Peapod (9.95)

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Online Groceries

• Subscription
• Streamline, 30/mo weekly, fridge and shelving
• Shoplink, 25/mo weekly 39/mo weekly fridge and
  shelving
• Peapod (4.95/mo 5/delivery)
• Peapod (19.95/mo free delivery on orders gt60)

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Online Groceries

• Trying the product
• Experience good
• Offer various promotions to get potential
  customers to try
• Free delivery (Homeruns 60, Homegrocer 1st
  order, Webvan until Jan 31)
• Free months of service (Shoplink, Streamline)
• Free groceries (Streamline, Webvan, Peapod)

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Online Groceries

• Turning one-shot customers into repeat customers
• On monthly plans, customers are committing to an
  ongoing relationship
• Satisfaction guarantees
• In per order relationships, firms seem to be
  banking on excellent customer service to bring
  people back