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The Online Grocery Industry. By Prof. Karen Clay. Major Players in Online Groceries. A Sample Front Page. Basics. Consumers sign up online with grocery company Can shop anytime anywhere that they have access to web interface

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the online grocery industry

The Online Grocery Industry

By Prof. Karen Clay

basics
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
online groceries
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)
online groceries8
Online Groceries
  • Peapod’s 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)
online groceries9
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)
online groceries10
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
online groceries11
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)
online groceries12
Online Groceries
  • Sample prices for some markets
    • Per delivery
      • Webvan (free > $50, $4.95 otherwise)
      • HomeGrocer (free > $75, $9.95 otherwise)
      • Homeruns (free > $60, $10 otherwise (min $30))
      • Peapod ($9.95)
online groceries13
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 >$60)
online groceries14
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)
online groceries15
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