February 3, 2009
Online Grocers Tout Time and Money Savings
Time is money
but today online grocery services can claim to deliver some additional
savings to consumers that go beyond avoiding a trip to the store.
According
to a piece on the website of The Boston Globe, the amount of money
consumers save by not making impulse purchases goes beyond the $6.95 to
$9.95 fee charged by services such as Peapod to pick and deliver grocery
orders.
Stacey Walsh, a nurse
at Massachusetts General Hospital, is one of those consumers who has found that shopping for her groceries online has meant
real savings. A regular trip to the supermarket, she admitted, would inevitably wind up with her spending $18 to $28 on
items she didn’t intend to buy before entering the store.
Peg Merzbacher,
marketing director at Peapod, said she understands how it works. "When
you’re waiting in line, it’s like, ‘Shoot, I need batteries’ or ‘I might
as well pick up this Chap Stick,’" she told The Globe. "And
it’s too embarrassing once they ring up your total to say, ‘Oh, I don’t
really want that.’"
Ms. Merzbacher pointed
out that there really are not online equivalents of an end-cap display
so "people tend to be much more planned as they buy."
Discussion Questions:
Are online grocers missing an opportunity to push their role in reducing
consumer expenditures considering the current economic environment? Do
online grocers have quantitative information to support the belief that
consumers buy fewer impulse items and actually spend less by shopping
these services?
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The fact that more impulse buys happen in-store, rather than online, simply points to the fact that bricks & mortar retailing has had longer to refine its impulse incentives. Give online a chance to catch up!
The success of online grocers reflects a personal view of time vs. money, provided that product expectations are met. Some grocers have developed very loyal shoppers, as it allows busy professionals to keep the household stocked. With good experience, its a service that is highly valued by some. Many online grocery subscribers still make top-up shopping trips to drugstores or specialty markets, suggesting the impulse spending is shifted to these locations, where unplanned spending is triggered by items in view.
The study about impulse purchases does make sense. In preparing an online grocery list, one tends to be disciplined. The online retailer even provides a saved list for the shopper to use which does not likely include extraneous items.
We use Fresh Direct here in New York City. They make the entire shopping process quicker, easier and cheaper. However, with each Fresh Direct online visit, they pop up with impulse suggestions. They had Super Bowl pop-ups and will have Valentine pop-ups. Depending on what one orders, you might get a prepared meal pop-up or a companion product pop-up. And, if they have specials, the shopper will certainly know about them. They seem to know how to market.
Using the idea that you will save money in these hard economic times because you won’t spend on impulse items is silly and insulting. Online grocers have a much better story. How about “you will save money on your entire purchase”? How about “you will save time and aggravation”?
Returning items isn’t even a problem. When a problem is found in the order, they simply credit you for the item in question.
Certainly, Fresh Direct does not have the sophistication of Amazon. But, don’t sell online grocers short. They have all the data that is needed to further enhance their marketing efforts.
I agree with John Lofstock. This is definitely a concept for urban upscale neighborhoods, like mine. There’s a Peapod truck in front of my neighbor’s house every Sunday, and it makes my teenage son seethe at the perceived laziness….
I’m not sure that the reduced-spending argument holds any water anyway. It would be fun to compare an online order with an in-person bargain-hunting run to see which approach saves more money. I’ll bet on the in-person approach.
When consumers go to the store or to the web site, they bring their budgets, their shopping lists, and their sense of financial well being. But they also bring along their weaknesses, their addictions, and the weaknesses and addictions of their kids. Impulse buying happens.
Grocers can help distressed shoppers control impulse buying by providing thoughtful analysis of their market basket. Make it available on MYGROCER.COM to preferred shoppers. It would help shoppers know how often non essentials were purchased and to monetize their bad habits. If this proves popular with shoppers, grocers can conduct courses and webinars to provide impulse shoppers with the training they need.
Grocers could go further integrating this information into the online experience to help impulse shoppers get themselves under control.
These kinds of programs would stimulate more online shopping and more customer loyalty. But they would bite into margin and sales volume. Still, I think it would be an overall good program that would gain enterprising grocers a substantial competitive advantage in tough times.
I live in Brooklyn, NY and use both Fresh Direct and Waldbaums to deliver my groceries. They both send circulars and have online specials that almost always lead me to purchase more than what’s on my original list. I think it’s in most of us to purchase more than what’s on that darned list.
I have purchased both meat and produce from their delivery services and have been pleased with the results except for one occasion. I believe that was a packaging/shipping issue as opposed to a problem with the meat itself. So, I really don’t understand why some people are squeamish about having meat and produce delivered.
The produce that is delivered from Fresh Direct and Waldbaums is always high quality. My local grocery stores usually have high-quality produce on display but every once in a while, you have to dig around for some time in hopes of finding some good ones. These services know that they can’t deliver bruised and battered fruit. If you pick it out yourself, that’s one thing. For them to try to dump it on you is something else entirely.
Being a NYC resident who has a long commute to and from Manhattan every day and no car at present, grocery delivery is definitely not a luxury. I pray that these services never go away and if that means spending a few extra dollars per delivery, so be it!
The online grocers should not look to use this fact as a marketing ploy. It reminds me when (in another life) I sold Whole Life insurance. When we tried to sell it as a “forced savings plan,” people reacted negatively to that approach. People do not like to think that companies are trying to force you to do something that behaviorally you (the consumer) can’t do yourself. People don’t want to be told they lack discipline.
The online grocers should continue to promote convenience, selection, ease of use, and time-saving. Leave the psychology to the psychologists.
Impulse purchases are higher for grocery shopping compared to other retail sectors. There is no doubt that impulse purchases are greater when shopping at in a store versus at website. Even when websites are designed for effective, suggestive selling, the consumer’s field of vision for impulse purchases is far greater in a store than on a website. A website can suggest several complementary items to encourage impulse purchases, but a shopper in a store can easily see hundreds of potential impulse items.
The problem with Internet supermarkets promoting this reduction in impulse buying as a benefit is that it is difficult to provide a convincing argument to consumers. First, consumers do not realize and may not believe that they are making as many impulse purchases as they actually do. Second, promoting this benefit is basically accusing consumers that they are poor shoppers–that they buy a lot of stuff they really don’t need.
Ugh! It didn’t work when times were good, why would it work now? Online groceries really are a logistical nightmare for the retailer. I do agree that it is better suited for a chain that has stores and a distribution network in place. I think customers feel more confident ordering from a site that has bricks and mortar representation. If I order produce and it’s not up to par, I’m not waiting for the ‘online return process’. I’m going to the local store to return/exchange it (many online retailers give that option to their customers).
Produce and meat is a very touchy feely kind of product. My latest client has a big produce section and I love watching the customer selection process. I would safely say that consumers find joy in picking fruit and vegetables that they like. I see elated expressions when they find that perfect cantaloupe at the bottom of the pile.
How’s this for an idea: instead of online grocery and delivery, have the customer place their order online, and they can pick it up ready on a cart the next day (or in a few hours) at the store. They get that visual and physical connection to their purchase, it saves them time and the upsell opportunities are endless. You can also throw in loyalty bonuses or special pricing to get stimulate online ordering. I could see this working for a number of chains without added labor or marketing costs.
Personally, I think this theory is a stretch, and I hope it’s not Peapod’s business model…”We’ll save you from yourself!”
In these tough economic times, I think most people view grocery delivery as a luxury they can’t afford. I’d say most customers may not enjoy having to drag the kids to the grocery store, but they prefer control over the shopping trip to use coupons, select sale items and even buy off-brands to save money. While there may not be as many “impulse sales,” more money is saved by having additional choices rather than picking items from a set list.
At best, this is an urban concept for upscale neighborhoods where access to supermarkets is restricted for residents without cars like New York, Chicago and Boston. Other than that, I don’t think people are interested in this service.
Marketing a product or service as “providing the self discipline you can’t” is risky business to be sure. Even products that seem to do that (100 calorie snack packs for example) are really just permission vehicles to go ahead and have that snack. Don’t go there.
It appears true that shoppers can avoid impulse items. But what consumer wants to be told they have a problem and they don’t have the ability to avoid impulse purchases? Online shoppers have to be careful not to offend the consumer.
Credit cards offer from one to five percent rebates on purchases hoping consumers will spend more than if they just used cash. If you use only cash, you might actually pay more but you will spend less overall. It’s a good message but I don’t think it’s going to be the trick that makes online shopping profitable. I think for online grocery shopping to be successful outside dense urban areas, they need to find a way to make it fun.
Well-designed websites encourage some impulse buying through “suggestive selling,” incentives to buy more/save more, special tabs to highlight sale items, and so on. It’s easy to fill that online shopping cart with an extra item or two.
Grocery marketers can benefit from some of the techniques used by experts in the business, like Amazon, to drive at least a few more impulse sales. In any case, the core customer for Peapod and other online grocers may not be driven by cost savings as much as by the convenience of home delivery.
I have never shopped at an online grocer but if they don’t now or before long have “specials” and pop-ups and “here’s the wine that goes well with that chicken” type of stuff that every other online merchant does, I’ll eat my hat.
Besides, if I buy something on impulse, at least I got something. Paying somewhere to fill my order and them bringing it to me are luxuries compared to getting a thing of Chapstick.
Web buying to save us from ourselves?
For a lot of folks, impulse shopping is fun. They like picking up the unexpected. Every online retailer encourages impulse shopping just like every bricks and mortar store. Where would the retail business be without impulse shopping? It would be like TV without laughs, books without sex, or newspapers without homicides.
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The fact that more impulse buys happen in-store, rather than online, simply points to the fact that bricks & mortar retailing has had longer to refine its impulse incentives. Give online a chance to catch up!
The success of online grocers reflects a personal view of time vs. money, provided that product expectations are met. Some grocers have developed very loyal shoppers, as it allows busy professionals to keep the household stocked. With good experience, its a service that is highly valued by some. Many online grocery subscribers still make top-up shopping trips to drugstores or specialty markets, suggesting the impulse spending is shifted to these locations, where unplanned spending is triggered by items in view.
The study about impulse purchases does make sense. In preparing an online grocery list, one tends to be disciplined. The online retailer even provides a saved list for the shopper to use which does not likely include extraneous items.
We use Fresh Direct here in New York City. They make the entire shopping process quicker, easier and cheaper. However, with each Fresh Direct online visit, they pop up with impulse suggestions. They had Super Bowl pop-ups and will have Valentine pop-ups. Depending on what one orders, you might get a prepared meal pop-up or a companion product pop-up. And, if they have specials, the shopper will certainly know about them. They seem to know how to market.
Using the idea that you will save money in these hard economic times because you won’t spend on impulse items is silly and insulting. Online grocers have a much better story. How about “you will save money on your entire purchase”? How about “you will save time and aggravation”?
Returning items isn’t even a problem. When a problem is found in the order, they simply credit you for the item in question.
Certainly, Fresh Direct does not have the sophistication of Amazon. But, don’t sell online grocers short. They have all the data that is needed to further enhance their marketing efforts.
I agree with John Lofstock. This is definitely a concept for urban upscale neighborhoods, like mine. There’s a Peapod truck in front of my neighbor’s house every Sunday, and it makes my teenage son seethe at the perceived laziness….
I’m not sure that the reduced-spending argument holds any water anyway. It would be fun to compare an online order with an in-person bargain-hunting run to see which approach saves more money. I’ll bet on the in-person approach.
When consumers go to the store or to the web site, they bring their budgets, their shopping lists, and their sense of financial well being. But they also bring along their weaknesses, their addictions, and the weaknesses and addictions of their kids. Impulse buying happens.
Grocers can help distressed shoppers control impulse buying by providing thoughtful analysis of their market basket. Make it available on MYGROCER.COM to preferred shoppers. It would help shoppers know how often non essentials were purchased and to monetize their bad habits. If this proves popular with shoppers, grocers can conduct courses and webinars to provide impulse shoppers with the training they need.
Grocers could go further integrating this information into the online experience to help impulse shoppers get themselves under control.
These kinds of programs would stimulate more online shopping and more customer loyalty. But they would bite into margin and sales volume. Still, I think it would be an overall good program that would gain enterprising grocers a substantial competitive advantage in tough times.
I live in Brooklyn, NY and use both Fresh Direct and Waldbaums to deliver my groceries. They both send circulars and have online specials that almost always lead me to purchase more than what’s on my original list. I think it’s in most of us to purchase more than what’s on that darned list.
I have purchased both meat and produce from their delivery services and have been pleased with the results except for one occasion. I believe that was a packaging/shipping issue as opposed to a problem with the meat itself. So, I really don’t understand why some people are squeamish about having meat and produce delivered.
The produce that is delivered from Fresh Direct and Waldbaums is always high quality. My local grocery stores usually have high-quality produce on display but every once in a while, you have to dig around for some time in hopes of finding some good ones. These services know that they can’t deliver bruised and battered fruit. If you pick it out yourself, that’s one thing. For them to try to dump it on you is something else entirely.
Being a NYC resident who has a long commute to and from Manhattan every day and no car at present, grocery delivery is definitely not a luxury. I pray that these services never go away and if that means spending a few extra dollars per delivery, so be it!
The online grocers should not look to use this fact as a marketing ploy. It reminds me when (in another life) I sold Whole Life insurance. When we tried to sell it as a “forced savings plan,” people reacted negatively to that approach. People do not like to think that companies are trying to force you to do something that behaviorally you (the consumer) can’t do yourself. People don’t want to be told they lack discipline.
The online grocers should continue to promote convenience, selection, ease of use, and time-saving. Leave the psychology to the psychologists.
Impulse purchases are higher for grocery shopping compared to other retail sectors. There is no doubt that impulse purchases are greater when shopping at in a store versus at website. Even when websites are designed for effective, suggestive selling, the consumer’s field of vision for impulse purchases is far greater in a store than on a website. A website can suggest several complementary items to encourage impulse purchases, but a shopper in a store can easily see hundreds of potential impulse items.
The problem with Internet supermarkets promoting this reduction in impulse buying as a benefit is that it is difficult to provide a convincing argument to consumers. First, consumers do not realize and may not believe that they are making as many impulse purchases as they actually do. Second, promoting this benefit is basically accusing consumers that they are poor shoppers–that they buy a lot of stuff they really don’t need.
Ugh! It didn’t work when times were good, why would it work now? Online groceries really are a logistical nightmare for the retailer. I do agree that it is better suited for a chain that has stores and a distribution network in place. I think customers feel more confident ordering from a site that has bricks and mortar representation. If I order produce and it’s not up to par, I’m not waiting for the ‘online return process’. I’m going to the local store to return/exchange it (many online retailers give that option to their customers).
Produce and meat is a very touchy feely kind of product. My latest client has a big produce section and I love watching the customer selection process. I would safely say that consumers find joy in picking fruit and vegetables that they like. I see elated expressions when they find that perfect cantaloupe at the bottom of the pile.
How’s this for an idea: instead of online grocery and delivery, have the customer place their order online, and they can pick it up ready on a cart the next day (or in a few hours) at the store. They get that visual and physical connection to their purchase, it saves them time and the upsell opportunities are endless. You can also throw in loyalty bonuses or special pricing to get stimulate online ordering. I could see this working for a number of chains without added labor or marketing costs.
Personally, I think this theory is a stretch, and I hope it’s not Peapod’s business model…”We’ll save you from yourself!”
In these tough economic times, I think most people view grocery delivery as a luxury they can’t afford. I’d say most customers may not enjoy having to drag the kids to the grocery store, but they prefer control over the shopping trip to use coupons, select sale items and even buy off-brands to save money. While there may not be as many “impulse sales,” more money is saved by having additional choices rather than picking items from a set list.
At best, this is an urban concept for upscale neighborhoods where access to supermarkets is restricted for residents without cars like New York, Chicago and Boston. Other than that, I don’t think people are interested in this service.
Marketing a product or service as “providing the self discipline you can’t” is risky business to be sure. Even products that seem to do that (100 calorie snack packs for example) are really just permission vehicles to go ahead and have that snack. Don’t go there.
It appears true that shoppers can avoid impulse items. But what consumer wants to be told they have a problem and they don’t have the ability to avoid impulse purchases? Online shoppers have to be careful not to offend the consumer.
Credit cards offer from one to five percent rebates on purchases hoping consumers will spend more than if they just used cash. If you use only cash, you might actually pay more but you will spend less overall. It’s a good message but I don’t think it’s going to be the trick that makes online shopping profitable. I think for online grocery shopping to be successful outside dense urban areas, they need to find a way to make it fun.
Well-designed websites encourage some impulse buying through “suggestive selling,” incentives to buy more/save more, special tabs to highlight sale items, and so on. It’s easy to fill that online shopping cart with an extra item or two.
Grocery marketers can benefit from some of the techniques used by experts in the business, like Amazon, to drive at least a few more impulse sales. In any case, the core customer for Peapod and other online grocers may not be driven by cost savings as much as by the convenience of home delivery.
I have never shopped at an online grocer but if they don’t now or before long have “specials” and pop-ups and “here’s the wine that goes well with that chicken” type of stuff that every other online merchant does, I’ll eat my hat.
Besides, if I buy something on impulse, at least I got something. Paying somewhere to fill my order and them bringing it to me are luxuries compared to getting a thing of Chapstick.
Web buying to save us from ourselves?
For a lot of folks, impulse shopping is fun. They like picking up the unexpected. Every online retailer encourages impulse shopping just like every bricks and mortar store. Where would the retail business be without impulse shopping? It would be like TV without laughs, books without sex, or newspapers without homicides.