December 3, 2007
Study: Online Grocers Not So Fresh
By Bernice Hurst, Managing Director, Fine Food Network
No one ever said it would be easy. Supermarkets in the U.K. deliver virtually everything a customer can find in-store through their websites. But not everything that is selected and delivered is of the same quality shoppers would choose for themselves.
Research from well respected and trusted consumer champion Which? is generally thorough and its campaigns much appreciated. The recent big announcement that they had found supermarkets using products with early best before dates to fill online customer orders was, not surprisingly, greeted with dismay.
As Which? said, “Online grocery shopping might save you from traipsing around a busy supermarket, but you may have to eat your food sooner than if you shop in the store. Our investigation into the main supermarkets found that foodstuffs bought in stores have, on average, a longer shelf life than those bought online.”
Originally highlighted in March 2007, the consumers’ association conducted an investigation in October that involved sending shoppers into stores and ordering the same items online, for delivery on the day of the shop visits. Although results varied slightly, in-store visits, on average, delivered best-before dates more than a day later than online.
Which? then asked stores how they pick products for online customers and received uniformly comforting reassurances that personal shoppers are instructed to pick the freshest produce from stores, selecting from the same assortment available directly to customers. Ocado, the online partner for the Waitrose chain, works from a warehouse, which, it says, allows it to deliver the freshest products and remove anything with a date deemed to be too short for customers. Asda did not respond in time for the report’s press release.
The supermarkets all assured the press that Which? had used small and unrepresentative samples from which to draw over-generalized conclusions. Relative degrees of truth are always subjective, however, and it is just possible that some pickers on some days packed products that needed to be sold sooner rather than later. Ben Cooper reported on just-food, however, that while such reports could possibly undermine consumer confidence in internet shopping, other indications are that strong growth in online food retailing looks set to continue.
Discussion questions: Could concerns about freshness put a damper on the trend toward online food retailing? Would grocers do better by not offering perishable items for home delivery? Or is it a case of buyer beware?
[Author’s commentary] When you rely on other people to do your shopping for you, there are bound to be slip-ups. There will always be unacceptable omissions or replacements as well as things that need to be used too quickly. Some of the supermarket websites give shoppers the opportunity to say whether they want long or short shelf-lives or under-ripe bananas, for example. But there will always be hiccups. In this country at least, customers are generally satisfied with what they get and supermarkets are prompt to apologize and replace or refund items that are unsatisfactory. If customers order perishables, they are accepting a risk that what they get might not be as fresh as anything they select themselves when visiting the store. This is the price they pay for not taking the time to do their own shopping.
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Of course freshness is a consumer concern and may create hesitation in using store delivery. Stores can overcome the concern by checking produce carefully before delivery and realizing that damage may occur during delivery or consumer perceptions of freshness may be higher or different than that of the person checking the order. Generous policies for replacement could alleviate consumer concern but would be expensive.
But, freshness is not the only concern about store delivery. Using my local store for grocery delivery proved frustrating. I placed the order for the items I wanted and needed, checked the confirmation slip to make sure that the items were available and was very disappointed to find that the final delivery was only about two thirds of what I had ordered because the rest of the items were “out of stock.” That demonstrated I could not rely upon home delivery to receive the items I needed and ended my use of the service.
“Fresh” can be done well online. Ask the customers of FreshDirect in NYC. They’re rabid fans of the service, which delivers fresh foods. Previous delivery services failed for many reasons other than not having good produce. To my way of thinking, including fresh products today has to be part of the offer, if you want to be viable over the long haul. And having good quality fresh foods is a terrific differentiator.
It’s about the distribution system and the area in which you work. For truly fresh food, you need to operate in high density markets with a distribution center that can do a lot of cross docking.
Produce shopping is such a sensory experience, with touch, sight, and smell being so important. I can’t envision the consumer set who can afford the delivery being satisfied in the long term with someone else doing that part of the process. Especially those who are even close to being “foodies” which is an ever-growing segment of affluent consumers. Online grocers should stick to the categories where they can hit it out of the park.
The US experience has been that fresh food does not work well in an online environment. Webvan did a pretty good job, but one bad apple (sorry about that) can ruin perceptions for some time. They’d be better staying away from this if they can–particularly for fruit (more time and handling sensitive).
Fresh is in the eye of the consumer. Let the buyer beware.
I always love when the topic of online grocery shopping comes up. How many companies have tried and failed and keep trying? In North America, we are a fickle bunch. We love squeezing the Charmin, so to speak. One of the companies here is called Grocery Gateway and I know they ran into some problems with logistics and quality. They were actually taken over by a large grocery chain but I haven’t heard much from them in the last few months. The only thing they had going for them was that they delivered liquor and beer which is heavily regulated here in Ontario. With grocers going upscale in their layouts and stores, I think customers like to go out to shop for groceries. Now if these large chains can offer sterling customer service, you would have a knockout combination of selection, price and service and even more people would come out to shop. Online grocery? Avacodos and TV dinners will have to pull off the information super highway for now.
Perception #1: Nobody ever picks out fresh foods for clients as carefully as the consumer does for him/herself.
Perception #2: Everyone’s time is considered to be more valuable these days than almost anything else in their life.
Result: If your desire is to eat the freshest products possible, shop in the stores–crowded though they might be.
If your time is considered more important than your pallet, let someone else pick out and deliver aging food stuffs.
Which category has the most customers in it? That seems to depend upon where you live and/or what your food values are. Personally I might like to intermingle with and watch the parade of people in a busy store as I select fresh products.
Having been a huge Webvan customer back in the day, I must admit that I wasn’t always thrilled with my produce. However, I was willing to put up with it in exchange for the convenience of having someone schlepp in my groceries for me! I’m sure many others feel the same way but it would be ideal to train the pickers to ensure a quality delivery with every item.
Let the free enterprise solve the problem. Eventually there will be an upscale online grocer that will deliver quality.
There is no reason perishables cannot be processed successfully by online retailers. All perishables have shrink, but I think online retailers try to minimize it too much. The pickers must be trained to select only items they would expect their mother to buy. A better approach is to pre-process perishables as they do in the store and implement inspection in this step. Only make available to pickers what should be shipped. Yes shrink will increase but also sales.
Fruits and vegetables are living things. They aren’t manufactured to perfect tolerances in factories. Their quality varies from field to field, tree to tree, branch to branch. Their quality isn’t perfectly measurable by statistics, it’s often subjective. Furthermore, handling, storage, timing, and transportation issues often influence quality. The perfect peach in the warehouse can become the dented embarrassment 4 hours later when delivered. So folks can order produce online, but the return customers are those who can accept the variation in return for the convenience.
The “Invisible Hand” of economics will prevail and those that are successful will survive and thrive.
The first real home delivery service in Toronto, Grocery Gateway, was purchased by a Bricks-and-Mortar retailer, Longo’s, who have been known for decades as having the best product in the city. They starting picking from stores and moved upstream to their warehouse.
Delivering fresh and high-quality produce and deli products is the ONLY way these companies will survive. One bad delivery is enough to stop consumers from returning.
Perishables can be done right if the store’s policy is set up for no excuses in terms of quality. Show me a customer with a need, and no concern about what it costs, and I’ll show you a happy customer. If a store has a separate pricing system that is exclusive for upscale perishable delivery, then everybody wins, because the store won’t worry about cutting corners to make the transaction profitable. It will be a small base of people buying, but I’ve seen online meat companies’ prices, and it is a no-brainer. Charge a good buck, and take good care of those willing to pay.
Rather than look at this as a potential problem, I believe the selection of fresh products could be a real boom for online retailers catering to the tech savvy gen X and Y consumers. For the most part these consumers do not have the buying and food preparation skills of older generations and look to the supermarket to make these decisions for them. Helping them to solve these food related problems with great tasting, fresh products can create customers for life.
Which peach gets less undesirable handling? The one that’s reshipped from a distribution center to a store, put out on display by a clerk, picked over by shoppers, then carted, bagged and carried home in the trunk of a car? Or the one that’s selected by a fulfillment clerk in the same distribution center, then packed and shipped directly to your home?
While were thinking about that, which peaches are likely to enjoy more beneficial inventory turnover? The ones in central inventory at the home delivery DC or the ones that were first shipped to the stores and put out on display?
Ideally, a fast-turning, professionally selected and packed, home delivered item of produce should arrive fresher, in better condition and with a longer shelf life than the same item after it has journeyed through many hands along the store distribution system. I say ideally, because we all know this potential is not consistently met.
The arguments in this perennial debate have not changed much since they were raised in 1996 in connection with online grocery pioneers Peapod and Streamline. Let’s review a few truisms:
Online ordering and home delivery of groceries, at best, will be a desirable service for a subset of shoppers on a subset of shopping occasions. It is not a substitute for browsing the produce bins to see what looks good this week. It is not a substitute for social contact in the store aisles.
Our wise colleague Gene shed light above in comments that begin to parse between product orientation and service orientation. Web-enabled home pantry management services help people save time and keep staples on hand. Use of such a service some of the time does not obligate shoppers to use it for all their needs, every time.
David nailed it succinctly–if the delivered peach is the pits, we have the freedom to buy somewhere else next time. Competition will eventually take care of the rest.
As long as people have the ability to order online, there will be a need to supply them with perishables. The problem is, what is acceptable to one person is not acceptable to another. It means the price for delivering perishables is always going to be at a premium compared to non-perishables. In the end, it will be the ability of the web-retailer and the customer to feel comfortable with one another. The old phrase prevails; “let the buyer beware.”
I have been a customer of Simon Delivers for almost as long as they have been in business. While the produce is not always as fresh as I would select on my own, the convenience more than makes up for any occasional “bad apple.” For everything else, it is very price competitive and tends to have the items I want to buy.
A couple of the features I most value could be offered by a traditional grocer as well. I like to be able to look up my order history and use it to build this week’s list. I also find the one stop meals very convenient. Bundling everything I need together for a meal I prepare is something that could also be done in a brick and mortar store.
The problem here is perception. Online retailers might have the freshest products out there, but the real question is, “Are customers actually ready to buy fresh foods and produce online?”
I think this is one case where the hype and marketing machines behind this retail format far exceeds actual customer demand. One of the things we routinely see in the convenience store industry is that customers what to see the food and watch it being prepared fresh. It’s the reason why great retail operators like Wawa, Sheetz and QuikTrip are experiencing strong sales gains.
We have all picked out an apple in the supermarket and turned others away because of a small blemish, a broken stem or whatever other little buying quirks we have. When food is ordered online you lose the ability to do that, and don’t underestimate how important choice is to consumers. Customers are creatures of habit when it comes to their food. They want it fresh, they want variety, but they also want the comfort of getting the things they are used to. In an online format, someone else is making the choice for you. In other words, expect a blemish on your apple.
Jamie is right, this debate has been going on for a long time. Based on 8 years of watching consumers in the online environment from the inside, I can say that:
1. While “foodies” may wish to smell, see, touch and “thump” their produce, most shoppers today do not have a great deal of training and understanding about what constitutes “good.” Having an “expert” pick out produce and meat for you can be seen as a real service.
2. In fact the majority of the product delivered to consumers who have ordered “online” are picked from bricks and mortar grocery stores, using the same produce section as the consumers who buy in store use. If the online provider uses trained produce pickers they generally do a great job (evidence Lowes Foods to Go in North Carolina and ShopRite From Home in the Northeast). If the online provider uses an after school stock clerk to pick the orders, including produce, then the result can certainly vary.
3. Pure e-tail plays (Peapod in Chicago, FreshDirect in NYC) generally have very efficient produce order/replenish systems with controlled temperature wholesale to consumer facilities that deliver superior, if limited, perishables. Rumor has it that Amazon is doing a good job with perishables as well in their Seattle test area.
Having started this discussion, I’d like to add an afterthought about how well delivery of fresh food can be handled. For complicated personal reasons, last week I decided that I HAD to send a cheesecake to my daughter in Anchorage and it HAD to arrive on Friday. I don’t think I need to detail the challenges entailed in this operation other than a reminder of my customary problem when paying an American company with my non-American credit card. Readers, I have to tell you that I succeeded. http://www.cheesecakedelivery.com promises overnight delivery via FedEx of fresh cakes, baked with excellent ingredients. They took my order, took my money (via Paypal) and did what they promised. I was an exceedingly pleased customer and have promised to tell the world–hence this shameless plug to an audience that I know will appreciate just what it takes to please this particular customer.
I have to agree with most that I just don’t see demand growing for the online grocery business, and the perishables factor makes this option a very simple “no” for my family.
That being said, I think there is a recipe for success here. I would be more inclined to buy groceries online if I weren’t shopping for items with relatively quick expiration dates, or high prices. For example, if I could buy my Wheat Thins, Cheerios, and Coco Krispies (my wife is pregnant–this is a necessity) online, I might do so. I might event buy my frozen dinners and meat there as well. (Milk, fruits, veggies, OJ, etc would not qualify) Granted, this would necessitate a trip to the store, but it would be a faster experience if I could just go to the produce and dairy section only.
So, its possible to make this a winner, but you have to think hard about what will and will not work over all.
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Of course freshness is a consumer concern and may create hesitation in using store delivery. Stores can overcome the concern by checking produce carefully before delivery and realizing that damage may occur during delivery or consumer perceptions of freshness may be higher or different than that of the person checking the order. Generous policies for replacement could alleviate consumer concern but would be expensive.
But, freshness is not the only concern about store delivery. Using my local store for grocery delivery proved frustrating. I placed the order for the items I wanted and needed, checked the confirmation slip to make sure that the items were available and was very disappointed to find that the final delivery was only about two thirds of what I had ordered because the rest of the items were “out of stock.” That demonstrated I could not rely upon home delivery to receive the items I needed and ended my use of the service.
“Fresh” can be done well online. Ask the customers of FreshDirect in NYC. They’re rabid fans of the service, which delivers fresh foods. Previous delivery services failed for many reasons other than not having good produce. To my way of thinking, including fresh products today has to be part of the offer, if you want to be viable over the long haul. And having good quality fresh foods is a terrific differentiator.
It’s about the distribution system and the area in which you work. For truly fresh food, you need to operate in high density markets with a distribution center that can do a lot of cross docking.
Produce shopping is such a sensory experience, with touch, sight, and smell being so important. I can’t envision the consumer set who can afford the delivery being satisfied in the long term with someone else doing that part of the process. Especially those who are even close to being “foodies” which is an ever-growing segment of affluent consumers. Online grocers should stick to the categories where they can hit it out of the park.
The US experience has been that fresh food does not work well in an online environment. Webvan did a pretty good job, but one bad apple (sorry about that) can ruin perceptions for some time. They’d be better staying away from this if they can–particularly for fruit (more time and handling sensitive).
Fresh is in the eye of the consumer. Let the buyer beware.
I always love when the topic of online grocery shopping comes up. How many companies have tried and failed and keep trying? In North America, we are a fickle bunch. We love squeezing the Charmin, so to speak. One of the companies here is called Grocery Gateway and I know they ran into some problems with logistics and quality. They were actually taken over by a large grocery chain but I haven’t heard much from them in the last few months. The only thing they had going for them was that they delivered liquor and beer which is heavily regulated here in Ontario. With grocers going upscale in their layouts and stores, I think customers like to go out to shop for groceries. Now if these large chains can offer sterling customer service, you would have a knockout combination of selection, price and service and even more people would come out to shop. Online grocery? Avacodos and TV dinners will have to pull off the information super highway for now.
Perception #1: Nobody ever picks out fresh foods for clients as carefully as the consumer does for him/herself.
Perception #2: Everyone’s time is considered to be more valuable these days than almost anything else in their life.
Result: If your desire is to eat the freshest products possible, shop in the stores–crowded though they might be.
If your time is considered more important than your pallet, let someone else pick out and deliver aging food stuffs.
Which category has the most customers in it? That seems to depend upon where you live and/or what your food values are. Personally I might like to intermingle with and watch the parade of people in a busy store as I select fresh products.
Having been a huge Webvan customer back in the day, I must admit that I wasn’t always thrilled with my produce. However, I was willing to put up with it in exchange for the convenience of having someone schlepp in my groceries for me! I’m sure many others feel the same way but it would be ideal to train the pickers to ensure a quality delivery with every item.
Let the free enterprise solve the problem. Eventually there will be an upscale online grocer that will deliver quality.
There is no reason perishables cannot be processed successfully by online retailers. All perishables have shrink, but I think online retailers try to minimize it too much. The pickers must be trained to select only items they would expect their mother to buy. A better approach is to pre-process perishables as they do in the store and implement inspection in this step. Only make available to pickers what should be shipped. Yes shrink will increase but also sales.
Fruits and vegetables are living things. They aren’t manufactured to perfect tolerances in factories. Their quality varies from field to field, tree to tree, branch to branch. Their quality isn’t perfectly measurable by statistics, it’s often subjective. Furthermore, handling, storage, timing, and transportation issues often influence quality. The perfect peach in the warehouse can become the dented embarrassment 4 hours later when delivered. So folks can order produce online, but the return customers are those who can accept the variation in return for the convenience.
The “Invisible Hand” of economics will prevail and those that are successful will survive and thrive.
The first real home delivery service in Toronto, Grocery Gateway, was purchased by a Bricks-and-Mortar retailer, Longo’s, who have been known for decades as having the best product in the city. They starting picking from stores and moved upstream to their warehouse.
Delivering fresh and high-quality produce and deli products is the ONLY way these companies will survive. One bad delivery is enough to stop consumers from returning.
Perishables can be done right if the store’s policy is set up for no excuses in terms of quality. Show me a customer with a need, and no concern about what it costs, and I’ll show you a happy customer. If a store has a separate pricing system that is exclusive for upscale perishable delivery, then everybody wins, because the store won’t worry about cutting corners to make the transaction profitable. It will be a small base of people buying, but I’ve seen online meat companies’ prices, and it is a no-brainer. Charge a good buck, and take good care of those willing to pay.
Rather than look at this as a potential problem, I believe the selection of fresh products could be a real boom for online retailers catering to the tech savvy gen X and Y consumers. For the most part these consumers do not have the buying and food preparation skills of older generations and look to the supermarket to make these decisions for them. Helping them to solve these food related problems with great tasting, fresh products can create customers for life.
Which peach gets less undesirable handling? The one that’s reshipped from a distribution center to a store, put out on display by a clerk, picked over by shoppers, then carted, bagged and carried home in the trunk of a car? Or the one that’s selected by a fulfillment clerk in the same distribution center, then packed and shipped directly to your home?
While were thinking about that, which peaches are likely to enjoy more beneficial inventory turnover? The ones in central inventory at the home delivery DC or the ones that were first shipped to the stores and put out on display?
Ideally, a fast-turning, professionally selected and packed, home delivered item of produce should arrive fresher, in better condition and with a longer shelf life than the same item after it has journeyed through many hands along the store distribution system. I say ideally, because we all know this potential is not consistently met.
The arguments in this perennial debate have not changed much since they were raised in 1996 in connection with online grocery pioneers Peapod and Streamline. Let’s review a few truisms:
Online ordering and home delivery of groceries, at best, will be a desirable service for a subset of shoppers on a subset of shopping occasions. It is not a substitute for browsing the produce bins to see what looks good this week. It is not a substitute for social contact in the store aisles.
Our wise colleague Gene shed light above in comments that begin to parse between product orientation and service orientation. Web-enabled home pantry management services help people save time and keep staples on hand. Use of such a service some of the time does not obligate shoppers to use it for all their needs, every time.
David nailed it succinctly–if the delivered peach is the pits, we have the freedom to buy somewhere else next time. Competition will eventually take care of the rest.
As long as people have the ability to order online, there will be a need to supply them with perishables. The problem is, what is acceptable to one person is not acceptable to another. It means the price for delivering perishables is always going to be at a premium compared to non-perishables. In the end, it will be the ability of the web-retailer and the customer to feel comfortable with one another. The old phrase prevails; “let the buyer beware.”
I have been a customer of Simon Delivers for almost as long as they have been in business. While the produce is not always as fresh as I would select on my own, the convenience more than makes up for any occasional “bad apple.” For everything else, it is very price competitive and tends to have the items I want to buy.
A couple of the features I most value could be offered by a traditional grocer as well. I like to be able to look up my order history and use it to build this week’s list. I also find the one stop meals very convenient. Bundling everything I need together for a meal I prepare is something that could also be done in a brick and mortar store.
The problem here is perception. Online retailers might have the freshest products out there, but the real question is, “Are customers actually ready to buy fresh foods and produce online?”
I think this is one case where the hype and marketing machines behind this retail format far exceeds actual customer demand. One of the things we routinely see in the convenience store industry is that customers what to see the food and watch it being prepared fresh. It’s the reason why great retail operators like Wawa, Sheetz and QuikTrip are experiencing strong sales gains.
We have all picked out an apple in the supermarket and turned others away because of a small blemish, a broken stem or whatever other little buying quirks we have. When food is ordered online you lose the ability to do that, and don’t underestimate how important choice is to consumers. Customers are creatures of habit when it comes to their food. They want it fresh, they want variety, but they also want the comfort of getting the things they are used to. In an online format, someone else is making the choice for you. In other words, expect a blemish on your apple.
Jamie is right, this debate has been going on for a long time. Based on 8 years of watching consumers in the online environment from the inside, I can say that:
1. While “foodies” may wish to smell, see, touch and “thump” their produce, most shoppers today do not have a great deal of training and understanding about what constitutes “good.” Having an “expert” pick out produce and meat for you can be seen as a real service.
2. In fact the majority of the product delivered to consumers who have ordered “online” are picked from bricks and mortar grocery stores, using the same produce section as the consumers who buy in store use. If the online provider uses trained produce pickers they generally do a great job (evidence Lowes Foods to Go in North Carolina and ShopRite From Home in the Northeast). If the online provider uses an after school stock clerk to pick the orders, including produce, then the result can certainly vary.
3. Pure e-tail plays (Peapod in Chicago, FreshDirect in NYC) generally have very efficient produce order/replenish systems with controlled temperature wholesale to consumer facilities that deliver superior, if limited, perishables. Rumor has it that Amazon is doing a good job with perishables as well in their Seattle test area.
Having started this discussion, I’d like to add an afterthought about how well delivery of fresh food can be handled. For complicated personal reasons, last week I decided that I HAD to send a cheesecake to my daughter in Anchorage and it HAD to arrive on Friday. I don’t think I need to detail the challenges entailed in this operation other than a reminder of my customary problem when paying an American company with my non-American credit card. Readers, I have to tell you that I succeeded. http://www.cheesecakedelivery.com promises overnight delivery via FedEx of fresh cakes, baked with excellent ingredients. They took my order, took my money (via Paypal) and did what they promised. I was an exceedingly pleased customer and have promised to tell the world–hence this shameless plug to an audience that I know will appreciate just what it takes to please this particular customer.
I have to agree with most that I just don’t see demand growing for the online grocery business, and the perishables factor makes this option a very simple “no” for my family.
That being said, I think there is a recipe for success here. I would be more inclined to buy groceries online if I weren’t shopping for items with relatively quick expiration dates, or high prices. For example, if I could buy my Wheat Thins, Cheerios, and Coco Krispies (my wife is pregnant–this is a necessity) online, I might do so. I might event buy my frozen dinners and meat there as well. (Milk, fruits, veggies, OJ, etc would not qualify) Granted, this would necessitate a trip to the store, but it would be a faster experience if I could just go to the produce and dairy section only.
So, its possible to make this a winner, but you have to think hard about what will and will not work over all.