The on-line share of all grocery retail in the UK had been bumping along at around 6% for the last four years, then almost doubled, to just under 12%, at the start of lockdown, and has since fallen back to around 10%. During a recent lecture to MSc students the course participants were divided on the future potential of on-line grocery retail and whether the growth seen during the pandemic is sustainable. Some students thought that, having tried on-line shopping for the first-time during lockdown, they would probably continue using it for bulky and long shelf-life items, but also use local stores for fresh produce (probably the worst possible outcome for the grocery retailers as they would be left with delivering the high logistics cost and low margin products). Other students thought that they would go back to in-store shopping and that the current 10% market share would probably fall back to around 7 or 8%. Most of the analysis I have seen shows that UK grocery retail home delivery charges (anything from £1 to £7 dependent on day, time slot etc) do not begin to cover the costs. This suggests that at some point the grocery retailers will have to start passing on the real costs and/or collaborate to improve efficiencies (shared hubs and last mile delivery fleets?). Interested in any views / research on the topic.
Dear Jeremy,
Last year, I have made research on a case of online grocery. I studied the online market growth by products in light of the increase of internet use by population (potential customers). Also, the business model transformation before Covid and during Covid, and what was the impact of the implementation of artificial intelligence aiming at optimisation of business processes and decision-making, and improving efficiency. In short, I would rather suggest studying this topic in relation to concrete markets, their maturity, the business model, and technology absorption and digital transformation. In my case study, the grocery retailer gained sustainable competitive advantages. All this mentioned here brunch could provide better performances for this sectors actors.
The research is published in Spanish here:
Article The use of artificial intelligence in the online retail sect...
Best to you,
Juliana
A low-margin, volume-intensive business selling perishable products that require quick delivery in special temperature-controlled vehicles makes for complex and expensive operations. But Instacart, for one, has reportedly achieved headway by emphasizing (a) flexibility (i.e., a mix of independent contractors and full-time employees, picking orders directly from stores); (b) shared platform costs (i.e., passing on the cost of development and maintenance of the website to those who use it, which channels more resources into improving the platform than would normally be feasible); (c) portability (i.e., minimizing fixed infrastructure makes it easier to expand in new markets); and (d) volume (i.e., brand-neutrality helps attract clients from across the grocery world).
Survey of a class of students is not a reliable indicator of much about a much larger world. D. Booth
COVID-19 forced to adopt online shopping in Bangladesh and business organisations radically transformed their mode of delivery from traditional to online. E-commerce has got a momentum during this time. In order to get the benefit of restriction imposed due to COVID-19 and consumer's demand comfortability, business community enhanced the system of retailing. Data indicates, grocery retail has become more profitable during the pandemic and it will be in future as well. Getting necessary times including grocery from home is not a fashion in developing country like Bangladesh, it is a reality that will be continued.
(My humble opinion) probabbly not in indonesia or maybe in other emerging / developing country since (added online retailer logistics) price is very sensitive for most of indonesian house hold. the only time we used it was due to covid, yet we're getting back to normal.
You were right, Those push-pull strategy (push: farm - retaler , pull: retailer - costumer) would only work for high tech maturitry also high demand volume citizen in some region.
I think we need to understand the basic business model of retailing first. They make profit based on inventory turns and no cost of delivery. There is also no major promotional cost involved. Now compare it with online retail. Most of them offer huge discounts to attract and retain customers ( this has become an expectation from customers who always compare any retail cost with online cost) . The door delivery which was not part of traditional retail is also an additional expectation. Online retailers are also spending a bomb on traditional media. Thus, they are unlikely to make profit from their regular retail operations. However, all the online retailers dream of leveraging the data. If they are able to monetize that data, then the new revenue stream can help salvage the situation. The question is , what kind of business insights can they generate and how much the companies are willing to pay for the same? Are there any other revenue sources? Can they become like an Indian real estate company with strong backward integration, spawning off different companies taking care of each piece of service to be delivered to the principal company? ( Amazon had done it already).
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