Saturday, January 29, 2011

Why On-Line Grocery Doesn’t Yet “Deliver”

Wall Street Journal reports  that Amazon is expanding their groceries online program with free delivery (without minimum order size).  It is part of their program called AmazonTote.  You get once-a-week delivery of groceries on a designated day with free delivery. Analysts predict this might finally break open the online grocery model.

So what’s up with home grocery delivery? Why hasn’t online shopping simply replaced the retail format? The concept and the business model have been around for over 15 years. Companies like Peapod started out in the early 1990s and many grocers quickly scaled up for what was believed to be an onslaught of consumers migrating to the internet for grocery purchasing.  Many of those same grocery chains have since cancelled the services due to lack of widespread consumer adoption.  Remember the “dot-com” era company, Webvan, that invested millions into a national infrastructure for home delivery and then went bankrupt back in 2001? Their issue was lack of customers, not a poor business model (It could be said that the business model was built on a huge predicted consumer base, so it was sort of flawed in the end.).  The small base of online shoppers of today are typically the elderly that may have trouble getting out. But for the average mom or dad of a growing family (grocery target sweet-spot), there is an obstacle, a dissonance, something isn’t working.  I sense a “consumer insight”….

The Consumer Insight (according to me) Why People Avoid Online Grocery

  1. Gathering food is a psychological need.  Humans are creatures that have a deep instinct to go out and gather essentials such as food.  Whether it was to go kill an animal or tend a farm, it is who we are over the last couple of million years.  Therefore:
    • Gathering food is a highly sensory experience.  Consumers want to see, touch and smell their food.
    • Food and hunger is immediate.  The average shopping trip is under $20 because shopping is partly impulse, an on-the fly experience  (“I feel like tacos, tonight, we have everything except the tortillas”).
  2. Consumers are not disciplined by nature.  Computer “database” interfaces require discipline and a pre-planning mindset.  While a grocery store may be a pain, the interface is pretty darn easy – you see it on the shelf, grab it, and go.  Therefore:
    • Selection and menu planning are easier done in a store environment where like items are visually grouped together for meal solutions.
  3. Online registration is also cumbersome. Kathy has started the process 3 times and was “timed out” by family distractions during the process of gathering all the needed information. This is her single reason for not doing it.  (She is a highly disciplined person, btw).

The Solution Is In The Interface

One thing a computer screen does do well is show pictures in graphic color.  This means there is hope for online shopping.  However, most online grocers of today ignore this power. Lets look at the average selection approach to a typical database.  Does this approach make you hungry??   It’s all there – complete description, great feature price and free delivery.   



Kraft Grated Parmesan/Romano Cheese  8 ounces  Cannister

$15.87 $7.82

Get it by Monday, if you order in the next 3 hours and choose one-day shipping.

Eligible for FREE Shipping.   add to cart


How about this approach? 

Wouldn’t it be great to scroll over this picture and pick something wonderful?  imageOf course it a bit more upscale, and the consumer is still likely to buy some sandwich slices in the end, but the experience would be so much cooler.   Retailers like Wegman’s have been wildly successful with a shopping experience that visually delights the consumer in-store with cheese bars, fresh food preparation, etc.  On-line retailers should take this approach of delighting your visual sense. Why not have a Café page for your breakfast – breads and pastries, coffees and a featured meal page, which would automatically purchase the recipe ingredients and provide recipe and preparation directions. Mama Mia – a deli shop that looks like an old Italian deli.  The possibilities are endless because it is all visual.  Its easy to set up – its just graphics!   Use the visual world of the computer to tap the consumer insight.  Online retailers are not yet using the power of the consumer insight to delight the shopper.  The “database” approach is nowhere near the what it could be.  The solution is to excite the consumer so that they will want to reach out with their hand and grab the displayed item.

Gotta go.  I’m getting hungry……

1 comment:

Jim Matorin said...


Good point: Gathering food is a psychological need. For me two needs are being met: My European value of buying fresh or what appeals to me daily and bargain hunting since food prices are going through the ceiling so I feel like I am beating the system.