Written by: Sabrina Dettmering
About two years ago online grocery shopping only accounted for approximately one per cent of total sales within the consumer goods industry (Alldredge et al. 2015). This is rapidly changing now. We can see a strong trend in this industry and online shopping is seen as the second largest driver of change over the next five years (Alldredge et al. 2015). Now the question is, is this an opportunity for small local food delivery businesses to get a foot in the door and even be able to fight the Amazons and Tescos of todays online world? If so, what exactly is the opportunity and how can it be used? This article will not only show the possibilities that may not be as obvious as you might think, it will most importantly show a way of using them. We will go through the trends of our near future and talk about the impact they have on food consumption and customer behaviour and we will show you how you can use this to your advantage. Get ready, online grocery shopping is on its way and you and your business should be prepared to take the most out of it!
Many big fishes are already aware of the trend within online grocery shopping and rolled out new online shopping business models. Pure player Amazon for example launched Amazon fresh and Amazon Pantry (Alldredge et al. 2015). Wal-Mart and Tesco made use of the possibility by offering online and offline services so called Brick and Click Business models (Campo et al. 2015). By now almost every big supermarket chain offers an online shop. Online grocery shopping is still comparatively small today and there is an opportunity to jump on the train now and get some space on the shelves the Internet offers (Alldredge et al. 2015). However, the growing market for online grocery shopping is not the only reason for seeing an opportunity for small local retailers. Next to the trend of growing online shopping for groceries, the opportunity for small local delivery services is especially supported by four trends that fuel this opportunity: search for authenticity, demand for high quality, decreasing trust in big corporations, and the importance of service.
Firstly, there is a general consumer trend of search for authenticity which then leads to two food trends: “simple and natural” and “what’s the story?” (thefoodmarketingexpert 2015). Today’s pragmatic consumer strives to buy, cook and eat simple food with natural ingredients (thefoodmarketingexpert 2015). He or she wants to know the story behind the food and what exactly it is they eat. In search for authenticity consumer love everything attached to local pride or regional heritage and would prefer to know the name of the producer they buy their food from (thefoodmarketingexpert 2015). Quality goes before quantity and being transparent about where the food comes from is essential.
Furthermore big corporations often struggle to keep customer’s trust. Especially in todays world were every information is accessible online it is hard to keep information secret from consumers. Negative information spreads quickly and it is extremely difficult for corporations to rebuild trust without a face-to-face relationship (Vaccaro 2011). Another fact to consider is the importance of customer service. Customer service is more and more seen as one of the most effective competitive advantages when it comes to online performance (Piercy 2013). However most online retailers still fail to implement it successfully. Good service is hard to copy and if done properly can result in repurchase and consumers building trust in the company (Piercy 2013).
Don’t forget, consumers have the power. Times where big corporations fed consumers with “what to do” and “what to buy” information are long passé. Consumers today demand information about the products they buy and choose themselves which retailer to trust and why (Labrecque 2013). This of course means that transparency is important, however it also means that if you as a local retailer offer great products, with good quality to adequate prices there is no reason why consumers should not trust and believe in you.
All these facts fit perfectly with local food delivery services offering regional products as they can meet consumers’ needs on all levels mentioned above. Let’s now talk about how to achieve this and take the most out of the opportunities mentioned!
In order to explain how to achieve great success with your local food delivery service we will look at an example from the UK. Hubbub is performing well on all levels mentioned and we will use it in order to make the information more accessible and to show the practical relevance. Hubbub brings together various different local stores and offers their products online – the butcher, the cheese maker, and the baker, all on one website in one online store (Hubbub 2016). How do they do it and what can you learn from them?
Hubbub picking up online ordered food to deliver it to the customer (source: http://www.mibusinessmag.com/2015/12/21/last-minute-christmas-food-shopping-at-hubbub-co-uk/ )
Alldredge et al. (2015) in the McKinsey Report recommend paying attention to three areas when wanting to achieve a successful e-commerce: Assortment, price and promotion, merchandising and marketing.
In today’s time customers are able to compare prices in all kinds of different stores, it is important to offer an assortment that offers something unique, that cannot be found somewhere else (Alldredge et al. 2015). As Hubbub does, you can use this possibility to offer a unique product assortment of local products, offering a quality and freshness big supermarket chains can simply not compete with. They have to ensure that the products they sell have a long shelf live, meet economy of scale requirements and can be transported over long distances (Hubbub 2016). At Hubbub on the other hand, customers enter their zip code and will only be offered to order products from producers in their direct neighbourhood, which is what differentiates them from big supermarket chains. This also enables Hubbub to offer same day delivery, as distances between producer and customer are short (Hubbub 2016).
In terms of price and promotion the McKinsey report recommends to always being transparent on pricing and not trying to constantly undercutting the competition (Alldredge et al. 2015). Of course as a local delivery service offering high quality products it is not even possible to compete on price with big supermarket chains. However it is still important to keep pricing transparent and educate customers on why they pay more for certain products (Corner 2012). Hububb offers exactly the same prices that customers would pay for the same product in the local store and additionally explains why those products are more expensive than in the supermarket (Hubbub 2016). Customers are willing to pay more for a certain product if it has a higher quality and they know where exactly it comes from (Corner 2012). Which corresponds with the consumer trends we talked about above. In terms of planning promotions, it is important that they are tailored and well-managed across channels (Alldredge et al. 2015). Hubbub does street promotions, approaching customer offline, explaining them the service and spread the word (Hubbub 2016). This can also be important for you and you can use it to build awareness and not sinking into the mass of online promotions. The McKinsey report also recommends to analyse past purchase data and to tailor promotions around them, e.g. offering online coupons or free delivery on the next order to enhance repurchase (Alldredge et al. 2015).
Merchandising and marketing is another key area highlighted, saying that having the perfect online page is essential (Alldredge et al. 2015). This can be achieved through excellent content, high-quality pictures, rollover notes, reviews, videos and a website that is optimized for mobile usage (Alldredge et al. 2015). Furthermore, as in 2015 use of mobile device for the first time overtook desktop usage and there is a trend towards usage of Apps it is definitely recommended to have a well-functioning app (DeMers 2015). To boot your app even more, a study reveals that services such as meal planning, an integrated recipe service and the possibility for direct online shopping increase the motivation for app usage (Tukkinen et al. 2015).
We already talked about the importance of customer service and that it could function as one of your competitive advantages when fighting big supermarket chains. Hubbub puts great focus on its customer service. They offer one-hour delivery slots so that the customer can have the food delivered at the time that suits them (Hubbub 2016). There is also an option to let hubbub know of any special requirements the customer might have such as whether they would like the fish filleted or as a whole or how ripe they like their cheese (Hubbub 2016). These small services differentiate your local delivery service from big supermarket chains, where those things are not practical.
Another key to success is to increase the online customer experience for your local delivery service. As online grocery shopping experience increases, customers are more willing to move from offline shopping or multichannel shopping to pure online shopping (Melis et al. 2015) – which is where you want them to be! Among various different influencers of online sopping experience the two most important one mentioned by Melis et al. (2015) are assortment attractiveness and online loyalty. As a local online shop you have many possibilities to create an outstanding customer experience that big supermarket chains simply don’t have. Just to give you an example, on their website Hubbub introduces the customer to all the local shops and producers they have in their assortment and tell their stories, which perfectly meets the trend that people want to know exactly where their food comes from (Hubbub 2016). Content is king!
Hubbub introducing local stores (source: https://www.hubbub.co.uk/shops/burro-e-salvia)
You can also make customers aware of your ethicalness. We know that consumers pay more and more attention to where their products come from and that they prefer to know the producer (thefoodmarketingexpert 2015). Hubbub makes people aware that through supporting local producers they are doing something good for their own neighbourhood and community (Hubbub 2016).
In terms of social media Hubbub is active on all the important channels. They have a Facebook page, a Pinterest, Instagram and twitter account and a blog. On all channels they provide great content such as recipes or inspiring stories from their local producers. However when using social media it is important to not only feed users with information but also make space for interaction, in order to create most value (Hennig-Thurau et al. 2013). This can for example be achieved through a review section where customers can rate the product they bought, whether they liked it or not and suggestions for improvement. Hubbub used the interaction with customers in order to find out in which markets to expand (Corner 2012). When people came to the website from an area where hubbub does not yet offer its service yet, they were asked to nominate their favourite local store. As soon as a certain geographical area gets enough interest from potential customers, Hubbub would expand their service to that area (Corner 2012).
Hubbub blog - The pickle jar (source: http://www.picklejarpaper.co.uk )
Obviously, there are many more aspects that could be highlighted when it comes to a great online performance, however this article provides you with the starter kit on what you need to kwon and a best practice example you can learn from. Today’s consumer and food trends are the perfect base for a local food delivery service and with the practical implications gathered above you will be able to fight the big fishes!
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