The Online Grocery Industry By Prof. Karen Clay. Major Players in Online Groceries.

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Presentation transcript:

The Online Grocery Industry By Prof. Karen Clay

Major Players in Online Groceries

A Sample Front Page

Basics Consumers sign up online with grocery company Can shop anytime anywhere that they have access to web interface Log in, select a basket of groceries, pay using a credit card, and arrange for delivery

A Sample Signup Page

A Sample Grocery Store

Online Groceries Who are the customers –“Streamline.com, Inc. ("Streamline" or the "Company") simplifies the lives of busy suburban families … Our typical customer tends to be a dual income household with at least one child and access to the Internet.” (Source: Streamline, 10Q, Nov. 1999)

Online Groceries –Peapod’s slogan is “Smart shopping for busy people”, which tells you something about who their customers are. –“Peapod's typical members are females between the ages of 30 and 54, households with children and dual income households. … Median income exceeding $60,000 per year.” (Source: Peapod, 10K 1999)

Online Groceries How to they attract customers –Referrals (Webvan, Peapod: $20, Homeruns: $10, Streamline) –School programs (Webvan donates a percentage) –Group affiliation (HomeGrocer) –Word of mouth (all) –Media advertising (all) –Direct mail (all)

Online Groceries Value added –The basic value proposition is having your groceries delivered Books/magazines/office supplies Stamps Flowers Gifts/toys/games Nonprescription drug items

Online Groceries Additional value added –Not having to be home for delivery Streamline and Shoplink install refrigerators and shelving in your garage, so they can deliver any time –Other services Dry cleaning, film processing, shoe repair, packages (SL, ST) Videos (ST) Bottle and can redemption (SL) Alcohol and Tobacco (WV, PP)

Online Groceries Sample prices for some markets –Per delivery Webvan (free > $50, $4.95 otherwise) HomeGrocer (free > $75, $9.95 otherwise) Homeruns (free > $60, $10 otherwise (min $30)) Peapod ($9.95)

Online Groceries –Subscription Streamline, $30/mo weekly, fridge and shelving Shoplink, $25/mo weekly; $39/mo weekly fridge and shelving Peapod ($4.95/mo + $5/delivery) Peapod ($19.95/mo + free delivery on orders >$60)

Online Groceries Trying the product –Experience good –Offer various promotions to get potential customers to try Free delivery (Homeruns $60, Homegrocer 1st order, Webvan until Jan 31) Free months of service (Shoplink, Streamline) Free groceries (Streamline, Webvan, Peapod)

Online Groceries Turning one-shot customers into repeat customers –On monthly plans, customers are committing to an ongoing relationship Satisfaction guarantees –In per order relationships, firms seem to be banking on excellent customer service to bring people back