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The Online Grocery Industry

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

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The Online Grocery Industry

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  1. The Online Grocery Industry By Prof. Karen Clay

  2. Major Players in Online Groceries

  3. A Sample Front Page

  4. 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

  5. A Sample Signup Page

  6. A Sample Grocery Store

  7. 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)

  8. 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)

  9. 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)

  10. 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

  11. 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)

  12. 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)

  13. 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)

  14. 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)

  15. 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

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