Opportunities and challenges in online food trade02.02.2017 | by Christoph Humpert
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Opportunities and challenges in online food trade
I buy everything online: clothing, furniture, children’s toys, diapers, aquarium plants, wine and all other food in the past three years.
At some point, I noticed whilst carrying home a laptop and handbag over my shoulder and in front of me the baby carriage, in addition to three heavy Rewe bags to my fourth floor flat, I realized that something was wrong. A book fits easily in the handbag, yet I was always ordering it to be delivered at home. Since then I buy everything online: Fish, meat, fruit, vegetables.
My friend, who has not been able to walk for six months, did the same too. Soon, the older generation will also appreciate the convenience of home delivery.
According to a survey conducted by Ernst & Young, deliveries at home with 56% and flexibility – by not being bound to shop closing times – are 47% the key factors that are significant for online food ordering. 1. Not to mention the huge selection of the Internet – specialty food for athletes, allergy sufferers, foreign specialties, an abundance of vegan foods. Everything is online. Approximately 86% of the online offer is also provided by specialist retailers.2.
Market shifts in billions
The food sector seems to be the last bastion in e-commerce. If it falls, billions will be postponed. The German food market has a market volume of 247 billion euros (2014) and is thus the largest in Europe.3 Only a few percentage points that migrate to the online business can shake old business models.
Adieu nice shopping feeling?
A survey reveals that for 83% of the interviewees, the lack of opportunity for seeing, smelling, feeling is a reason for not buying online their products and for 56% they miss the shopping experience.
Nice websites and pictures of happy animals will help little in this situation. User-friendly online shops and comfortable ordering are required as a technical minimum. The only touchpoint to the customer, where the shipper can provide enthusiasm, is the package content, freshness / cold and packaging. The goods must not disappoint, otherwise the trust is immediately lost. This occurs much faster compared to when it occurs at the supermarket around the corner. The quality of the product must surpass the expectation – at least for the first customer.
The freshness must be right
According to a survey conducted by the Consumer Center in Brandenburg, many retailers would ship refrigerated products in cardboard boxes and even without cooling elements. Half of the products would have a temperature “clearly” above the normal value. This is a massive burden on the customers’ trust in the online food trade.
The use of control mechanisms on compliance with the cold chain to the end user has not yet been required by law. Therefore – from my experience currently all – senders see the use of time-temperature labels or RFID chips useful. This provides more control, and could also create more confidence and thus, more sales.
Packaging as marketing material
Brown cardboard, Styrofoam, Styrofoam chips and air cushion – too much rubbish for the shipment of perhaps a single dinner. In the case of multi-path systems, I have to be at home during delivery and the children should not yet sleep. The slot in the evening is very tight.
It would be nice if I came home from work, the package with the ingredients for the dinner would be well-cooled in front of the door and the packaging would not upset me.
Quality and freshness are my prerequisites. I do not expect anything from the packaging, except for no annoying waste disposal. Or when it comes to the worst case: a ride to the recycling yard.
The packaging can make the customer a fan. Over reaching expectation. Amazing him. Packaging is a communication medium, which is ideal for advertising, associations, pictures. Especially, since we never expect anything from packaging only the function.
Apart from a sustainable insulation, the carton itself could be smart. How about, for example, a coloring page of different vegetables and fruit for children as a printed image on the cardboard? Or even a guide on how to build a house from the box.
Online shippers, who have switched to specially printed cartons, say that they have been able to significantly reduce their returns.
It is certain that billions will shift in food business. We will go the same way as we did for shoe shopping. We could not imagine selling shoes online (I have to try on!) And we suddenly do all of it. But whether they are from Amazon and Co or elsewhere. Is dependent on the extent to which the smaller dealers create or lose confidence – with the quality of the goods, refrigeration logistics and packaging. Per customer, a sender probably has only one chance. This one should not be gambled.
1 Ernst & Young, “Cross Channel Revolution in Food Trade”, Düsseldorf / Stuttgart, 2014.
2 EHI Retail Institute, “Food E-Commerce”, Cologne, 2015.
3 Syndy, “The State of Online Grocery Retail in Europe”, Amsterdam, 2015.
4 Ernst & Young, “CrossChannel – Revolution in Food Trade”, Düsseldorf / Stuttgart, 2014.