New player in the landscape of online grocery shopping
5 August 2015
Big news this morning in the Netherlands, a new company called Picnic is entering the market for online grocery shopping (egrocery). A group of investors has been secretly working on a business plan for almost three years. And in a few months they are ready to conquer the online grocery shopping market in the Netherlands, taking against the top two supermarkets Albert Heijn and Jumbo.
It is quite surprising that in today’s online landscape in The Netherlands only 1,3 percent of the groceries are bought online with an estimated value of €450 million. According to a survey conducted by
Syndy, online grocery shopping is getting more and more popular. In fact, the global online grocery market is expected to grow rapidly over the next five years. Therefore it is quite understanding why Picnic sees an opportunity to start in the egrocery landscape. It is a gap that Albert Heijn and Jumbo are also trying to fill with their pick-up points and online service Ah.nl. But what is the reason the percentage of online grocery shopping is still quite low in the Netherlands and how will Picnic try to increase this percentage? Main reasons not to buy groceries online
According to the survey of Syndy, the main reasons not to buy groceries online are the high delivery costs (20%) and the inconvenient delivery slots (18%). Picnic will not charge any delivery costs because it does not have the cost of big shops and they are only purchasing the products that are ordered, taking down the first main barrier for consumers to shop groceries online. They also promise to deliver orders within a timeslot of 30 minutes, making the time you have to be at home to wait for you groceries really short. Market leader Albert Heijn charges different delivery costs for different time slots, which can increase rapidly for popular times, making the barrier for buying online still quite high. According to Coca Cola Retailing Research Council (2014) this is one of the reasons behind the slow initial development; for a long time there has not been any serious online competition for Albert Heijn (ah.nl), which in return was able to keep delivery fees high and, as a result, slowed the market’s growth. In November 2014, Jumbo has also stepped in to the egrocery market by opening pickup points. In just two months, the company opened 28 pickup points, rapidly growing their online turnover.
Another reason for not buying groceries online is that many people prefer to touch and judge the products themselves (17%). If Picnic wants to succeed with their business it is important that the products they deliver are high quality products. This means that the expiration dates of products should be sufficient and especially the quality of fresh products should be an important issue in their supply chain. According to Syndy, beverages are the most popular product to buy online, followed by dairy and canned/jarred goods. The least favorite products are meats and fresh products. When shopping online consumers prefer to buy non-perishable over perishable products.
More than half of consumers use mobile devices to shop online
Picnic supplies all groceries with fresh products like bread, meat and vegetables, both premium brands and affordable brands. The customer orders his or her groceries using an app. Payment also takes place in the app, so that upon delivery of the groceries no debit or credit card is required. But is an app the right channel to offer your products? The survey from Syndy shows that the ‘traditional’ PC or laptop is still the most used device to shop online, but mobile is catching up fast. Almost 60% of the respondents said they prefer the PC or laptop as a device for online grocery shopping, while 28% used smartphones and 26% shopped online using their tablets. Together, these mobile devices were being used by 54% of all respondents. There’s also a significant number of respondents (13%) who use both PC’s/laptops and mobile devices to shop online for groceries.
The real breakthrough on the Dutch online grocery shopping market has yet to come. Will Picnic be able to speed up the adaption process? The potential is huge. However, we have to wait and see in the upcoming year if Picnic will become successful or that market leaders Albert Heijn and Jumbo will grow their online turnover.