Nowadays, everything imaginable can be bought and sold on the internet. Even groceries. Even fresh food. Despite the growing trend, online food sales in Germany does not appear to be growing. The country’s logistical challenges, its dense network of stores and its unwillingness to buy fresh produce remotely stagnate growth in this market.
But this doesn’t mean that there’s no movement or exciting developments. Never before have so many competitors existed, as a colourful panorama in neighbouring Switzerland shows. Traditional companies and new online players are coexisting. Who can make a breakthrough here and what factors must companies consider in order to compete in this challenging market?
Ordering food online: where’s it headed?
As the chart shows, the online food delivery market will continue to grow steadily but weakly over the coming years.
However, compared to other countries, Germany is below average in terms of willingness to buy products online. According to a consumer study by the management consultancy A.T.Kearney, while 60 per cent of Germans have already ordered groceries online, only 18 per cent regularly shop this way.
Most customers expect obvious advantages to shop online. Delivery to your front door, time savings when shopping, and more flexible hours. In addition, a large assortment is a plus, especially in terms of special diets such as gluten-free, lactose-free, or vegan.
But there are also big hurdles that hinder the acceptance of this business model. Customers want to smell, touch and personally select fresh produce before they make a purchase. Also, added delivery fees are partially incomprehensible, but they guarantee a standard of quality. There’s also often a lack of opportunity to buy groceries online, although many customers would be willing to do so. It’s really only possible in large cities like Berlin, Munich, Frankfurt, Hamburg, or Cologne. The truth is that in Germany there are hardly any services that could supply the entire country.
In order to meet these challenges, producers and retailers must try to find new ways if they want to tap potential in the market.
In addition to the leading online delivery services REWE and Amazon Fresh, there are also some new examples of what’s to come. We’ll show you the different approach these companies are taking.
Online grocery delivery: Freshness
One of the main problems facing the sector is the transport and delivery of fresh food such as meat or fish. Since these must be sent under special conditions, shipping costs are higher. In addition, customers are increasingly demanding more details about the origin of the food and its treatment before the purchase. Transparency and building confidence are essential. How can a profitable formula be developed here?
In Switzerland, the nationally available online supermarket Farmly offers fresh produce directly from farms and production centres. Farmers receive an order, process it overnight and the next morning they’re sent to their destination.
Customer can choose between local, regional and national products, even filtering by distance or amount of CO2 emitted. On every product page, there’s also concrete information about the company or the producer behind the food in order to build trust. A selection of fresh and organic products make Farmly strong in this regard.
Online grocery delivery: Convenience
But it’s not just the freshness and sustainability of the products that make a supermarket differentiable. The convenience and convenience of the shopping experience, one of the reasons why consumers prefer the online medium, can be the central hub to stand out from the competition. In order to do so, the pain points related to online food retailing must be identified and resolved:
Selection is very standardised despite the many filters. What can I do to individualise purchases?
Swiss supermarket Coop’s online service, Coop @ home, relies on personalisation to get returning customers. For example, they can select weight, thickness, and marinades for meat to customise the product to their liking.
There are now many potential customers who are mobile aficionados and prefer to shop while out and about. How can I be attractive and visible to mobile customers?
Both the Dutch start-up Picnic and the mobile supermarket MIACAR from the Swiss retailer Migros no longer offer a desktop solution. Everything’s done on an app. Both also score points when it comes to their excellent delivery conditions, which create a comfortable and carefree shopping experience for customers.
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Shipping costs and large time windows during delivery aren’t optimal for the average customer. How can I improve shipping conditions?
Picnic is one of the few online supermarkets offering free deliveries. MIACAR promises ultra-fast delivery within 20 minutes. Both share with the users the location of parcel carriers to the minute, so they know when the order is going to be delivered to the door.
Specialised delivery services also provide customers with services: Flaschenpost (a beverage delivery website) not only delivers drinks free of charge within two hours, but also takes empty bottles and settles the deposit on-site with the new order. But to get items delivered, a minimum purchase total must be me and it varies depending on the delivery area.