Wednesday, 24 August 2011

Key issues for e-grocery businesses

As a kind of e-tailing business, e-grocery businesses need to respond successfully to following key issues in order to be viable:

a. The products that they sell are mainly convenience products, such as food. Consumers value convenience; e-grocery operators need to address the tight convenience requirements of consumers with an appropriate logistics setup.
b. e-grocery products are mainly of the nature of commodity, yet perishable. Thus, profit margin of these products tend to be slim; on the other hand, once these goods turn bad due to slow stock turnover, the businesses cannot earn profit.
c. Some of these products are touch-and-feel products, thus not easy to sell via the Internet.
d. To succeed as a e-grocery business, it is important to gain repeated businesses from consumers (again due to the nature of products sold - convenience products); much efforts need to be made by e-grocery businesses to cultivate customer loyalty and  trust. Some of the efforts made in this regard have to do with the e-grocery website's security and usability.

e-Grogery businesses do offer various other products that are not convenience goods; in this case, some of the issues identified above do not apply. There are also more specific business issues as related to business models, financing and logistics of e-grocery businesses. They are not explored here.

References
  1. Grocery store: http://en.wikipedia.org/wiki/Grocery_store
  2. Keh, H.T. and Shieh, E. (2001) "Online Grocery Retailing: Success Factors and Potential Pitfalls", Business Horizons, July-Aug., pp. 73-83.

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