Online grocery delivery to become new normal

Online grocery delivery to become new normal


Business
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A new era in online food delivery marks an incredible opportunity for existing players and others in the food industry.

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The idea of browsing the supermarket aisles is increasingly irrelevant when compared with the convenience of ordering food online.

The idea of browsing the supermarket aisles is increasingly irrelevant when compared with the convenience of ordering food online.

A NEW era in online food delivery has been rapidly emerging around the world, and – rather than a total disruption – it marks an incredible opportunity for existing players and others in the food industry.

For a growing number of consumers, the idea of browsing the supermarket aisles is increasingly irrelevant when compared with the convenience of ordering food online with a few clicks on a mobile phone, iPad or computer.

Although it is early days yet, the ubiquity of the smartphone and the rise of the on-demand economy will have a profound and lasting impact on food, as it has in other spheres of our lives. These platforms are here to stay and the majority of consumers in the future will, to varying degrees, shop both online and offline.

For food producers, retailers, restaurants and others in the food industry – it is a matter of ensuring they take advantage of the opportunities this raises.

Globally, the number of companies offering food and grocery delivery through an online platform has grown exponentially in the past two years. 

A number of established players have already begun to invest in the food delivery space. In the US, for example, Walmart recently purchased Jet in an attempt to compete with Amazon, and other retailers are experimenting with a variety of mobile and delivery models, including click-and-collect. 

In food service, Starbucks and Domino’s Pizza are leading the pack with proprietary apps. Smaller chains and outlets have realised that participating in aggregator platforms for both ordering and delivery can increase their takeaway revenue by up to 20 per cent.

E-commerce tends to appeal most to those shoppers who are least price sensitive. - Nicholas Fereday

Consumer packaged goods companies, like Cambells and Hershey, are also dipping their toes into food delivery waters via partnerships in meal kits with online retailers, while grocers are also moving increasingly down this channel.

Although online food sales is still lagging when it comes to e-commerce, it is growing fast.  In the UK, for example, online food purchases already account for six per cent of total food retail.

E-commerce tends to appeal most to those shoppers who are least price sensitive, creating new opportunities to increase margin.

Certainly no major player in the food industry should sit this one out. And all participants in the food sector should be aware of the implications and opportunities online food delivery will bring.

  • Based in New York, Nicholas Fereday is a senior analyst of consumer foods with Rabobank.
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