Retailers are investing in online grocery operations despite the cost in order to get more consumers to shop online. There is a lot of complexity surrounding selling food online due to important details like keeping the food fresh, frozen or warm. Another aspect is impulse buys that occur in the store that often don’t translate to online shopping. However, North American and European retailers are investing more and more in offering food online. Amazon.com is said to offer more fresh foods to compete with its non-food sales.
“They are trying to hook customers up to brands for their grocery shop and hope they will spend on non-food which is lower headache and higher margin, which will drive profitability,” says Sophie Albizua from retail consultancy eNova Partnership. “It is notoriously difficult to make money selling groceries online. The reason that people do it and need to do it have nothing to do with profit and nothing to do with groceries.”
In Britain, e-commerce already accounts for five per cent of the food sales, with other countries like France catching up. In 2013, retail giant Tesco made $216 million on online grocery sales, with a five per cent margin. Studies showed that Tesco customers who shop for online groceries spend twice as much as customers who don’t shop for groceries online. Tesco offers one-hour delivery hours for online grocery orders during the entire week.
