Success Factors in Online Food and Grocery Retailing: literature review

It is acknowledged by secondary data authors that online retailing in its various forms, including retailing of food and grocery products is considered to be a component of e-commerce. E-Commerce can be defined as “conducting business transactions – generally financial transactions – via communications technology” (Morley and Parker, 2010, p.431)

Laudon and Traver (2009) inform that internet boom in general, and e-commerce in particular that has started towards the end of the last century had transformed the various aspects of lives of people significantly in a global scale. Authors offer different viewpoints about the nature of that affect but agree on the idea that “with the introduction of e-commerce, we have come to expect 24-hour delivery of products from across the world, and home delivery of groceries from the local Tesco at a time of our choosing” (Gustafsson, 2006, p.39)

Hall (2008) mentions a survey conducted in 2008, which revealed that sixty-five percent of food companies were engaged in selling specialty food via internet. The following table illustrates the findings of the survey in a more detailed way:

However, some authors (May, 2000, Kozami, 2002, Ashley, 2004, and others) dismiss the idea that purchasing food and grocery products through internet is an entirely new thing. They justify their stand by stating that “we should be suspicious of claims that internet provisioning is something entirely new. There are obvious continuities with existing telephone and television shopping, even if the service has become widespread and notionally democratized” (Ashley, 2004, p.119). Nevertheless, this idea in no way affects the current scale and future tendency associated with online food and grocery retailing.

It has been stated that “an interesting aspect of the massive growth of food e-commerce has been the emergence of a wide of business models through which retailers attempt to organise the delivery of services” (Graham, 2004, p.226). Specifically, there are three ways in which the delivery of food and grocery products has been arranged by companies. First, there are companies like Tesco who arrange the delivery of products to online customers from the closest offline branches of the store. Second, some other companies prefer to arrange the delivery from specially designed warehouses. Third, others have chosen to outsource the delivery function of their business to third parties

Some researchers warn that “one of the main problems of e-commerce in the grocery sector is that only very few firms have been able to make a profit. Thus it is important to identify the main cost drivers of the business and address the question of how to balance the needs expressed by consumers and the resources used by a firm as a consequence of these generated needs” (Kornum & Bjerre, 2005, p.4).

Moreover, it has been advised that “when designing online grocery systems, a key concept to consider is the aisle layout of conventional self-service grocery stores” (Oliver et al, 2009, p.145). Gamble et al (2007) expand this idea and inform that virtual store layout can be presented in three forms: greed, racetrack and freedom. Grid layout involves long parallel layouts, whereas in racetrack layout products are organised into semi-separate retail areas according to their category. Freedom layout, on the other hand, involves the displays of various products in a free layout.

However, as it can be seen recommendations offered by other authors in terms of achieving better performance in online food and grocery retailing are only general and authors fail to provide more specific and practical recommendations in that aspect, and the proposed study aims to fill this gap in the literature.

References

• Ashley, B, 2004, Food and Cultural Studies, Routledge
• Baldwin, C, 2004, Sustainability in the Food Industry, John Wiley & Sons
• Hall, S, 2008, Sell Your Specialty Food: Market, Distribute, and Profit from Your Kitchen Creation, Kaplan Publishing
• Graham, S, 2004, The Cybercities Reader, Routledge
• Gustafsson, K, 2006, Retailing Logistics & Fresh Food Packaging: Managing Change in the Supply Chain, Kogan Page
• May, P. 2000. The Business of E-Commerce: From Corporate Strategy to Technology, Cambridge University Press
• Gamble, PR, Tapp, A, Marsella, A & Stone, M, 2007, Marketing Revolution: The Radical New Approach to Transforming the Business, the Brand & the Bottom Line, Kogan Page
• Kornum, N & Bjere, M, 2005, Grocery E-commerce: Consumer Behaviour and Business Strategies, Edward Elgar Publishing
• Kozami, A, 2002, Business Policy and Management, Tata McGraw-Hill
• Laudon, KC & Traver, CG, 2009, E-Commerce: Business, Technology and Society, Prentice Hall
• Monk, EF & Wagner, BJ, 2008, Concepts in Enterprise Resource Planning, Cengage Learning
• Morley, D & Parker, C, 2010, Understanding Computers: Today and Tomorrow, Comprehensive, Cengage Learning
• Oliver, D, Romm-Livermore, C & Sudweeks, F, 2009, Self-Service in the Internet Age: Expectations and Experiences, Springer Publications
• Lockstrom, M, 2007, Low-Cost Country Sourcing: Trends and Implications, DUV