Online Grocery Retailing Research Articles

Understanding shoppers' expectations of online grocery retailing

PurposeThe purpose of this paper is to analyse the online preference structures of consumers.Design/methodology/approachNovel choice‐based conjoint experiments are used and are administered online. A select group of high net worth online grocery shoppers are examined. Both qualitative and quantitative procedures are used to determine the most frequently cited attributes affecting online patronage.FindingsWhilst there is no single attribute on which a retailer could develop a competitive edge, a significant market advantage can be gained by being simultaneously “best in class” on the top four attributes.Practical implicationsThis research approach has significant practical application to a wide range of strategic marketing questions.Originality/valueThese findings give focus to the management task facing marketing executives in the UK multichannel grocery market. How these findings might be used within a marketing plan is illustrated.

The advantages of preference-based segmentation: An investigation of online grocery retailing

Most companies aim to identify different groups of attractive customers in order to offer them appropriate products and/or services. To do this, companies need market segmentation. There is, however, a problem with the standard methods employed in market segmentation. The static inductive approach to market segmentation commonly employed by companies does little to identify buying intentions across demographic variables. A more dynamic and deductive approach to developing market segmentation is through analysis of consumer preference structures — an approach which is glaringly absent from most marketing texts, not least because of the difficulty of developing practical approaches which can generate effective marketing strategies. The purpose of this paper is to highlight and demonstrate a preference-based approach to market segmentation, using shoppers' experience of online grocery retail brands in the UK. The paper first demonstrates how using choice-based conjoint analysis could help achieve this objective more effectively than other more traditional conjoint methods. While conjoint analysis is not new, the ability to segment based on markedly different preference structures is a recent development and comprises a powerful, but underutilised segmentation approach. A web-based methodology is then applied to build up a picture of consumers' conscious and unconscious prioritisation of a large number of choice criteria. The paper calculates consumer utility values for both offline and online shoppers in the UK and develops a preference-based segmentation approach, which is compared with a traditional demographic segmentation approach using the same data. From this analysis, the advantages of a preference-based approach to segmentation are extracted. The paper closes with recommendations for market research practitioners.

Opportunities for active stock-out management in online stores: The impact of the stock-out policy on online stock-out reactions

This paper investigates the impact of an online retailer's stock-out policy on consumers’ category purchase and choice decisions. We investigate three different policies: (1) stock-outs are immediately visible and there are no replacement suggestions, (2) stock-outs are only visible after purchase attempts and (3) stock-outs are immediately visible but a replacement item is suggested. Results from an online grocery shopping experiment reveal that the adopted stock-out policy has a significant impact on both decisions. Making stock-outs not immediately visible creates confusion and intensifies the consumer's loss experience, thereby reducing the tendency to buy in the category. Suggesting a replacement item, in contrast, facilitates the substitution decision and slightly reduces the purchase cancellation rate. It also substantially increases the suggested item's choice probability. Yet, this effect disappears when higher-priced – suspicious – items are suggested. Overall, these results indicate that online grocery retailers have an interest in pursuing open and convenience-oriented stock-out policies.

Online grocery retailing: what do consumers think?

PurposeTo use the theory of planned behavior (TPB) as a theoretical framework to explore in depth the range of beliefs held by consumers about internet shopping in general and internet grocery shopping in particular.Design/methodology/approachSeven focus group interviews, four in the United Kingdom and three in Denmark, were conducted among consumers with different degrees of experience with internet grocery shopping. This diversification of respondents was chosen to capture a broad range of the consumer beliefs that predict intentions to buy groceries online or not. The TPB framework was used to construct the interview guide that was followed in all focus groups.FindingsAn unexpected result of the explorative study was that the seven groups consisting of more or less experienced internet shoppers differed only little in their pool of beliefs (outcome and control beliefs). Beliefs about internet grocery shopping, positive as well as negative, were remarkably congruent across groups. In the minds of consumers, internet grocery shopping is an advantage compared with conventional grocery shopping in terms of convenience, product range and price. Disadvantages, which could act as mental barriers, are, for instance, the risk of receiving inferior quality groceries and the loss of the recreational aspect of grocery shopping.Research limitations/implicationsAn important potential limitation of this research is the choice of focus groups as research methodology, which can prevent the elicitation of certain types of beliefs. If important beliefs concern issues of a more sensitive, personal character they are not likely to be mentioned in a focus group. Another limitation is the explorative nature of the research, which makes it impossible to attach weights to the importance of the elicited beliefs in predicting internet shopping behavior.Practical implicationsThe findings could be used to direct attention to consumer beliefs about internet grocery shopping which have the potential of acting as barriers to this line of e‐commerce.Originality/valueTo shed some light on the role of consumers in an underperforming and understudied branch of internet retailing. Barriers in the consumers' minds to shop for groceries online are identified using an established theoretical framework.

Social Contagion and Trial on the Internet: Evidence from Online Grocery Retailing

For a traditional retailer, the size of the customer pool can evolve over time but is largely bounded in space. In contrast, an Internet retailer with the appropriate shipping infrastructure can draw customers from a wide-ranging geographical area (e.g., the entire United States). We examine the trial decision for customers shopping at an Internet grocery retailer. Drawing on literature in economics, marketing and sociology, we conjecture that the trial decision may be subject to social influence or contagion. That is, exposure to the actions of proximate others - either through direct social interaction or passive observation - influences the trial decision of individuals who have yet to experience the service. This idea is tested in a discrete time hazard setting in which consumer trial decisions arise from utility-maximizing behavior. Moreover, our derivation allows use of region-level data to estimate a model consistent with individual utility maximization, even in the absence of individual level covariates. We find that the marginal impact of the so-called neighborhood effect is economically meaningful as it results in an approximately fifty percent increase in the baseline hazard of trial. This effect is robust to the inclusion of a broad set of covariates, region-level fixed effects, and time-dependent heterogeneity in the baseline trial rate. The model is calibrated on a unique dataset spanning: (1) 29,701 residential zip codes, (2) 156,049 customer transactions over forty-five months, and (3) zip code specific contiguity data from Geographic Information System (GIS) analysis. Substantive implications for customer base evolution and Internet retailing are discussed.

Virtual store layout: an experimental comparison in the context of grocery retail

Interface design and the interaction between customer and computer are factors critical to business effectiveness over the Web. A key aspect of conventional retailing is store layout; an analogous aspect in virtual retail is virtual store layout. This paper reports on an experimental investigation into the use of three different layouts in online grocery retailing: freeform, grid, and racetrack. These three most common conventional retailing layout types were transformed into virtual layouts for computer-mediated interfaces. Subjects in Greece and the UK participated in a laboratory experiment: they were given a planned shopping task with money to spend, and performed their shopping through a virtual store with layout as the manipulated variable. The results show that layout significantly affects online consumer behavior, but that predictions generated from the literature of conventional retailing about differences in the outcome of layouts do not generally hold in a virtual setting. Some of the findings can be explained by reference to research in Human Computer Interaction (HCI).

(Re)Solving Space and Time: Fulfilment Issues in Online Grocery Retailing

There has been much hype and speculation in the media and in academe on the vitality and future of the ‘Internet economy’. In this paper the author uses case studies from Britain, Canada, New Zealand and the United States to assess the strengths and weaknesses of online grocery retailers, from national chain stores pursuing a ‘bricks and clicks' strategy to ‘pure-play’ startups. He argues that delivering groceries via the Internet to customer doorsteps requires ways of solving space and time that are markedly different from previous trends in food retail logistics. He holds that solving problems of space management creates problems in the management of time and vice versa. In particular, ‘e-tailers’ struggle with fulfilment costs and logistics, and have attempted to manage customers' time and locations to reduce these costs. Store-based operations may be best suited for short-term profitability (or loss minimisation), whereas warehouse-based fulfilment may hold future promise of greater efficiency and flexibility. The author suggests that online organic home delivery may be the most successful type of online food retailer, for its size, given greater customer commitment and problems with store-based supply of organic food.

The nature of value created by UK online grocery retailers

AbstractThe UK retail environment is extremely competitive, forcing retailers to constantly develop and enhance both their offerings and their formats. Probably the most significant changes taking place are coming from not the products being sold themselves, but rather when, how and where they are being sold. For example, new technologies such as the Internet, CD‐Roms, electronic kiosks and digital television are opening up new opportunities for retailers through remote purchasing and delivery. While a number of large retailers have made heavy investments into electronic retailing, such as Arcadia, Marks & Spencer, Tesco and Sainsbury, it is uncertain how they are going to use this technology to gain competitive or market advantages. Given the media attention which technologies such as the Internet has attracted, there is the danger that businesses may adopt an unfocussed use. This report identifies and evaluates the ways in which major UK grocery retailers are using the Internet to create value for their users over and above that which is offered by bricks and mortar stores. Web sites of three grocery retailers were evaluated via preselected criteria in order to assess how they created value for their customers. Applying Holbrook’s typology of consumer value, the findings of the research suggest that each of the retailers surveyed are similar in terms of the nature of the value they have created for consumers online, these being value‐as‐convenience and value‐as excellence.

Online grocery retailing: success factors and potential pitfalls

Online grocery retailing: success factors and potential pitfalls