eCommerce conquers the food & beverage retail market

Compared to the turnover achieved in the consumer electronics business, buying food over the internet is less common. In the food sector, consumers mainly use the internet as a source of information. In 2013, food sales accounted for only 0.3 % of the total internet turnover which is equivalent to roughly £450 million.

These figures contrast with UK figures: in 2013, a turnover of £4.5 billion was achieved with food and beverage sales over the internet – almost 5 % of the total internet sales volume. Exports forecast that food sales in Germany will rise from today's 0.3 % to 10 % in 2020. This means that every tenth consumer will buy food exclusively over electronic systems. The share of cross channel purchases which cover customers buying food on internet as well as from non-electronic sources is estimated to rise from currently 6 % to 20 % in 2020. The market share of non-electronic channels is estimated to drop
to 70 %.

Business models

The most common business model for shopping fresh foods online are drive markets. Customers order their product selection online on the website of a grocer and personally pick up the prepared package in the branch store at their location.

The business model "online shopping with delivery service" modelled on the Amazon consumer electronics trade implements more thoroughly the convenience concept. However,
logistics requirements are higher since a consistent strategy for storage, dispatch and handling returns is needed.

Development of sales volumes in the German food trade
Turnover achieved in food trade: Plant retail 2013/Market shares: EY figures

Implications of this trend

  • Sales surface in retail markets is diminishing
  • Growing number of distribution centres and decentralised warehouses instead of new retail markets
  • Order picking and distribution processes must be thoroughly planned as to capacity and efficiency

Logistics requirements

  • Compact and efficient storage of foods under product specific temperature conditions
  • Fast and error-free preparation of customer orders
  • Temperature controlled and reliable delivery of food orders at low additional cost
  • Cold chain needs to be extended to consumer's house door (last mile)
  • Bridging the time gap between transport of goods and handover to the customer

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