Tracking The Evolution Of E-Grocers: A Quantitative Assessment

Forecasts of the proportion of food retailing likely to be conducted over the Internet remain small, perhaps only contributing 2 percent of sales. One reason for this low market share is the challenge E-Grocers face in developing strategies which respond to four key areas of interest to consumers: signals of firm quality; signals of product quality; the range of products offered; and service, or customer-relationship management (CRM). Careful attention to these consumer concerns is important in all retail relationships-online or offline. This paper compares indicators of these factors across U.S. E-Grocers. A quantitative four-period ranking of online food-retailing strategies is presented for the nascent industry. Data from the third and fourth quarters of 2001, the fourth quarter of 2002, and the first quarter of 2004 provide the basis of this discussion. After initial setbacks, data show traditional ("bricks") grocery retailers successfully developing online strategies. Firms not primarily focused on groceries exited the E-Grocery sector, while the development of specialty food suppliers blurred the concept of online food retailing. Gaps in current strategies are indicated using content analyses of E-Grocery web sites.