Home Posts Tagged "online sales"

online sales

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Machiel Reinders is a senior researcher of Marketing & Consumer Behaviour at LEI Wageningen University Research Centre. He is currently focusing on trends in the agrifood market, in which capacity he is also involved in the Fresh ONLINE Pack project. In the previous years, Reinders mapped out the existing situation and the situation that is desirable in the future with respect to the online sale of fresh produce.

This study included a mystery shopping experiment, in which products, packaging and the ordering procedure of various online sellers of fruit and vegetables were tested. ‘The study revealed that there were substantial differences not only with regard to the ordering and delivery processes, but also in respect of the product ranges, delivery frequencies, packaging and the payment methods offered.’

Critical success factors

What requirements would you need to satisfy if you wish to be successful in the online sale of fresh produce? According to Reinders, one of the biggest obstacles is logistics. How can you be sure that your fresh products will be delivered on time and in the desired manner, and in a way that is profitable to you? Door-to-door delivery is expensive, particularly when your customers have individual wishes with regard to delivery and are only willing to pay limited delivery costs.

A study conducted by Deloitte in 2015 reveals that consumers increasingly want to pick up their own groceries.

There are a few ways to keep these costs down, according to the researcher: ‘If you opt for home delivery, you can limit yourself to a specific delivery radius or ‘pick’ your orders in a decentralised manner, like at the local supermarket or greengrocer’s. Another alternative is to use pick-up points at supermarkets or community centres. The study conducted by Deloitte in 2015 reveals that consumers increasingly want to pick up their own groceries. The most important reason for this the ability to pick up your groceries when it’s most convenient to you.’

Speed and convenience

Reinders believes that opportunities abound in an online environment. Groceries can be put together according to individual specifications, or linked to a personal profile, such as a specific diet. An online environment can also offer consumers inspiration, in the form of videos, for example. Platforms like these also enable information to be shared via social media. ‘Online channels offer the ultimate in speed and convenience.’

The researcher also believes that online sales offer opportunities in the field of freshness and quality. ‘Supplying products of a consistently high quality and responding to the demands of target groups could make it easier to achieve higher profit margins. Differentiation in products range and delivery methods are also opportunities that could be explored. Also, differentiation raises efficiency in the chain: food waste can be reduced and chains shortened.’

An online environment offers opportunities for demand-driven innovation and marketing, because it is easier to gain insight into the behaviour and wishes of customers who order their products online.

According to Reinders an online environment also offers opportunities for demand-driven innovation and marketing, because it is easier to gain insight into the behaviour and wishes of customers who order their products online. ‘This will provide an incentive for new products or concepts to be developed based on customers’ prior ordering behaviour.’

The threats facing the online sale of produce lie mainly in the fact that the Dutch fresh produce sector is still highly traditional in its commercial development, says Reinders. ‘The Netherlands is not a front runner in digital technology. Also, the online delivery of a consistent and high quality still constitutes a challenge. Moreover, many consumers believe online purchases to be more expensive. This also forms a serious threat.’

New initiatives

Reinders expects the online market to keep growing unabatedly over the next few years. ‘The ING bank anticipates the online portion of sales achieved by Dutch supermarkets to reach 15 to 20 per cent by 2020. Developments follow one another at a rapid pace; new online initiatives are mushrooming. I think that growers and suppliers responding to these developments can be assured of becoming the preferred business partners of certain sales outlets and retailers. As far as this is concerned, the sector should not let these opportunities slip by!’

Text: Tuinbouwteksten.nl/Ank van Lier. Photo: LEI Wageningen UR.

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The consumption of fruit and vegetables is declining. The purchase of fresh vegetables by consumers dropped by three per cent and the purchase of fresh fruit by half a per cent in 2015. This trend has been growing for some time. According to Nicolette Quaedvlieg of GroentenFruit Huis there is still a world to conquer in this respect. ‘The online market offers a lot of new opportunities. Businesses are looking for new markets and models for their distribution.’

However, Quaedvlieg is also aware that the online sale of fresh produce is lagging behind the sale of other consumer and other goods. ‘People buying fresh products want to be able to see, touch and smell them first. Additionally, one type fruit or vegetable can easily be replaced by another; the internet offers more added value in the sale of consumer goods.’

Experience

Nevertheless, Quaedvlieg believes there to be ample opportunities with regard to the online sale of fresh produce. ‘There are outstanding opportunities if you can offer a unique product that is not available anywhere else, for example. Or if you can add something interesting to your products, like a recipe. Customer loyalty is also very important; people will come back once they know how tasty your products are. Consumer experience is a key factor in this.’

'Customer loyalty is also very important; people will come back once they know how tasty your products are. Consumer experience is a key factor in this.’

Quaedvlieg is also convinced that selling your products online enables you to enter into closer contact with your customers, which is a considerable advantage. ‘It’s easier to get feedback, from which you can gain a great deal of information. However, if you don’t make use of this it won’t be any help to you. This service is very important to consumers.’

Text: Tuinbouwteksten.nl/Ank van Lier. Photo: GroentenFruit Huis.

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Entrepreneurs have to jump on the online bandwagon, says Harrij Schmeitz, the director of Fresh Informationmanagement Center (FIC). The objective of FIC is to make the fresh produce sector stronger, more efficient and safer, and to successfully launch innovative developments on the market.

Schmeitz calls the online world an entirely new world. ‘I am comparing it to the emergence of the convenience market. This market was created by a group of pioneers who started chopping and packaging vegetables in a shed. In the course of time, this niche grew into a full-fledged market. The online market will be undergoing a similar development.’

‘I am comparing it to the emergence of the convenience market. This market was created by a group of pioneers who started chopping and packaging vegetables in a shed.'

According to Schmeitz, this is the reason why FIC launched the Fresh ONLINE Pack project. This project is exploring ways to promote the online market for fresh fruit and vegetables. The results are shared with the corporate world through ‘Innovation Circle Meetings’.

Quality and perception

According to Schmeitz, young people’s increasing tendency to opt for convenience offers plenty of opportunities for boosting the online sale of fresh consumer products. ‘However, this development could lead to negative results if we are unable to offer good quality products and adequately contribute to customer perception. Additionally, this niche is faced with a great deal of international competition. Acceptance with regard to the online sale of fresh consumer products will be faster in one country than in another. Just consider the Asian market in this respect!’

'The question is whether the enterprises currently operating in this sector will continue to survive at all. New parties are tapping into this market, also from outside.'

The Director of FIC believes that taking part in this development is not voluntary, but mandatory. ‘As a sector, we need to develop a strategy to cope with the changing market. The question is whether the enterprises currently operating in this sector will continue to survive at all. New parties are tapping into this market, also from outside. A new market is emerging, with new players and existing players that are undergoing a transformation. You have to hop on the bandwagon or you’ll miss the boat!’

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Text: Tuinbouwteksten.nl/Ank van Lier. Photo: FIC.

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JEM-id is based in Honselersdijk and develops websites and software. Ninety-five per cent of its clients are active in the fresh produce and ornamental plants sectors. Account manager Martijn van Andel has experienced the rapid growth in online sales achieved in the past few years by the ornamental plants sector, while according to him the the fresh produce sector lagged notably behind.

Van Andel explains that the diversity of the products in the ornamental plants sector is much greater than that of the fresh produce sector. Apart from this, consumers want to see fresh food products before buying them. ‘Even if you’re speaking about the same product, there are notable differences. No two moth orchids (Phalaenopsis) are alike. The number of branches will be different, as well as the quality, the packaging, and many other aspects. You really buy a specific article. This is why people are looking for ways to clearly and efficiently present the diversity of their products. Good photographs, taken at the growers’ place of business, are very important in this.’

This is different in the fresh produce sector, and the differences are less obvious. ‘If you order a five-kilogram box of red sweet peppers, diversity will be very limited. Everyone knows what you mean and nobody actually needs to look at the products before buying them. In this respect, ordering fresh produce is easier than ordering ornamental plants.’

FloraXchange

JEM-id developed the FloraXchange online communication platform especially for the potted plant sector. This platform provides support to growers in advertising their offering of potted plants. There are currently 1,059 growers affiliated with FloraXchange who present their products on the website. JEM-id makes this information available to more than 300 buyers, who in turn forward this information to their own customers. ‘It is quite revolutionary in the market. I venture to claim that this initiative has given the entire sector a boost. It provides in a demand; we have obtained a lot of positive response.’

According to the ICT specialist, trade companies really wanting to boost their sales have to make sure that their internal automation and logistics processes are in order. This means that a lot of their old systems will need to be replaced. Of course, not everyone is equally enthusiastic about this. ‘If you are a leading exporter of fresh produce or ornamental plants and you have to replace your internet systems, this will cost you a lot of money. This will, of course, have a huge impact, while the success ratio can be called quite exciting in terms of feasibility. There are many companies who keep putting this off. However, you have to embrace change rather than avoid it; at this point you have no other choice. You have to change with the times. This is the only way to survive in a world where the only constant is change.’

Purchase moment

According to Van Andel, there are still plenty of opportunities in the consumer market, both in the ornamental plants sector and the fresh produce sector. Logistics plays an important part in that respect. ‘Although there are special boxes available these days for shipping plants, shipping shoes is still a lot easier. Besides this, plants are impulse products. You don’t decide to buy a plant when you’re sitting on the couch in the evening with your laptop; you decide to buy one when you’re at the garden centre or the supermarket.’

However, the ICT specialist is surprised that the trend of buying groceries online is lagging so far behind. At the same time, he offers some plausible explanations for this. ‘Ordering a packet of macaroni, a jar of pasta sauce or a carton of yoghurt online is easy. But it’s different when you’re buying fruit or vegetables. If you regularly buy produce at a supermarket, you know that the freshest mushrooms aren’t the ones stalled out in front, and that the quality of green beans is variable from day to day. This is preventing a lot of consumers from buying these products online.’

One of the aspects that should be taken into consideration is customer perceptions at the moment of sale. ‘Buying a computer online is a lot more fun than buying one at a shop. Mediamarkt may have the lowest prices, but when you buy a computer there you will be helped by an eighteen-year-old in an ill-fitting jacket. On the other hand, when you buy a computer via Coolblue, you are not being pestered by anybody trying to sell you a more expensive product, you can consult hundreds of user reviews and your computer will be delivered to your home the next morning. It’s clear who will be winning this race.’

Text: Tuinbouwteksten.nl/Ank van Lier. Photo: JEM-id.

Would you like to know the key conclusions and read about appealing examples in e-commerce? Download the complete dossier New Retail (8 pages, pdf).

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