On-line grocery shopping a tough sell
More than one in five Internet users indicate that nothing would make them more likely to use an on-line grocery service in the future. A recent survey conducted by PricewaterhouseCoopers, the Columbus, Ohio, professional services organization, indicates that while shopping for groceries is something that consumers do frequently, only 1 percent grocery shop on-line on a monthly basis.
"The category is not ideally suited for the Internet as it is near impossible to translate the grocery shopping experience on-line," says Mary Brett Whitfield, principal consultant and director of PricewaterhouseCoopers’ E-Retail Intelligence System. "It’s also a highly personal process. Consumers are not yet ready to transfer this caregiving function to a detached process such as on-line shopping."
Shopping for groceries is something that consumer’s do frequently, so any on-line retailers that develop a winning strategy will tap into a large shopper base. According to the 1999 PricewaterhouseCoopers Retail Intelligence System annual consumer survey, primary household shoppers make nearly 10 shopping trips for groceries every month. More often than not, these grocery shopping trips are to supermarkets.
"Although consumers have more choices than ever of where to buy their groceries, supermarkets remain the clear winners, garnering a 59 percent share of monthly grocery shopping trips among on-line purchasers," Whitfield says. "Internet shopping sites, on the other hand, capture just slightly more than 1 percent of monthly grocery shopping trips." Furthermore, only 7 percent of respondents who have ever purchased groceries on-line indicate that they do more than half of their grocery shopping on-line while almost half admit to doing "very little."
Consumers clearly value their time. In fact, 42 percent of Internet users agree that they are always looking for ways to spend less time grocery shopping. However, only 11 percent would be willing to pay more for products or services that save them time. Therefore, on-line grocery offers have to be competitive with supermarket prices.
For many consumers, a continuation of a relationship with their regular supermarket is a way to reduce risk and uncertainty surrounding the online grocery shopping and purchasing process. Four out of 10 Intemet users (43 percent) state they are more likely to shop for groceries on-line if the service is operated by their regular supermarket vs. an Internet-only grocery service. However, overall, only 18 percent state that they are interested in grocery home delivery of any kind.
Here is a sampling of grocery shopping attitudes (among primary household shoppers):
- I am more likely to shop for groceries on-line if the service is operated by my regular supermarket than an Internet-only grocery company: 43 percent strongly agree/agree; 35 percent slightly agree/slightly disagree; 23 percent disagree/strongly disagree.
- I am always looking for ways to spend less time grocery shopping: 42 percent strongly agree/agree; 43 percent slightly agree/slightly disagree; 15 percent disagree/strongly disagree.
- I am interested in grocery home delivery: 18 percent strongly agree/agree; 35 percent slightly agree/slightly disagree; 48 percent disagree/ strongly disagree.
- I am willing to pay more for products or services that save me time: 11 percent strongly agree/agree; 53 percent slightly agree/slightly disagree; 36 percent disagree/strongly disagree. Price remains a key driver of on-line shopping behavior in the grocery category.
- Intemet users rank price as the most important factor when shopping online for groceries, ahead of product brand, site shopability, delivery time, and customer service.
- Twenty-two percent of on-line grocery purchasers identified low prices as their primary reason for purchasing the category on-line.
- Forty-six percent of Internet users cited free delivery for large orders as the factor most likely to entice them to use an on-line grocery service in the future.
"In addition to low prices, consumers shop on-line for groceries because they want easier access to brands and products and because they either do not have time or dislike shopping at stores," Whitfield says.
What will it take to get shoppers to grocery shop on-line in the future? While free delivery tops the list, 40 percent of respondents indicated that the acceptance of manufacturers’ coupons would make them more likely to use an on-line grocery shopping service. Other factors that would motivate on-land shoppers to shop for groceries on-line include convenience factors such as the ability to set a specific delivery time window, create a list of frequently purchased products, or pick up their order at a local store. However, one in five stated that nothing would make them more likely to purchase groceries on-line.
While there are several different variations of on-line grocery services currently in operation today, the vast majority of Interact users are not aware of most types of on-line grocery service. However, low awareness levels are not surprising since many of the online grocery services are currently confined to only a handful of market areas. Even so, among Interact users who are aware of the on-line grocery shopping options, the trial rates are very low.
The on-line grocery service model that resonates most favorably with the shoppers most interested in grocery home delivery is one in which groceries are delivered in a tight time frame - 30 minutes - with only a very modest delivery charge.
"The fact that very few Internet users are even aware of the on-line grocery service options and even fewer have actually tested the options is an indicator of the infancy of this distribution channel for groceries and household essentials," says Whitfield. "But the ability to deliver groceries to consumers’ homes within a short time frame will be key to determining which on-line grocery service providers survive and prosper and which fall by the wayside," she says.
Every month, the PricewaterhouseCoopers E-Retail Intelligence System surveys over 500 Intemet users regarding on-line shopping behavior and attitudes and Internet usage. The survey is fielded on-line to a nationally representative sample of Intemet users using National Family Opinion’s Interactive Panel. Most survey respondents access the Intemet at least weekly for non-business use. The survey reported above was fielded among Intemet users who were either the primary grocery shopper for their household or frequent supermarket shoppers from March 29 to April 5.
Survey shows Internet’s impact on workplace
According to a survey commissioned by pogo.com, an on-line games site, and conducted by Greenfield Online, Wilton, Conn. Internet users say the Web is having a definite impact on how they work, and how well they work.
- Nine percent of workers think their work performance has declined as a result of time they spend on the internet. Twice as many workers living in the West (13 percent) think their work performance has declined compared to Eastern workers (6 percent).
- Ten percent of workers stay after business hours just to use the Internet at work. High-income workers prefer to use the Internet after business hours: just 20 percent of workers earning $75,-$100k stay after hours, compared to just 8 percent of workers earning $35K.
- Women are twice as likely (2 percent) as men (1 percent) to make more mistakes at work due to increased time spent surfing on the Internet.
- Thirteen percent of workers say access to the Internet makes it harder for them to stay focused at work. Workers in the West (17 percent) find it harder to stay focused compared with Eastern (10 percent) workers.
- Seventy-four percent of workers surveyed check their e-mail one to five times per day; 11 percent check six to 10 times a day; 3 percent check 11-15 times a day; 8 percent check more than 15 times a day. Men are twice as likely (10 percent) to check their e-mail more than 15 times a day when compared to women (5 percent).
The younger you are the more you check e-mail: 21 percent of workers under 25 check their e-mail more than 15 times a day, compared to only 1 percent of workers 55+.
- Thirty-four percent prefer talking about business with people via e-mail rather than face-to-face.
- Four percent of workers say their boss or other work supervisor has commented or complained about the amount of time they spend on-line at work. Eastern workers have the fewest complaints about on-line time from their employers (2 percent) compared to 5 percent of workers from the Central U.S. Four percent of workers in the West say their employers have complained about their time on-line while at work.
- What do workers prefer to do during their lunch breaks? Fourteen percent stay at the office, eat lunch at their desk and use Internet; 24 percent leave the office and have lunch at a restaurant; 19 percent socialize and hang out with their co-workers; 13 percent leave the office and take a walk; 3 percent leave the office and do some shopping.
Results are based on 1,000 responses from Greenfield Online’s Internet-based marketing research panel. That data is weighted by age, gender and region to be representative of the Internet population.
AOL names top 10 ’senior wired’ cities
America Online has named the 10 most "senior wired" cities in America based on the amount of time adults age 55 and over spend on-line (according to more than 3,200 older Americans visiting AOL’s Opinion Place from March 20 - April 3). The results are drawn from a survey conducted by Digital Marketing Services, Inc., a provider of on-line research and a wholly-owned subsidiary of America Online, Inc.
THE TOP 10 "SENIOR WIRED" CITIES
1. Phoenix
2. Boston
3. Tampa-St. Petersburg-Sarasota
4. Los Angeles
5. Orlando-Daytona Beach-Melbourne
6. West Palm Beach-Ft. Pierce
7. R. Myers-Naples
8. Oleveland
9. San Francisco-0akland-San Jose
10. New York
Additional top "senior wired" cities include Philadelphia, Chicago, Miami-Ft. Lauderdale, and Seattle-Tacoma.
The AOL "senior wired" survey demonstrates that older Americans are getting connected to the Interact regardless of their age and computer sldlls, and they feel that the Interact is beneficial. The average amount of time older Americans in the top 10 cities on-line is approximately 18 hours per week; most have been on-line one to three years. Ninety-two percent of older adults polled say they feel the Internet has improved their fives overall, and 69 percent say the Internet has brought their families closer together.
According to Jupiter Communications, older adults are already the fastest-growing segment of the Web market, spending more time on-line individually than other age groups. Jupiter also projects that the number of older Americans on-fine is expected to increase from 14 million to 27.3 million by 2003.
"The Internet has proven to be a exciting new world for AARP members," says Katie Sloan, director of applied gerontology, AARR "It serves as social glue in facilitating better communication with friends and families and opens new worlds in research and information and better shopping opportunities. It should be no surprise that older Americans and the Boomer generation have taken great interest in using computers and the Intemet."
Computers are giving older Americans high-tech ways of doing their favorite activities, especially as they age or become less mobile. According to the AOL "senior wired" survey, some of their favorite on-line activities include:
- Communicating: 93 percent of older Americans polled say they go on-line to e-mail and instant-message. They frequently send on-line greetings cards and pictures, and correspond with their children, grandchildren and other family members and friends.
- Researching: Older Americans find they are gaining independence by having access to a centralized source of information day or night, seven days a week, where they don’t have to worry about business hours or finding transportation. According to the AOL survey, 75 percent are frequently involved in information searches for themselves and their families, particularly checking their financial investments (53 percent), searching travel and vacation options (65 percent), and finding medical and health resoures (69 percent).
- Shopping: An AARP survey of Americans 45 and older found that 54 percent of Intemet users make purchases on-line. The most frequently purchased products by older adults include computer software and hardware, music and clothing. The number of Internet purchases respondents make is strongly related to income level, the AARP survey found. About one quarter of those with incomes under $50,000 made 10 or more purchases last year, this figure doubles (52 percent) for those with incomes above $75,000. The survey also reports that Internet purchasers are overwhelmingly satisfied with their purchases, with 82 percent saying that the product "completely" met their expectations.
- Playing games: For some older Americans, especially those living alone, it’s hard to initiate their own entertainment. On line games are popular users of computers and users can play them alone or as a group. Plus, in addition to on-line computer classes, games are a non-threatening way to learn basic computer skills like using a mouse and Navigating the Internet.
Smart-card usage will grow
For years, Europe has been using smart cards to do everything from health identification to banking to buying groceries, but the United States has been slow to implement the technology due to a lack of infrastructure and the highly fragmented market. But increased use in the digital realm, the increased use of mobile systems, the importance of network security, and the government taking an active role in smart-card applications will drive this market to unprecedented heights, according to research on the smart-card market conducted by Frost & Sullivan, a Mountain View, Calif., research firm. The Frost & Sullivan research shows participants shipped 14.4 million units in 1999. By the end of the forecast period, 2006, the units shipped is projected to rise to 114.7 million.
The pay-TV segment, which includes digital broadcast satellites (DBS) and PCFFV set-top boxes, such as WebTV,and the mobile segment, are currently driving the market. Combined, these two segments were responsible for shipping nearly 93 percent of all units sold in the U.S.
In the future, however, the network security and government segments will garner a greater share of the marketplace. The government, specifically the defense sector, has played an important role of piloting smart-card applications and will begin mass deployment in the next few years. The network security segment is projected to make up nearly half of all units shipped by 2006.
The greatest challenge facing the industry is a revamping of the infrastructure. Frost & Sullivan projects that it would take nearly $3 billion to convert just the hardware and over $12 billion to change the entire infrastructure in both direct and indirect costs. The rest of the world, including Europe, on the other hand, built their infrastructures from the ground up, based on smartcard technology.
Instead of smart cards, the U.S. based its payment systems on magnetic stripecard technology. Until the banks have a business case that proves smart cards can be a viable competitive advantage, this industry is reluctant to change.
"U.S. banks haven’t been able to nail down return-on-investment with smart cards," Frost & Sullivan Analyst Alyxia Do says. "But banks have to face the fact that new competitors in the form of telecom operators, insurance companies, and transit authorities are changing the face of the financial competitive environment. Smart cards can be the banks’ response to increased competition.
Fragmentation in the application market is also a major hurdle smartcard participants must overcome. Whereas in France or Germany the country may have one to three telecom operators, the U.S. has nearly 50 wireless service providers.
"While we have been able to create pockets of market activity and development, the total conversion of the country is not occurring yet," Do says.
"What will continue to hurt the U.S. market are issues that need to be solved in the industry more generally. We have more application frameworks and platforms than we can handle, our markets are niched by vertical market demands, and the banking industry is still trying to find its business case. All of this is slowing down the industry quite a bit."
Despite these difficulties, Frost & Sullivan expects that the U.S. market will grow and will become one of the leading and most innovative markets in deploying smart cards. "Smart cards in the U.S. will grow with everything Internet-related," Do says.
Small businesses think banks should stick to banking
In contrast to the growing trend of banks offering non-banking services and expanded options on their portalstyle Web sites, small-business owners participating in a virtual focus group on technology in banking overwhelmingly said banks should "stick to being a bank." The group was moderated by John B arlow, president of Minnetonka, Minn.-based Barlow Research Associates, Inc., and hosted by Evoke during the eFinancial World conference in May in New York City.
Participants were asked if they wanted access to a variety of adjunct products and services from their bank. Their answer was a unanimous no. A bank trying to be all things to all people doesn’t do anything well, said one focus group participant. Another stated that too many additional "supermarket" services made the bank "inefficient?’
As for what they do want, participants said that a personal relationship with their banker and close, convenient branch locations remain key factors in their choice of a business bank. In a less traditional vein, focus group respondents also considered electronic banking services a plus, contending that they improve time management and make for easier access to account balances and fund transfers at hours convenient for the often time-strapped small-business person.
Customarily, small-business owners have relied on face-to-face interaction with their bankers and personal visits to their local branch to maintain their relationship with their bank. A personal relationship is still preferred, according to the focus group participants, even at the expense of paying up to a quarter percent more for credit. Most said they were willing to pay slightly more for access to a trusted adviser.
Participants also expressed strong interest in utilizing less-personal services that facilitate the banking relationship and save time. The new scraper technology elicited largely positive reactions, with participants perceiving it as a vehicle that could save paperwork, provide better information, and eliminate hassles by putting financial information from various sources on one comprehensive sheet. All of the participants also said they would check the small-business loan auction sites on the Internet to compare rates and terms with those offered by their own bank. Several of the small-business owners said that because of the relationship they had with their banker, they felt they owed their local bank the courtesy of asking them to match a lower rate before accepting a loan over the Internet.
The "eReality Check" focus group was comprised of 12 small-business owners with annual sales of between $1 million and $10 million; all have access to and use the Internet frequently.