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Sometimes being the biggest loser is not a good thing. Such is the case of Webvan, an online grocery store that was the biggest loser in the dot-com bust. When all those venture capitalists were pouring money into Webvan - a total of $441 million before the company declared bankruptcy in 2001 - the general consensus was: online grocery shopping was a no-brainer.
Despite all the money, online grocery shopping never took off. Now, ten years later, there are a few companies in the sector. In Minneapolis, where I live, there is Coborn's Delivers as well as Lund's & Byerlys. Coburn's is an exclusively online business and is route-based, while Lunds & Byerlys is a brick-and-mortar chain that offers the option to order online with delivery or pickup. You can use the service whenever you want.
What the online grocery sector has going against it is most people actually enjoy grocery shopping.
Sure, there are those who hate it, like oopsie daisy and October Bombshell, but according to the Nielsen Company, they are just 10% of the population, while the majority of us either enjoy it, or don't think it's such an awful chore.
Did all those venture capitalists see this data when they were pouring money into online grocery businesses a decade ago? Or were they so sure that people wanted to live their lives online that they didn't pay attention to the fact that some people would actually miss not pushing their cart up and down the aisles?
Coborn's is not the first "route" delivery grocery store in the Twin Cities. There's Schwan's, which originally served rural America and has been in business since 1952, and there was the failed Simon's Delivers. If you look up Simon's Delivers online and click on the link, it will take you to Coborn's.
While there are times when I would delight in having my groceries delivered, I neither want or need it as a steady diet. And that is the problem. You have to be extraordinarily organized to enjoy a route grocery service. It requires planning, because when you sign up for the service they deliver food to your house either weekly or every other week. And it requires knowing exactly what you plan to cook a week from Thursday. That is a lifestyle I have resisted like the plague.
That alone is why some of the new models of online grocery shopping are so appealing. They offer more flexibility than a route service. These hybrids seem to be working, not just in the U.S. but in France and England as well. In France, Chronodrive opened in 2004.
...a hybrid online shopping model devised by Chronodrive that ditches the expensive delivery option used by early Web grocers and retains what the company’s founders felt shoppers wanted: an easy online system to order groceries that the consumer can pick up, prepacked, at his convenience….In France, Mr. Thoumine expects the format to reach a 4%-5% market share of grocery shopping by 2013, compared with 0.6% now. “People want to save time on grocery shopping,” he says. “The drive-through offers a very original solution.”
In England, new research shows that consumers are taking to online shopping, and if current trends continue, sales at online grocery outlets are expected to double in the next five years.
Why the change?
“People are increasingly mixing the channels they use for their weekly or monthly shop. Many are choosing to visit their local store on a regular basis, while purchasing a number of bulk items, like tinned foods and toiletries, online less frequently.”
It is precisely the willingness of consumers to buy in bulk that is driving the business model of another online retailer, Alice.com. Last June, Maria Niles asked, "Could Alice.com Be Your New Shopping BFF?
Offering free shipping, Alice is a grocery store that sells "household essentials" like toilet paper, trash bags, kitty litter - the stuff you might buy in the grocery store, Target or Costco. On their Web site, the headline reads Get Big Box Savings & Free Shipping.
You order from Alice just like you would a retailer, but behind the scenes it works like a marketplace, allowing participating manufacturers to sell directly to you.
That is what the business looks like to the consumer.
On the back end, it is a fascinating strategy designed to help Consumer Packaged Good (CPG) manufacturers compete with the retailers
