$26.8 Billion Up for Grabs in Online Grocery Market

Offline Grocers Can Reap Benefits by Driving

Consumer Adoption Through Broadbased Marketing



Apr 04, 2001, 01:00 ET from Datamonitor plc

    NEW YORK, April 4 /PRNewswire/ -- Datamonitor, a premium business
 information company specializing in industry analysis, today announced that
 the US online grocery sector will reach a market value of $26.8 billion by
 2005.  This prediction is contingent on online and offline grocers' ability to
 raise consumer awareness to drive adoption.
 
     Gap in Consumer Demand
     According to the report, Online Grocery in the US, 2001, the market for
 online grocery shopping is growing strongly, with total consumer expenditure
 increasing at a compound annual growth rate of 108.6 percent from $80 million
 in 1996 to $1.5 billion in 2000.  At the same time, consumers are deterred
 from using online grocery shopping services because they are unaware of such
 services in their local area.  Consumers are also discouraged from using
 online grocery channels because they do not know which sites to visit.  To
 combat such barriers to adoption, grocery executives need to pay special
 attention to marketing initiatives.
     "Grocery executives are not accustomed to building brand awareness and
 marketing on the Internet," said Erlina Hendarwan, consumer analyst with
 Datamonitor.  "Traditionally, they have limited marketing to a localized
 audience.  In order to exploit the market potential of online grocery, grocery
 executives should begin to build brand awareness and consumer demand now, in
 preparation for online grocery developments in the future," she added.
 
     New Technologies Fuel Industry Growth
     Online grocers need to align their front-to-back end office systems to
 provide adequate order fulfillment, service availability, and customer
 support.  According to the report, online grocers must implement marketing and
 production plans that include an efficient logistics and supply chain system
 and link automated order processing with personalized marketing efforts.  In
 the future, concerted customer relationship management (CRM) techniques and
 advanced technology developments such as broadband Internet access, Bluetooth,
 and other wireless technologies will drive the growth of online grocery
 shopping.
 
     Dotbams Will Dominate Online Grocery
     Datamonitor believes that dotbams (brick-and-mortar retailers who invest
 heavily in online shopping services) will emerge as the most important players
 in the future online grocery industry.  Spurred by consumers' need for
 convenience, they will provide consumers with a full range of grocery items
 and a more flexible and less expensive order fulfillment system of in-store
 pick-up.  The ability to leverage the value of their existing brand, loyal
 current customer-base and preexisting infrastructure will result in lower
 costs and allow them to reach profitability at a faster rate.
     "Future growth in pure-play grocers will be limited by the slim profit
 margins and difficulties in offering effective order fulfillment and customer
 service," said Hendarwan.  Pure-plays' domination of online shopping is
 beginning to wane as supermarket chains buy them out.  "Major potential exists
 for joint ventures between other online service providers (e.g. Webvan,
 Amazon.com) and brick-and-mortar grocers which will further reduce overall
 costs and improve customer service."
 
     Note to editors:
     To receive an executive summary of Online Grocery in the US 2001 or to
 speak with the author, Erlina Hendarwan, Datamonitor consumer markets analyst,
 please contact Gayle Birkelund at (212) 686-7400, ext. 727,
 gbirkelund@datamonitor.com.
 
     Datamonitor plc is a premium business information company specializing in
 industry analysis.  We help our clients, 5000 of the world's leading
 companies, to address complex strategic issues.  Through our proprietary
 databases and wealth of expertise, we provide clients with unbiased expert
 analysis and in-depth forecasts for six industry sectors: Automotive, Consumer
 Markets, Energy, Financial Services, Healthcare, Technology.  Datamonitor
 maintains its headquarters in London, and has regional offices in New York,
 Frankfurt, and Hong Kong.
 
 

SOURCE Datamonitor plc
    NEW YORK, April 4 /PRNewswire/ -- Datamonitor, a premium business
 information company specializing in industry analysis, today announced that
 the US online grocery sector will reach a market value of $26.8 billion by
 2005.  This prediction is contingent on online and offline grocers' ability to
 raise consumer awareness to drive adoption.
 
     Gap in Consumer Demand
     According to the report, Online Grocery in the US, 2001, the market for
 online grocery shopping is growing strongly, with total consumer expenditure
 increasing at a compound annual growth rate of 108.6 percent from $80 million
 in 1996 to $1.5 billion in 2000.  At the same time, consumers are deterred
 from using online grocery shopping services because they are unaware of such
 services in their local area.  Consumers are also discouraged from using
 online grocery channels because they do not know which sites to visit.  To
 combat such barriers to adoption, grocery executives need to pay special
 attention to marketing initiatives.
     "Grocery executives are not accustomed to building brand awareness and
 marketing on the Internet," said Erlina Hendarwan, consumer analyst with
 Datamonitor.  "Traditionally, they have limited marketing to a localized
 audience.  In order to exploit the market potential of online grocery, grocery
 executives should begin to build brand awareness and consumer demand now, in
 preparation for online grocery developments in the future," she added.
 
     New Technologies Fuel Industry Growth
     Online grocers need to align their front-to-back end office systems to
 provide adequate order fulfillment, service availability, and customer
 support.  According to the report, online grocers must implement marketing and
 production plans that include an efficient logistics and supply chain system
 and link automated order processing with personalized marketing efforts.  In
 the future, concerted customer relationship management (CRM) techniques and
 advanced technology developments such as broadband Internet access, Bluetooth,
 and other wireless technologies will drive the growth of online grocery
 shopping.
 
     Dotbams Will Dominate Online Grocery
     Datamonitor believes that dotbams (brick-and-mortar retailers who invest
 heavily in online shopping services) will emerge as the most important players
 in the future online grocery industry.  Spurred by consumers' need for
 convenience, they will provide consumers with a full range of grocery items
 and a more flexible and less expensive order fulfillment system of in-store
 pick-up.  The ability to leverage the value of their existing brand, loyal
 current customer-base and preexisting infrastructure will result in lower
 costs and allow them to reach profitability at a faster rate.
     "Future growth in pure-play grocers will be limited by the slim profit
 margins and difficulties in offering effective order fulfillment and customer
 service," said Hendarwan.  Pure-plays' domination of online shopping is
 beginning to wane as supermarket chains buy them out.  "Major potential exists
 for joint ventures between other online service providers (e.g. Webvan,
 Amazon.com) and brick-and-mortar grocers which will further reduce overall
 costs and improve customer service."
 
     Note to editors:
     To receive an executive summary of Online Grocery in the US 2001 or to
 speak with the author, Erlina Hendarwan, Datamonitor consumer markets analyst,
 please contact Gayle Birkelund at (212) 686-7400, ext. 727,
 gbirkelund@datamonitor.com.
 
     Datamonitor plc is a premium business information company specializing in
 industry analysis.  We help our clients, 5000 of the world's leading
 companies, to address complex strategic issues.  Through our proprietary
 databases and wealth of expertise, we provide clients with unbiased expert
 analysis and in-depth forecasts for six industry sectors: Automotive, Consumer
 Markets, Energy, Financial Services, Healthcare, Technology.  Datamonitor
 maintains its headquarters in London, and has regional offices in New York,
 Frankfurt, and Hong Kong.
 
 SOURCE  Datamonitor plc