Thursday, September 21, 2006

The Future of Grocery Stores

Nick poses a question on why the delivery of groceries never worked out:
One thing that I never could understand was why Webvan (the company "back in the day") who was in all the major cities delivering groceries from their online page went out of business. It just made sense to me that people would have an easier time buying their groceries online and having them sent directly to their house (no driving, long lines, etc).
Here is an article that discusses the issue.

Economist Tyler Cowen actually discusses this very question in his post today:
We should expect supermarkets to overinvest in encouraging impulse purchases. (Wegman's should put a given item in only one place and yes I will learn where that is.) Maybe that is the economic problem with home delivery. Smells, squeezes, and full-size items -- not Internet links -- sell profitable foodstuffs. The boring bulk stuff which is easy to order over the Internet also brings the lowest profit margins, I believe.
Overall, can you think of any other reasons why the home delivery of groceries did not work? Or maybe answer the question posed by Dr. Cowen in his post: what features would you like to see in the near future in grocery stores (especially given that it will probably be a few years until you have to shop for groceries on a regular basis anyway)?

(Source: Marginal Revolution & Nick Wellmon)


Anonymous said...

I think that the main reason why companies like webvan didn't succeed was that buyers couldn't actually see the products they were buying. I know that, at least for my family, most of the purchases we make at the grocery store aren't ones that we were originally planning on. Even if we walk in with a list, usually we end up buying twice as many things just because we happen to see them in the store. For me, it would be a lot harder to go onto a website with a pre-prepared list of items that I needed to get and come out with everything I need. For such a browsing oriented market, it seems like many consumers would find it difficult to shop online without actually coming into contact with the selection of items.
-Jordan Croom

Anonymous said...

I agree with Jordan in saying that Webvan didnt succeed because buyers could not see the products they were buying. I know especially with fruits and vegetables many people pick through to get the ripe ones or the ones that look the best. When they buy items off the internet they dont know if there ripe, stale, bruised, etc. Also there are still many people in the US that do not have home computers or very technical savy, so they might not be aware of this service or know how to use it. Also, i know my family takes many coupons into the grocery store to get discounts on items. I dont think there would be a way to use coupons over the internet. And the cost of the goods would be higher because of the shipping that would ensue. So many people went to the grocery store than the online service because it was cheaper.
Taylor Pike

Anonymous said...

Another problem with ordering all of your groceries online would be the time involved. Even though home delivery is made to be convenient for the consumer, I honestly think that in the long run it wouldn't save you any time at all (unless maybe you have no time in the first place). Grocery shopping is no small thing and making a list of every single product you think you may need isn't always easy. Chances are you're going to forget something and realize it when you see it in the store. Its quicker to just go in the store with an idea of what you need, see it and get it. Writing out a list is pointless when you know you're going to forget things and deviate anyway. Also, if you were to forget something and realize it after the groceries were delivered, its even more of a hassle to sign back online, reorder and go back through the process. Finally, how speedy can you expect the service to be? Many times when you order other things off line it takes several days to a few weeks. So what happens when you need a certain grocery (or more) in a fairly soon amount of time? You'll end up going out to get it yourself. So why you're there why not just get everything else you need? Also say the service was to forget something on your list (i've had pizza places do it before) imagine the hassle then. There are just too many unsuitable circumstances for this to really ever work out. I do think it would be a relatively good idea for senior citizens. Perhaps people who live alone and arent able to be as active as they once were. A company like this could be a big help to them.
-Lauren Henderson

Anonymous said...

Another reason I think that the internet grocery stores did not succeed is that some people use grocery shopping as a time to relax and sometimes be almost social in the community. I know at the Publix by my house if you walk in on a weekend there is a very high chance you will run into some one you know. Especially if you are an adult. I can definently believe that people would miss the social aspect of grocery shopping if it was online. Im curious how the creators of the online grocery stores thought about how to compete with the impulsive buys at a local grocery store.
seth weiland

Anonymous said...

I don't think that companies like webvan can be very successful because so much good food is perishable. It won't make life easier if you shop online for some items and then you still need a local store for produce, meat, and dairy. I agree that impulse purchases are a big part of grocery shopping, which is good for the people who own the stores.

Caitie Hicks