My article in the September 2011 issue of Food Trader magazine as I wrote it. The published version can be found here on page 14.
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Why sell online?
With online shopping now accounting for 10% of all retail sales do conventional retailers need to be thinking about getting involved? Being big Internet shoppers my family are very much part of this revolution and in our case I would suggest we are now buying online 80% – 90% of the time. In truth we have completely lost the desire to visit supermarkets and shopping centres and increasingly we don’t need to as someone is offering what we want online.
Many shoppers still buy food in store and the overriding reason given is that they want to pick and choose, especially when it comes to fresh meat and produce. Having bought our groceries online from virtually the moment it all started we have rarely found this to be an issue and whenever we have had a problem it has always been dealt with without fuss. On the other hand to be able to have someone do our shopping and deliver it to our house for as little as £3 is exceptionally helpful and excellent value for money.
We stopped buying supermarket meat a few years ago not because our personal shopper was picking and choosing badly but because the quality was no longer there. There were also a lot of other issues around provenance, animal welfare and trust. I still don’t recall giving supermarkets permission to inject my meat with water! At this point we tried to buy online but it was hopeless so we found ourselves driving 15 miles to buy our meat from a farm shop who sold meat from their own animals. Today things have improved a little and we are currently buying our meat online and also from a local butcher.
So why sell online? Well in describing my family’s behaviour I hope to have shown you that this isn’t about in store versus online but more about experience and convenience. The expression “the customer is king” has never been more relevant than it is today. Not only can we choose how we buy but we also have more choices as to where we can buy from. You may have also detected that we are still frustrated as shoppers as we still can’t quite get what we want. The Internet and online shopping have truly shaken things up, just look at the music industry, however this evolution is far from over and many winners and losers are yet to be decided. The food sector appears to be just getting going with the last of the big four supermarkets recently announcing they are to offer online grocery shopping. So how will independent food retailers react? Is there an opportunity to offer convenience as well as sensibly priced quality products and win some of the market share back? What if the local butcher, baker and green grocer worked together? What if they delivered in the evenings and at weekends?
Who’s shopping online?
The people most likely to shop online are from middle income career or family based groups. Unsurprisingly the group least likely to shop online are the older generation. Reasons people shop online are convenience, value for money and a larger choice of products. Reasons cited for not shopping online are inconvenience with delivery, wanting to see and try products, difficulties with returns and refunds, and security concerns.
As well as people buying online there is a large group using the Internet for research. We often use product rating and comments to help decide which one to buy and product and company descriptions for in depth information. For many the decisions as to what to buy and where to buy it from are often taken online followed by an in store visit to execute the purchase.
Considering how your online food business might operate
Having decided to join the online revolution you first need to consider exactly what service you are to provide and if you haven’t already done so you should place a few orders online both with supermarkets and independents.
The first thing you’ll notice is that although the supermarkets have a national reach they operate locally and deliver using their own vehicles and staff. Customers are offered one or two hour long delivery slots and someone has to be there to accept the delivery. Their vans usually have three compartments; frozen, chilled and ambient which are fitted out with racking to efficiently store the crates.
Some independents operate nationally and deliver using a next-day courier service. Insulated packaging packed with ice is normally required for the goods to survive the journey and the courier is instructed to leave the package if no one is at home.
There are other independents operating local box schemes where they deliver using their own vehicles and staff. They normally have a fixed route and leave the package if no one is home.
Each delivery method has its pros and cons but ultimately you will need to provide a service your customers want and one that you can afford to provide. Insulated packaging is expensive as is next-day delivery and passing these costs and packaging disposal problems on to your customers will be off putting for many. Equally offering two hour delivery slots and zigzagging across town will give you a hefty fuel bill. The fixed route is more efficient and although insulated packaging may still be required it can be collected next visit and reused. This recycling can help promote loyalty and repeat business.
Delivery times are also very important and lack of flexibility here is cited as one of the main barriers to shopping online. Although most retailers understand food will survive a long time in insulated packaging your customers may not be that confident. They may prefer you to deliver when they are at home in the evening or at weekends.
The person that delivers your orders could be the only person representing your business your customers see or talk to. Getting the doorstep experience right is therefore important and you may not want to entrust this to a third party courier. Their behaviour may not reflect your brand and may give your customers the wrong impression. Also if they get it wrong and return a package to the depot it could be expensive as it is unlikely you will get insurance for perishables.
The cost of marketing and building your brand nationally will be considerably more expensive than doing it locally. Having an established local brand should also give your new online business a good start. Loyalty and repeat business are easier to achieve locally.
Will you charge for the exact weight you supply? To do this you will need to capture the customer payment details when they place their order so you can authorise the payment later when you know the amount to be taken. Payment gateways, the bit your online shop needs to take payments from your customers’ cards, are improving all the time and many now have features that allow you to do this. You will also need to consider how you will arrive at the final amount for an order and how you will authorise the payment. Another way would be to take payment on delivery however you will need to consider the security risks with carrying cash and also trust that the customer will pay.
Once you have decided on the service you want to offer you can then start looking into building your online shop and how you will operate your online business. A cheap online shop may sound attractive but if it doesn’t do what you need it to it can only increase your operating costs as you will spend more time manually getting around the problems. You should also expect to get very busy at Christmas time so if there are any weaknesses in your order fulfilment process you may not be able to cope.
Internet shoppers are generally savvy people looking for a good experience and will notice if your online shop doesn’t measure up. Conversely developing something bespoke will be expensive (and ongoing). If your website is slow don’t expect to get too many orders.
The differences between selling online and in store
When you sell in store the challenge is to get people in and by achieving that you have a good chance of making a sale. With an online shop however potential customers can and do leave the buying process at any point. Every part of your selling process is therefore of equal importance and you will need to identify and deal with any points of weakness.
We do business with people we know, like and trust which online means it is important to tell people who you are and what you stand for. Testimonials and recommendations are also helpful. Your online shop should also display an address and a landline phone number so customers are confident they can get in touch if things go wrong.
When someone shops with you online they put a lot of trust in you getting their order right and delivering it as agreed. Do not betray this trust. If you have problems then contact your customer to agree a solution, they expect you to do so. The biggest faux pas is to send online shoppers sub-standard goods or unagreed substitutions. If you do you will not only lose them for ever but they will tell all their friends on Facebook and put a bad product review on your online shop. A no quibble guarantee is highly recommended.
Being able to see and try products is one of the main barriers to shopping online so good product images and information are essential if you are to make sales. Describing where your meat comes from, how long it has been hung and why, how it has been prepared, what it tastes like, how to cook it and how to serve it all help the shopper convince themselves that they want it.
Customers often want to ask questions before they make a purchase and online they will probably do this by sending you an email or on Facebook. They are now interacting with the real people behind your faceless website so how you respond will reflect significantly on your online brand. Answer quickly with a good writing style.
Distance Selling Regulations and E-commerce Regulations apply to goods sold on the Internet. They entitle the customer to written information about you and their transaction along with a seven day cooling off period where they can return the goods for a full refund. Perishables and customised goods are exceptions.
Marketing an online business
Switching your online shop on and immediately expecting orders simply doesn’t work as nobody knows you are there unless you tell them. Marketing therefore is essential, even if you are well known, and something you must budget for.
Getting your website address in front of people is vital so display it prominently whenever you interact with your customers. The obvious places are your shop, vehicles and packaging but really you should put it anywhere and everywhere. You should also make it clear that you are selling online.
Where possible make the running of your online shop one person’s prime role in your organisation. This person would manage the content of your online shop, decide on the marketing and manage and deliver the orders. By taking ownership of the whole thing in this way they should be able to make all of the pieces fit properly together. For example if you decide to offer 20% off your customers’ first order then you will need to know how you will execute this within your order processing.
Email marketing is the primary marketing tool of online shops and you use it to encourage repeat business and loyalty. The best email addresses by far are those of existing customers so use good offers to get shoppers to place their first order. Simply asking for email addresses also works especially when linked with a competition or small gift. Letting your hard won new customers simply drift away is not a good idea so you should start sending marketing emails out from the very beginning, even if you only have a handful of email addresses. Regular expected emails work best.
If you are delivering locally it is worth investing in an appropriate livery for your van as this is a major marketing asset. Not only will it get you noticed as you drive around but it will also feature heavily in your marketing literature and provide a good picture for your local newspaper when you launch your new service. Take your van when you are out posting leaflets through letterboxes and do it on the same day and time you intend to deliver down that street.
If you are delivering nationally then you may want to consider pay-per-click advertising with Google and Microsoft’s Bing. Pay-per-click can work brilliantly especially on the run up to Christmas when people are searching for things they don’t normally buy like a goose. Conversely it can also be a useless drain on your money so do take care.
Social media websites like Facebook, Twitter and YouTube are currently causing much excitement in marketing circles as they are proving to be great ways to interact with existing and potential customers. Think of it as electronic word of mouth, if you do something good, bad or interesting then people will tell their friends. If you do choose to use social media coherent plans and tangible targets are essential in preventing you wasting a lot of your time.
Far from exhaustive I hope this article has given you an idea of what is involved in selling food online and some ideas on how to go about it.
