Online Grocery - Partnership Proposal
This presentation discusses the demand for online groceries, it includes many researches on market and customer trends as well as a business study on sales and cost and how to implement the solution in an effective manner to capture as big of a market share as possible by partnering with established brick-and-mortar stores.
Mohamed Al-Amoodi
July 24 2013
2. Online Grocery
• Introduction
– We want to offer a shop/delivery
service for groceries in Edmonton
– Customers buy your products from
our website
– We shop in-store/deliver using a
system
– To make the service fast/cheap for
customers we need to form a
partnership
3. Customers
• Usual customers
– busy young professionals
– value saving 50 mins trip and queue
• 60% of customers
– physically unfit (eg: seniors, pregnant
mothers, injured people, etc)
• 15% of customers
• Usual products
– dry/frozen food and housekeeping
products
* (PR-Newswire, 2013) (Evolution Insight, 2010)
4. Customers
• Demands
– low service fee (90% demanded)
– personalized/online-only offers (60% demanded)
– membership/loyalty cards (57% demanded)
– new products requests (50% demanded)
– small delivery slots (50% demanded)
– clear food quality/refund policies
– good website (stable, easy search, fast checkout)
– good customer service
* (ATKearney, 2012) (Poulter, 2011) (Symphony-EYC, 2013) (ePerformance Observatory, 2012) (Mélanie, 2011)
5. Market Demand
• Summary
– The trend in customer behaviour since 2000 has
been an increasingly rapid migration towards
online shopping - the grocery retail sector is no
exception
– Online grocery shopping was in it’s infancy in
2004 in the UK, but spiked in popularity around
2008, and has risen every year since
6. Revenue Market
Share Trend
Customer Market
Share Trend
Misc
Color
Description
Market Demand
2004 2004 2005 2006 2007 2008 2009 2010 2011 2012 2012
Internationally -
population planning to
shop for groceries
online = 26% compared
to computer software =
29%, travel reservation
= 30%, entertainment =
45% (Nielsen’s, 2012)
UK - population
shopping for groceries
online at least once a
year = 20%, at least
once a week = 5.9%
(Key Note, 2013)
US - online ($13B) to
physical grocery
shopping market share
= 1.2% (Hartman
Group, 2012)
US - population
shopping for groceries
online 1-3 times per
month = 4%, at least
once a week = 2%
(Demery, 2011)
UK – top online
grocery firms annual
increase in sales =
35% (Research
Methodology, 2012)
US - online to physical
grocery shopping
market share = 1%
(Empower Research,
2009)
UK - online to physical
grocery shopping
market share = 0.8%
(Yousept & Li, 2004)
7. Market Demand
Revenue Market
Share Trend
Customer Market
Share Trend
Misc
Color
Description
2013 2013 2014 2015 2016 2017 2018 2018
Today
UK - online grocery
shopping = GBP 11.1B
(predicted to be double
2013 sales) (Neville,
2013)
UK - online (GBP 5.6B)
to physical grocery
shopping market share
= 3.5% (Neville, 2013)
US - population
shopping for groceries
online = 30% (Trassard,
2013)
12. Business Solution
• Service fee (breakdown)
* Calculations available
Average Amount of Customer Purchase by Online Grocery Firm
Peapod average basket price 100CAD per customer
Streamline average basket price 102CAD per customer
Teso average basket price 100CAD per customer
WebVan average basket price 71CAD per customer
HomeGrocer average basket price 102CAD per customer
Average basket price 95CAD per customer
Average Service Fee based on an Average Basket Price
COST – To have a shopper pick up the items from the shelves (26.3 mins per customer) 4.36CAD per customer
COST – For gas spent on the delivery (8.2 km per customer) 0.94CAD per customer
COST – To have the items delivered to the customer (31.2 mins per customer) 5.18CAD per customer
COST – Transaction fee charged by credit card companies (online credit CAD 2.36 per customer) 2.36CAD per customer
COST – Admin cost, food/business license renewals, truck maintenance (CAD 2.38 per customer) 2.38CAD per customer
Overall service fee 15.22CAD per customer
13. Business Solution
• Service fee (impact on sales)
Service Fee ($) People who would be interested (%)
0 100%
1-5 48%
5-10 18%
10-20 5%
20+ 1%
* 857 people surveyed (Site, 2011)
0%
20%
40%
60%
80%
100%
0.00 5.00 10.00 15.00 20.00 25.00
PeopleInterested(%)
Service Fee ($)
Service Fee Impact on Sales
Min 1.5% discount (as we
eliminated credit card fees)
Will bring service fee to $13.75
and 5% market share
1.5% discount + 2.5% commission
Will bring service fee to $11.25 and
10% market share (double sales)
14. Partnership
• Requirements
– Commission
• for reduction of service fee
– Database connection
• for items, quantity, department/location in shop
– Return policy
• for unsatisfied customers
– Skip checkout
• for increasing speed
• for eliminating 1.5% credit transactions fees
• items will be invoiced and paid at an agreed time
with an agreed payment method
15. Partnership
• Benefits
– First-mover competitive edge
• Because Edmonton has no good online grocery firm
• Increase in customer loyalty
– Increase in sales and customers
• No investment needed
• Estimated $22.5M revenue and 160,000 customers
in long term in Edmonton
– Free continuous feedback to improve products
• Because we collect data, reviews, forum information
16. Management Team
• Mohamed Al-Amoodi
– Head Programmer and CEO
– Education: BSc Chemical Engineer, 2011
– Experience:
• Engineer/designer with Pentair (Tyco)
• Programmer/manager with Rehabtronics (Bioness)
* Endorsements available
17. Management Team
• Khaled Al-Amoodi
– Programmer and CFO
– Education: BSc Electrical Engineer, 2013
– Experience:
• Researcher (on multi-ferric material) with Dr Kim Chow
(University of Alberta)
* Endorsements available
21. References
1. Al-Amoodi, M. (2013). Online Grocer. Edmonton: Google Drive.
2. ATKearney. (2012, March 01). Ideas and Insights. Retrieved July 13, 2013, from ATKearney: http://www.atkearney.com/paper/-/asset_publisher/dVxv4Hz2h8bS/content/a-fresh-look-at-online-
grocery/10192
3. Browne, K. (2010, March 04). Grocery shopping online. Retrieved July 11, 2013, from Choice: http://www.choice.com.au/reviews-and-tests/food-and-health/food-and-drink/groceries/grocery-
shopping-online/page/online-versus-instore.aspx
4. Demery, P. (2011, March 18). Online grocery shoppers like home delivery. Retrieved June 16, 2013, from Internet Retailer: http://www.internetretailer.com/2011/03/18/online-grocery-shoppers-home-
delivery
5. Empower Research. (2009, April 09). Empower Research. Retrieved July 11, 2013, from Slide Share: http://www.slideshare.net/incred23/online-grocery-industry
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observatory.com/etudes.php?titre=Food%20and%20Grocery
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perspective-sample-extract
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10. Hartman Group. (2012, January 01). The Online Grocery Opportunity. Retrieved July 11, 2013, from Hartman Group: http://www.hartman-group.com/downloads/the-online-grocery-opportunity-
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grocery-business-value
17. Nielsen’s. (2012). Half of Online Consumers Have Bought a Grocery Product Online. Thetford: MarketingCharts staff.
18. Poulter, S. (2011, June 21). It's back to the shops! Why we’re fed up with buying groceries. Retrieved June 21, 2013, from Mail Online: http://www.dailymail.co.uk/news/article-2006005/Grocery-
shopping-online-Were-fed-shops.html
19. PR-Newswire. (2013, February 13). More Than One-Third of U.S. Adults Currently or Plan to Shop for Groceries Online, Reveals New CouponCabin.com Survey. Retrieved 07 08, 2013, from PR-Newswire:
http://www.prnewswire.com/news-releases/more-than-one-third-of-us-adults-currently-or-plan-to-shop-for-groceries-online-reveals-new-couponcabincom-survey-190992051.html
20. Research Methodology. (2012, July 30). Online Food and Grocery Shopping as a Branch of E-Commerce. Retrieved July 08, 2013, from Research Methodology: http://research-methodology.net/online-
food-and-grocery-shopping-as-a-branch-of-e-commerce/
21. Site, S. (2011). Online Grocery. Chicago: Survey Site.
22. Symphony-EYC. (2013, January 02). Shopper Research 2013, USA. Retrieved July 08, 2013, from Symphony EYC: http://www.symphonyeyc-omni.com/2013_SymphonyEYC_Shopper_Research.pdf
23. Trassard, P. (2013, May 2). Online Grocery Shopping Hasn’t yet Caught on among All US Consumers. Retrieved June 21, 2013, from L'Atelier: http://www.atelier.net/en/trends/articles/online-grocery-
shopping-hasn-t-yet-caught-among-all-us-consumers_419378
24. Web Site Magazine. (2013, June 7). Supermarket Stats Good Retail Benchmark. Retrieved June 21, 2013, from Web Site Magazine:
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25. Yousept, I., & Li, F. (2004). Online Supermarkets: Emerging Strategies And Business Models In The UK. Bled eCommerce Conference (pp. 1-22). Bled: University of Newcastle.
