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EU fruit & vegetable e-Commerce market study shows promising future for online sales

EU fruit & vegetable e-Commerce market study shows promising future for online sales

 

Freshfel Europe and the Scheme for the Application of International Standards for Fruit and Vegetables of the OECD have published the first  ever  extensive  study  on  fresh  produce  e-Commerce with  the title “Online  Sales  of  Fruit  and Vegetables in Europe”. The study explores the structure and regulatory challenges of selling fruit and vegetables online and analyses the format of existing web shops specialised in online sales of fruit and vegetables, their delivery model as well as compliance with the current EU regulatory framework for (online) marketing standards with multifaceted results.

While a big share of European fruits and vegetables online sales are conducted by online pure players and retailers with roughly 51% of all findings, surprisingly the study illustrated the growing share of agricultural suppliers with direct marketing to consumers. Freshfel’s Director Trade Policy and Business Development and co-author of the study, Nelli Hajdu remarks, that this study marks only the beginning of understanding  the  complexity  of this uprising outlet:  “The structure  of  the  online  landscape  is characterized by national shopping ‘traditions’ and trends, a challenge for creating a favourable regulatory environment. However, the impact of COVID-19 on market structure and consumer uptake is still to be examined in detail.”

Recently, online sales have become an important outlet for food products and the COVID-19 pandemic has accelerated this trend. As little was known about the online sales and distribution system of fruits and vegetables, Freshfel Europe teamed up with the OECD to explore the structure and size of the European online fruit and vegetable market as well as its compliance with existing regulatory requirements. To quantify the size of the market, seven sample EU Member States have been selected, to compare their organisational features (online-pure players/retailers, agricultural suppliers) as well as their distribution system (delivery vs. click-and-collect). The study also examined the verification of compliance with labelling requirements of Marketing Standard Regulation EU 543/2011.

For the first time ever the ground breaking study gave an accurate picture of the size and structure of EU e- Commerce suppliers. The study found that while the overall structure of online fruit and vegetable sales can be defined by its characteristic business format, either as an online-pure player, retailer or agricultural supplier, as well as by its distribution structure, this varies strongly at national level. For example, the German online fruit and vegetable market is mainly shaped by agricultural suppliers selling directly to consumers, while in Spain smaller local ‘Fruteria’ shops have gone online to expand their customer base. France stood out with a strong and established coverage of click-and-collect opportunities. Regarding market size, the online market shows a high range of fragmentation, however this doesn’t exceed 100 to 150 web shops per country, and is depending on the maturity of the market development at national level. Regarding the compliance with labelling requirements in the context of the Marketing Standard Regulation EU 543/2011, the rate highly diverged by operator and organisational structure.

While revealing promising signs for the future of online sales, this first study also revealed key questions, which  will  require  further investigation.  This includes  understanding  the characteristics  of  successful business models for  fruit  and vegetable online sales,  trustworthiness  and verification  of  information provided on websites and the overall uptake by consumers. These key areas for further investigation have become even more relevant as the Covid-19 pandemic continues to accelerate overall online food availability, especially fruit and vegetable sales, with urgent need for quantification. 

 

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Indian startup Ninjacart backed by Walmart and Flipkart

Indian startup Ninjacart backed by Walmart and Flipkart, Credit: Business Standard
Credit: Business Standard

 

 

Indian online retailer Flipkart and its major stakeholder Walmart have invested in fresh produce startup, Ninjacart. Ninjacart connects fruit and vegetable growers with retailers and food service operators via its technology-integrated supply chain. The new partnership is intended to grant Indian retailers and consumers better access to high-quality fresh produce, while also supporting farmers.

The agreement will enable direct sourcing of fresh produce for Walmart India’s Best Price B2B cash-and-carry stores and Flipkart’s online grocery business Supermart. At the same time, it will also allow Ninjacart to expand its customer base, reach new cities and gain exposure to global best practices to enhance the efficiency of the local fresh produce ecosystem.

Nijacart currently operates over 200 collection centres and 1,200 warehouses across India, handling in excess of 1,400 tons of fresh produce per day, a volume that has doubled in the last four months.

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Modern retail in Ukraine

Tavria V is the top retailer from Southern Ukraine in online sales

Founded in 1992 in Odessa (southern Ukraine), Tavria V started out selling food in kiosks but in 1998 opened its first supermarkets.

“Tavria V is a multi-format retailer,” said Elena Seyrik, director of its import department. “We operate via 70 stores: hypermarkets, supermarkets, convenience stores and delicatessen supermarkets. Our shops are located in central and southern Ukraine.”

In addition, Tavria V was the first retailer in the region to begin e-commerce, opening its internet shop under the same brand.

“Sales of fresh produce, and fruit and vegetables in particular, are very significant for us,” said Natalia Muzyka, the company’s import manager.

“We import fruit from Greece, Spain, Egypt and Turkey, mainly citrus and stone fruit. The vegetables are imported from Turkey, Poland, and Egypt. Nonetheless, domestic fruit and especially vegetables account for a considerable part of our trade, especially in summer and autumn.

“Ukrainian producers keep improving the quality of their products, expanding their assortment and building modern cold stores so they can extend the seasons’ supplies of local fruit, berries and vegetables.”

To offer better quality and better prices, Tavria V has direct contracts with both Ukrainian and foreign producers.

“Our company keeps growing; we not only have shops, but also two restaurants and a chain of Sprint cafés, so we are open to new contacts,” Seyrik said. 

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How to win in both online & conventional retail

Eurofresh Distribution editor Pierre Escodo's latest editorial looks at critical factors for success in both conventional and e-retail.

Fruit and vegetable consumption may be declining in Europe but as highlighted at the ‘Tomatoes, trends towards 2020’ conference in Antwerp in April, the market value of tomatoes has nevertheless risen.

The reality is that sales can be boosted via tastier, more convenient varieties that increase consumer satisfaction.

And more sales can also be achieved through online shopping.

In Europe, Denmark is one country where e-commerce is truly booming for fresh food, such as seen with the success of nemlig.com, and in Asia, Japan – where online sales are growing at double digit rates – reveals that it’s not just young people but also seniors that supermarkets should cater to with their online platforms, including mobile retail.

Adapting online shopping to consumer needs is crucial to success, and entertainment is a factor that also needs to be considered, advises Kantar WorldPanel in its recent report on the growth of e-commerce in FMCG. Interestingly, its data shows that in the UK, tomato products form the category with the second highest online share, and in France, soups are top-ranked.

From the pen of editor Pierre Escodo on page 3 of edition 143 (May/June 2016) of Eurofresh Distribution magazine. Read it online here.

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CAGR of 63% in line for India’s online grocery market to 2022

6Wresearch predicts India’s online grocery market will grow at a CAGR of 62.7% over 2016-22.

India’s online grocery market is still in a nascent stage and primarily confined to Tier 1 cities, says New Delhi-based market intelligence centre 6Wresearch.

And the hyperlocal model (which usually features on-demand delivery) is growing faster than the ‘pure-play’ one (such as  businesses that focus only on e-commerce) in India, it says in a recently published report summary.

“(The) pure-play business model requires heavy investments and warehouses, which pushes the overall operating cost. On the other hand, hyperlocal model saves cost and time of delivery due to the support from the local merchant,” it says.

6Wresearch predicts India’s online grocery market will grow at a CAGR of 62.7% over 2016-22.

“India is the sixth largest grocery market in the world, which is majorly dominated by the unorganized sector with over 12 million pop and mom stores all over the country. Online grocery market is one of the fastest growing markets fueled by the intensifying e-commerce industry.”

But senior research analyst Avishrant Mani said the fruit and vegetables segment is growing sluggishly compared to other grocery segments, “since (the) consumer prefers to purchase fruits and vegetables in fresh condition, favours touch and smell of the items to judge the quality.”

Otherwise, the grocery and staples segment is contributing major revenue share in the online grocery market, followed by the FMCG segment.

Bengaluru from southern region is the key market for online grocery, followed by Mumbai from western and Delhi from northern region. Online grocery companies are mainly operating in metropolitan cities due to better infrastructure facilities and higher internet penetration as compared to tier II and tier III cities.

“However, online grocery firms are now targeting tier II and tier III cities to expand their presence on a pan India level. BigBasket, one of the key players of the market, is planning to enlarge its operation to 50 cities by the end of 2016.”

Read more “Wide Acceptance of Online Shopping and Busy LifeStyle Spurring the Growth of Online Grocery Market in India – 6Wresearch

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Survey sheds light on Australia’s online grocery shoppers

A third of consumers who buy their groceries online do so because it’s easier than shopping in a physical store.

Australians are curious about the benefits of buying their groceries online, but the majority don’t feel the need to make a permanent transition as they remain content with the current offerings provided by the bricks and mortar stores, reports customer satisfaction research and ratings business Canstar Blue.

Based on a survey of 6,014 Australians, it said consumers often prefer to physically inspect certain grocery items before purchasing them, particularly when it comes to fresh fruits and vegetables, dairy products and meats.

“However, 42% of the 1,474 adults who have bought groceries online in the last six months said they expect to do the majority of their shopping this way in future. And as online grocery retailers continue to develop their services, it seems a reasonable assumption that more and more consumers will choose to shop this way in the coming years, even if it is only occasionally.”

Of those who had ordered groceries online in the last six months, just one in five choose do all of their shopping this way, Canstar Blue said.

Its research also found:

Who buys their groceries online?

  • women (27%) are more likely than men (21%) to have bought groceries online in the last six months
  • but of those who have done so, men (22%) were more likely than women (18%) to do all of their grocery shopping this way
  • adults aged in their 30s were most likely to have bought groceries online in the last six months (37%), followed by 18-29 year-olds (30%) and consumers in their 40s (29%)

Why people buy groceries online

  • 35% of consumers buy their groceries online because it’s easier than shopping in a physical store
  • 24% struggle to find time to shop in-store
  • 17% believe it’s cheaper buying online
  • 7% don’t like visiting supermarkets
  • the majority of survey respondents (55%) always use the same website when they buy their groceries online, but 36% have tried more than one online grocery store
  • most consumers (64%) are inclined to click onto the website of the supermarket chain they usually buy from in person

What people don’t like about buying groceries online

  • 30% of online shoppers cited delivery costs as the biggest cause of complaint
  • 18% said their greatest issue was receiving replacement items for products that were unavailable
  • 15% found uncertain delivery times their main bugbear

How much people spend when buying groceries online

  • More than half of consumers (58%) said they tend to spend less online than they would if they bought their groceries from a bricks and mortar store.
  • While a previous Canstar Blue survey found consumers spend an average of $138 per week when they buy groceries in-store, the average for respondents in this survey was a $130 spend on their weekly online shop.

“It’s worth remembering, said Canstar Blue, “that buying online arguably makes you less likely to impulse buy other products that perhaps weren’t on your shopping list in the first place. Shopping online could also make you more price-conscious and willing to select a cheaper option if it’s available. You could argue that shopping online allows you to pay closer attention to your spending, when it’s easier to get carried away in store.”

Read the results here: http://www.canstarblue.com.au/retailers/online-grocery/
Online shop image: by Namakkalshowroom (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

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Tudespensa earns a staunch customer base in Spain

“Our most loyal customers are those who buy fresh produce from us.” Juan Carlos Chillaron

One of Spain’s first exclusively online supermarkets, Tudespensa.com was launched in October 2012 and now has 80,000 registered customers with 30% growth expected this year.

Tudespensa– which translates as ‘Your pantry’ – aims to set the benchmark for quality and freshness in fresh produce e-commerce in Spain. Head of fresh produce procurement and pricing, Juan Carlos Chillaron, explains how.

What is your fresh produce strategy?

Fresh produce is the most important part of the www.tudespensa.com online supermarket and so we always aim to exceed our customers’ expectations in terms of the quality of our produce. This applies to all kinds of fresh produce, but in the case of fruit implies achieving this amid the idiosyncrasies of these products, where the quality perceived by the customer is not just influenced by freshness, but by other factors such as the calibre of the fruit and, above all, the ripeness of each piece fruit, as well as the packaging and labelling. For all our fresh produce we aim to keep the supply chain as short as possible, selecting and packing the product for delivery the same day or at the most the next morning, giving the customer the maximum possible product life – these are our competitive advantages.

How are you able to offer competitive prices, particularly when you have to factor in delivery costs?

You have to bear in mind that all our products arrive in fully labelled packaging, ensuring product traceability, and via refrigerated transport. They are kept in conditions of maximum food safety until they reach our customers’ fridges. Also, the formats for each of our products are adapted so they meet the needs of all our customers, without having to buy too little or too much of something, with the above-mentioned food safety guarantee, and every tray must carry full product information, such as on origin, category and weight. As well, every product has its own information sheet customers can view online while making a purchase. Taking into account all these factors, our pricing policy is based on a comparison with our online competitors selling comparable – of the same quality and calibre – labelled and pre-packaged products. We try to keep a balance, as do all retailers, in trying to offer the best prices while also achieving the margins the company needs.

What is the biggest challenge in selling fruit and vegetables online?

It’s the same for all online food retailers, it’s getting consumers to change their shopping habits, with the additional factor that we will be selecting their fruit and vegetables for them. The immediacy expected of online sales adds other challenges, such as the need to not only have the produce available, but of the desired quality and as soon as possible, as well as to offer a very wide range. For all these reasons, the rigour we require of ourselves at www.tudespensa. com must reflect that demanded by the customer, but without incurring very high costs as they also want competitive prices.

How many of your first-time customers return?

Nearly two-thirds of customers stay with Tudespensa after trying us the first time and we are especially pleased that 9 out of 10 customers recommend us to their friends and acquaintances. Another positive aspect is that our most loyal customers are those who buy fresh produce from us. Indeed, 81% of all orders include something from the fresh produce department, and 28% involve something from every section. We think this indicates that most of our customers understand and appreciate the complexity of doing their shopping for them, and the daily effort that goes into picking and delivering the best products in a timely manner, and their loyalty is the best possible response and biggest asset we could have. Although there will always be some consumers who want to keep buying these products in a traditional way, we have developed different ways to show them how much more convenient it is to not have to go to a store and carry heavy weights. One is the site www. valoratutiempo.es (assess your time), which we launched to prove to customers that doing their own shopping ends up being more expensive, and which has already been used by 8,500 people.

Where is your logistics platform?

For fresh produce, we are strategically located right near Mercamadrid, one of the biggest fresh produce markets in Europe, where our partners in the supply of meat, fruit, vegetables and fish are also based. Every day before 9am they deliver produce – packaged and labelled – to our automated warehouse, where it is soon dispatched to fulfil our customers’ orders. 
 

KEY FACTS

Turnover 2014: €8.9 million (expecting +30% 2015)
Expected to break even for first time this year  
Average customer spend: €115
Total assortment: more than 7,000 products
Fruit & vegetable items: 158 (including pre-prepared products): fruit 69, vegetables 89
Current top-selling fruit: bananas, oranges, mandarins
Current top-selling vegetables: potatoes, onions, courgettes
Fruit & vegetables imported: 25% of total (due to off-season produce & big tropical range)
Orders including some fresh produce: 81%
Delivery: 98% of orders delivered within customer’s chosen 2-hour slot
Logistics base: more than 8,000 m2  (incl. automated warehouse) beside Mercamadrid
Coverage: Madrid, Barcelona, Toledo, Guadalajara
Main competitors: Ulabox (100% online) plus retail chains Mercadona, Carrefour, El Corte Inglés
Forecast growth in food e-commerce in Spain: 18% by 2017

JB