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UK consumers switching online in their droves

UK consumers switching online in their droves

 

According to NielsenIQ data, the number of British households shopping for groceries online has more than doubled in the last year, reaching 41% compared to 18% at the same point in 2020. Overall, online grocery sales are up 132% y-o-y, while sales at bricks and mortar stores declined by 1%. UK shoppers spent £1.5bn on online groceries in the four weeks ending 27th February 2021, with the online share reaching 17%. This is the highest ever share for online grocery sales in the UK and a 1% increase in share in just a month. 

Total till sales for February grew by 10.6% y-o-y, the highest growth recorded since June 2020, when sales growth peaked at 14%. The top-performing retailer is Lidl, which enjoyed 21.2% sales growth in the past 12 weeks, as the discounter continues to benefit from its Lidl Plus loyalty app. Next came Iceland (+17.5%), and Morrisons (+11.7%).

NielsenIQ’s UK head of retailer and business insight, Mike Watkins, said: “One year on since the pandemic began in the UK, it’s evident that a lot has changed in terms of consumer shopping patterns. Online grocery has now become a permanent fixture for many UK shoppers – it is now past the ‘tipping point’ and is at the ‘sticking point’. Consumers no longer feel like they have to shop online, but do so because they prefer to, particularly now that many retailers have expanded fulfilment capacities. Even when we exit lockdown and start to return to some normality, we anticipate that online demand will continue to grow ahead of the market.”

 

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Russian retail sector consolidates and goes online

Russian retail sector consolidates and goes online

The turnover of the Russian food retail industry grew by 1.4% in 2019 to reach US$223.9 billion. The sector continues to consolidate, with the share of the top ten fast-moving consumer goods (FMCG) chains in the retail food market increasing to 32.9%, led by X5 Retail Group and M&A transactions. Torgservice, which owns two popular hard discounters (Svetofor and Mayak) increased revenues by 26% and moved up to 9th place. In light of the slim profit margins, most industry observers predict continued consolidation in the retail sector. Russia’s retail chains are modernising and expanding in the provinces. Convenience is becoming one of the key priorities for consumers, which has stimulated the development of e-commerce (delivery services) and negatively affected sales in large-format shopping facilities. The discounter format is also spreading. 

With the country going through a period of sustained economic hardship, Russian consumers continue to buy rationally with minimal impulse purchases, while also looking for healthy, natural, innovative and “trendy” products at affordable prices. A GfK survey last year reported that 46% of Russians said they were looking for a way to save money and use special offers for this purpose, while 54% said they were looking for stores with low prices. Meanwhile, in a Nielsen study, over 84% stated that they had recently changed their eating habits, with 53% reducing fat intake, 65% reducing sugar consumption, and 67% increasing the share of natural and healthy foods in their diet.

Most federal retail chains have a section for healthy products. A quarter of Russians surveyed by GfK stated they were interested in farm products and 20% were interested in products marked ‘bio’, ‘eco’ or ‘organic’. In 2019, this segment of the Russian market accounted for $12.5 billion, according to Euromonitor. Similarly, online purchases are on the rise, with Euromonitor reporting that food and drink internet retailing grew by 20% in 2018, to reach $736 million, and is forecast to reach $1.8 billion by 2023.

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Tesco expands home delivery services to meet surge in demand

UK retailer Tesco has expanded its home delivery and click-and-collect services following a sharp increase in demand that led to shoppers reporting difficulties in securing online delivery slots. The firm’s delivery and collection capacity has risen from 660,000 to around 780,000 in the past two weeks, with plans to increase this by another 100,000 in the coming weeks. Tesco has also added over 200 new vans and recruited another 2,500 drivers and over 5,000 pickers, as part of the delivery expansion.

Last week, Tesco said it was limiting shoppers to only 80 items per online order. Tesco chief executive Dave Lewis said the Covid-19 pandemic has “led to unprecedented levels of demand for grocery shopping services. We’re doing everything we can to increase the number of slots available and to support vulnerable people.”

Meanwhile, online grocer Ocado announced it was recruiting an extra 3,000 staff to work in its logistics division to meet the current surge in demand.

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Online retail sales jump 20% due to impact of coronavirus

Online retail sales jump 20% due to impact of coronavirus

The Coronavirus is changing the way people shop, with the restrictions on movement and health fears driving an increase in spending online. Analytics platform Contentsquare published a report based on its analyses of 1.8 billion user sessions and 50 million transactions on 1,400 websites worldwide between the weeks of February 16 and 23. The study compared the conversion rate, the number of transactions, the number of visits, the length of sessions in order to analyse changes in consumer behaviour online during the two-week period.

The results showed a sharp increase in conversions for household and grocery items, as well as a major rise in hours spent on the web searching for first necessity products. Online purchases from large retailers increased by nearly 20% and consumers spent 25.7% more hours searching online, up 44%. At the same time fears over shortages drove sales in physical stores up 16%, with an 8.1% increase in the industry’s average conversion rate. 

Over the coming weeks, it is likely that online sales will continue to rise if lockdowns spread worldwide.

Press Release: https://contentsquare.com/

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Japanese supermarket giant Aeon, in online grocery push

AEON organic retail store

AEON organic retail store

Credit: Aeon

 

 

Aeon is partnering with British online grocery pioneer Ocado to launch a new company by March 2020 that will use AI and robotics to deliver a cutting-edge digital experience. Also, as a sustainability initiative, Aeon has set up a platform to help boost organic farming in Japan, where demand is outstripping supply of organic food.

 

Fresh food delivery has yet to truly take off among the Japanese, who largely still pick up fresh produce on a daily basis. But with better logistic networks and different demographics – such as more dual-income households and senior citizens – that’s forecast to change. And with AmazonFresh already in Tokyo, and Walmart (owner of Aeon rival Seiyu) beefing up its online grocery delivery together with Japanese e-commerce giant Rakuten, it’s no surprise that supermarket Aeon is also making the leap. In a statement in November, Aeon said it will leverage Ocado’s world leading know-how to launch and operate “the next generation online supermarket.” It plans to open its first customer fulfilment centre harnessing the Ocado Smart Platform by 2023 to serve Japan’s Kanto region, followed by others over the following two years in order to eventually serve the whole country. And it anticipates achieving online grocery sales of about 600 billion yen (about €4.92b) by 2030. “Aeon will realise a highly efficient operations and distribution system to deliver ‘anytime, anywhere, anything’ through a superb application interface to meet our customer needs. It is expected that these technologies can be utilised for the existing Aeon online supermarket business, store pick up, click & collect,” the company said in a press release. Aeon also plans to seek more partners both in Japan and around the world in order to be at the forefront of the digital era. Ocado, it should be mentioned, has also been chosen as a partner by other major supermarket groups around the world, including Kroger in the US, Casino in France, Marks & Spencer in the UK, ICA in Sweden and Coles in Australia.

Produce from farms run by Aeon Agri Create // Credit: Aeon

 

A platform to boost organic production 

Two other key initiatives from Aeon are in the area of organic food. Back in 2017, among the sustainable procurement goals the group set itself was that of boosting the sales ratio of organic products to 5% of all its agricultural products by 2020, also when Tokyo will host the summer Olympics. Aeon says it wants to contribute to “human, social and environmental health” through organic products, furthermore ones that are “cultivated, distributed and consumed naturally.” It also says it is “responding to our customer demands for safer, better tasting, and environmentally friendly food products.” However, while interest in organic produce is on the rise in Japan, “supply of organic products has not caught up with growing consumer demand,” it says, and “organic JAS certified producers in Japan account for only 0.2% of all farmers.” Given this context, in September 2019 the retailer announced another initiative, the new Aeon Organic Alliance (AOA). In a statement, it said this platform will boost the supply of organic products and help farmers overcome the burden of high organic cultivation costs and those incurred due to inefficient distribution, as well as giving them opportunities to gain new skills, exchange information and share and solve issues together. The AOA platform will be used to “centrally manage production, procurement, processing, distribution, and sale of organic agriculture products.”

Organic produce in Bio c’ Bon store in Japan // Credit: Aeon

 

14 new organic stores in Japan

AOA members will also have access to technological know-how for the acquisition of Global G.A.P. and organic JAS certification. Aeon has acquired such expertise via the 20 farms it directly manages across Japan. The farms are operated by the company Aeon Agri Create and three hold organic JAS (Japanese Agricultural Standard) certification, one of which is the fully organic 16 ha Saitama Hidaka Farm. Aeon’s organic farms will serve as distribution bases that collect products from growers who are members of its organic alliance, thus reducing distribution and delivery costs while also facilitating joint purchasing of materials necessary for cultivation, which in turn lowers costs. Furthermore, an AOA website will share what is happening in stores, including customer feedback, product line-ups, and sales performance, as well as overseas trends and other relevant information. It will also serve as a communication platform for connecting producers. Another group subsidiary, Aeon Topvalu, develops Aeon’s private brand for organics, Topvalu Gurinai, which is sold in group stores across Japan. Also providing a sales outlet for organic produce in Japan are the Bio c’Bon stores operated by Aeon in partnership with French firm Bio c’ Bon. There are now 14 such stores in Japan.

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Upsurge in international demand at Alimentaria 2016

Alimentaria Barcelona, Spain’s biannual food and drinks fair, is becoming more international.

Alimentaria Barcelona, Spain’s biannual food and drinks fair, is becoming more international. Organisers were delighted by this year’s figures of more than 140,000 attendees from 157 countries (16 more than in 2014). The number of International buyers, importers and distributors increased by 62%.

Alimentaria has seen the injection of €170 millions in the city. In terms of offer, “Vintage” food recipes revamped, Vegan, health and nutrition supplements and superfood have been the main food trends in the 40th edition of the fair.

According to organisers FIAB (the Spanish Food and Drink Industry Federation), Spain is the world’s seventh largest exporter of food and drink and also one of the leaders in horticultural exports globally.

Offering both online and offline sales the key to the future

Also at Alimentaria, Mercabarna, Barcelona’s wholesale food hub, took the opportunity to present its second report about e-commerce and food. The goal of this initiative is to create awareness of e-commerce within Spain’s small and medium-sized food companies when it comes to sales strategy.

The future consumer will increasingly buy their produce online either for delivery to their doorstep, via new intermediaries (new food portals or using Amazon services, for instance), or collection at a traditional shop.

For the food business, sensorial and purchase experience will be key, as the consumer still wants to experience and touch the product before purchasing it. So it won’t be surprising to see an online shop to be present offline to boost the customer experience.

Today, food represents 2.2% of e-commerce in Spain and fresh produce 0.8% of the total online food spend, though just 13% of online shoppers buy their fresh produce online.

According to MAGRAMA (Spanish Ministry of Agriculture, Food and Environment), fruit and vegetables account for 17% of the total food spend by Spanish consumers. The average household spend on food and drink was €1,482 in 2014. At a macro level, Spanish spent €98 billion on food in 2014, 67.5% of which was consumed in the home and 32.2% involved eating out.

CVA

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DIA expands its online business in Barcelona

DIA says its online shop includes a range not available in certain high street stores and is the cheapest establishment in the entire company, thanks to its aggressive rates and promotional discounts.

DIA has expanded its online shopping business with the launch of an online platform in Barcelona,

In a press release, DIA said that having rolled out this experience in Madrid and Málaga, it is now making its online business available to reach a potential 4 million consumers in Barcelona.

“DIA’s online shop, which includes a range that is not available in certain high street stores, has become the cheapest establishment in the entire company, thanks to its aggressive rates and promotional discounts.,” it said.

Delivery will be made from 7 DIA shops, where the number of staff has been increased, with a total of 14 new hires, and is free for orders over €50. If the order is made before midday, it can be delivered that same day, and an SMS is sent to customers 20 minutes prior to delivery.

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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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Inside India’s biggest e-grocer – BigBasket

Big Basket is currently India’s biggest online grocery player, clocking an average 12,000 orders a day – 70% of which include fruit and vegetables – and sales growing 10-15% month on month.

BigBasket says fruit exporters have a big chance to grow their brands in India, the world’s 6th largest grocery market e-grocery

Currently India’s biggest online grocery player, BigBasket clocks an average 12,000 orders a day – 70% of which include fruit and vegetables – and sales growing 10-15% month on month.

Even so, that’s just a drop in the ocean of potential grocery e-commerce in India. Against a total F&V market of about US$ 53 billion, modern retail sales of fresh fruit and vegetables contribute around US$ 500 million and online sales around US$ 30 million. So said Vipul Mittal, head of fruit and vegetables for Bangalore-based BigBasket.com.

Speaking to ED from India, Mittal also stressed that e-retail success is “not as simple as it looks.”

“A lot of back end work has gone into this company over the last 3-4 years to make it very powerful. It’s about being a comprehensive service and delivery package and not just a web site.”

And Indian consumers look for value irrespective of the channel through which they buy. Hence constant benchmarking against all competitors takes place to compare prices and ensure value, he said.

E-grocery potential in India

With an estimated 1.27 billion people — and likely to overtake China by 2028 as the world’s most populous country — India also has lowest rate of meat consumption, highest rate of vegetarianism, and a growing affluent class keen to try new cuisines.

According to the Indian daily Business Standard, last year Randstad India – which pegged India as the world’s 6th biggest grocery market – estimated just 1% of the groceries Indians buy are online. By 2020, it expected that to grow to 2%, making India’s online grocery market worth around €9 billion.

Indian households tend to buy fruit and vegetables 2-3 times a week, and the same trend is seen on Bigbasket.

Mittal said e-commerce facilitates insight into consumer buying patterns and allows the offering to be tailored accordingly, for instance running a promo on apples to all mango customers in the off-season (July).

Expansion into ready-to-cook food

The online retailer sells other grocery items apart from food, such as personal hygiene products, but until now, sales of fruit and vegetables have hovered around 14-16% of its total value sales, Mittal said.

However, having built a solid customer base, it now plans to increase its assortment further with many other food products including an imported and gourmet range.

According to recent reports, BigBasket is also set to offer more organic fruit and vegetables and plans to start selling gourmet salads and ready-to-cook meals – initially Thai, Mexican and Italian dishes – that include freshly cut vegetables and other ingredients, and recipes. This it has launched under the brand ‘Happy chef’ – a la Blue Apron.

Technology aids forecasting

Getting supply right is the key to BigBasket’s success, Mittal said. ”We have used a lot of technology for forecasting demand and use a dynamic model to plan capacity and the availability of vehicles.”

“Historical data has limited scope to assist demand forecasting in perishables, especially when the growth is so rapid and there are multiple variables.”

Big Basket has developed backward linkages with growers and buys directly from growers wherever possible, giving it better control of quality and enabling delivery of fresher produce by reducing time between harvest and consumption.

Direct sourcing preferred

BigBasket is currently located in six cities – Bangalore, Hyderabad, Mumbai, Pune, Chennai and Delhi – and tries to source what it needs in the vicinity of each.

By the end of this financial year, it will have opened 50 more locations, all in clusters with 5-6 cities around six central locations typically with one central warehouse.

BigBasket has no contracts with growers as yet, but is setting up collection centres to source directly from multiple farmers. It plans to establish linkages to bring safe food to the table with complete traceability, having already set up four such centres in southern India.

“We are currently a very small player with respect to total production in an area. So typically when we go into source areas, there are multiple farmers who can supply us. We create an enabling environment for the farmer to bring his produce to us soon after harvest and provide him the transparency of price and weighment. We have also initiated a pilot to provide extension services to the farmers through our field agronomists.”

BigBasket may also draw on wholesale markets to fill any gaps but prefers not to, Mittal said, because the produce is a step further from harvest, therefore less fresh and more expensive. “Quality and freshness are the driving force rather than price and margin.”

Chance for exporters to build brands

In terms of opportunities to export into India, it is a matter of creating differentiation, which so far has been very limited. BigBasket is looking to stand apart by bringing in different products and varieties, such as seedless watermelon, wider variety of pears and apples, exotic fruit, etc. (Few vegetables are imported by India, mainly due to shelf life reasons.)

Mittal stressed he sees a big – and so far largely untapped – potential for foreign suppliers to harness e-commerce to build their brands.

Most imports into India are channelled through traders and conventional retail channel. Growers/shippers don’t have much opportunity to build their brands because they don’t have much control over distribution channels, as well as other marketing elements. BigBasket, in contrast, can package, display and deliver its imported apples under a brand, for instance.

“It’s a big opportunity to build a brand in India, where ecommerce is still in a very infantile stage but set to expand rapidly,” he said, stressing e-commerce’s power to communicate directly to consumers.

(BigBasket is also said to be looking at launching a data analysis business to offer information on customer trends related to brands.)

Also on imports, Mittal said produce should adhere to global food safety and quality standards but trade with India is “not as tricky” as with the EU and US.

No questions asked returns

BigBasket’s customers mostly order by noon for same day delivery or choose a convenient slot among four options the next day. Insulated boxes are used to maintain the cold chain for temperature sensitive products such as mushrooms.

Its recent acquisition of a a hyperlocal food delivery startup in Bangalore will be act as a springboard to compete with rivals offering hyper-rapid delivery.

Mittal said customers can return produce at the time of delivery if for any reason they don’t like it. The return rate for fresh fruit and vegetables is about 0.5% and the most common reason is a problem with quality caused by transit damage.

Analysis of complaints has led to service improvements, such as in the case of customers finding worms in their cauliflower. Now the company has introduced florets, thus solving the worm problem “and adding value.”

Another big source of complaints was fruit being delivered semi-ripe. Thus, in March, BigBasket set up a ‘freshometer’ – for bananas, mangoes and papayas – on its sales page so consumers know when to eat them. Mittal said this is important because BigBasket tends to ship these fruit to consumers at the semi-ripe stage – to reduce transit damage – so consumers need to know what to expect and when to consumer for best results.

Customers expect Big Basket to be ‘greener’

Mittal said customers’ increasingly expect Big Basket to be environmentally friendly, but e-grocery has its pros and cons in this regard.

On the one hand, all its produce must be pre-packed for home deliveries and till recently only plastic was used. But unlike on retail store shelves, having transparent packaging is not a necessity for home deliveries, so Big Basket is now trying to increase its use of more eco-friendly packaging, such as paper and cardboard boxes. “For example, this season all mangoes were shipped in cardboard boxes,” Mittal said.

BigBasket.com

JB

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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