New research reveals that the UK supermarket sector is driving the development of eTailing.
The UK has the most developed online retailing market in Europe, with most of the UK’s largest online grocers now offering an online service. According to a new Datamonitor report, by the end of 2000 the online grocery sector was worth $580 million. Although this is already a substantial business, it only represents 0.4% of the UK’s $145 billion grocery trade, suggesting that growth forecasts of 75% per year are achievable.
2000 was a watershed year in the UK, with Tesco expanding its reach to 90% of the country’s population and diversifying into new product areas. Archrival Sainsbury’s is keen to catch up, building the world’s second largest fulfillment center to cater for its new Sainsbury’s to You service, launched last August. It aims to make the service available to 60% of the population by April. The UK’s number three chain, Asda, has also launched its Asda @t Home service. Currently focused on the London area, it aims to reach the 60% mark by April 2002. Other services are provided by Waitrose and Iceland, but services from smaller players such as Budgen and Somerfield were dropped last year after they failed to build a critical mass of customers.
Convenience is a key selling point for online services. A growing number of cash-rich time-poor consumers are willing to pay for the luxury of a home delivery service, with the typical GBP5 fee appearing to be a fair price to pay to avoid the hassles of picking products oneself and lugging them back home. Access to the Internet is also a driver, with an ever growing proportion of the population having access to and gaining experience of the Internet.
Moreover, consumers trust companies like Tesco, Sainsbury’s or Asda far more than unknown Internet startups. Once they have tried the service they are likely to become loyal customers and use built-in repeat ordering functions to have their groceries delivered regularly.
