By Elena F. Guiral
E-commerce is already part of our daily lives, not only in purchases of non-perishable goods but also in fresh products, although these only account for 2.3%, in which fruit and vegetables account for only 0.5% of the total.
According to the Report on food consumption in Spain 2017 published by the Ministry of Agriculture, Fisheries and Food, two years agoe-commerce represented 1.2% of total purchases of food for home consumption, so it is considered a channel with a high development potential, although fresh products accounted for only 0.5% of the volume. The increase was 10% in 2017. It is estimated that the percentage could reach 8% in 2020. In fact, they are the only purchase channel whose use is increasing besides supermarkets, which do so by 5.7% compared to the 1.7% decrease in purchases in hypermarkets.Physical stores, especially the smallest and traditional ones, would then be those most affected by this slow but unstoppable trend. Although according to the consultancy firm Oliver Wyman, which in 2018 presented its report Fresh or fail: six keys to world-class freshness", food is an exception in the emergence of on-line sales and many consumers still look upon on-line offers with a sceptical eye. The lack of confidence in the quality of the product keeps 44% of the respondents out of the on-line purchase dynamic".
However, it is estimated that this barrier is breaking down thanks in part to the arrival of Amazon Fresh to Europe and this consultancy firm estimated that in 2020 the percentage could reach between 6% and 8% of total food sales. "This means putting 15% of conventional stores at risk ".
On the other hand, the consultancy firm Kantar Worldpanel states that on-line spending on consumer products grew by 11.7% in Spain in 2018. With this increase, e-commerce already represents 2.3% of the Spanish Mass market, compared to 2.1% the previous year. Namely data that would not match the forecasts of the aforementioned studies.
The Kantar Worldpanel report states that global e-commerce is increasing by 13% and accounts for 6.3% of the global Mass Consumption market. The countries with the greatest contribution to this growth are China and the US, both growing by 30%. Therefore, Spain is lagging slightly behind this worldwide trend.
The large traditional distribution groups lead the on-line market in Spain, where the so-called "pure players" such as Amazon, native Internet supermarkets such as Amazon reach 21% of the market share, a position still limited as compared to Asian countries. Perhaps the issue of trust and tradition is more relevant in our countries, and consumers prefer to trust their usual suppliers, such as El Corte Inglés, Carrefour and Mercadona, to make their purchases on-line.
While in Spain and other European countries consumers prefer to use the computer to make their purchases, 60% in the case of Spain, the most common device is the smartphone, use of which has reached 88% in China. "The fact that there is such a high percentage of people in China who use their smartphones to do their daily shopping is amazing and shows what can be achieved. European brands and retailers have a lot to learn, they have a great opportunity among the younger consumer sector".
According to this consultancy firm, 25% of on-line consumers are under 35 and their purchase is very selective and is usually higher than average traditional on-line shopping. There is also a great opportunity in the market segment of young people between 16 and 24 years old, in which around 45% make purchases through this channel.
The ISDI Food is Digital Report published in 2017
The ISDI Food is digital report states that The percentage of women who buy food on-line is 56% and, among buyers, 75% buy at least once a month, spending an average of 82 euros. A high percentage of users make purchases on the websites of supermarkets and hypermarkets (77%), 35% on global shopping portals such as Amazon and Glovo and 25% in specialised stores.
Perishable products, fruit and vegetables, gain positions (44%), although they are still far from others such as bottled products (88%), beverages (82%) or dairy products (64%).
Among the advantages for which users choose to buy food on-line, 22% mention the convenience of not having to load and transport it and 17% that they can make the purchase at any time and 14% due to the time savings.
Regarding devices, 70% of respondents buy on-line from their computer and 94% from home, perhaps due to the greater complexity than making a simpler purchase or booking a table at a restaurant.
The giant of on-line commerce
Curiously enough, Amazon has taken the opposite path to other companies starting 100% on-line and is now in a pilot phase of opening physical stores mainly on the West coast of the US. That is exactly why it decided to acquire Whole Foods in 2016, to get a physical presence in urban centres where the wealthiest families live, as well as for logistical reasons.
Amazon Fresh is not trading in Spain, and the on-line service is provided through Prime Now. Prime customers in Madrid and Barcelona can enjoy ultra-fast deliveries for their daily products such as fresh, chilled and frozen foods or drinks, as well as baby products, beauty and personal care items, Amazon devices, books, video games, toys, smartphones and sports equipment.
In addition, in Madrid and Barcelona fruit and vegetables are delivered daily from Mercamadrid and Mercabarna. In the three cities, they can also buy food products from La Plaza de Día through the Prime Now service, including fresh produce.
In Madrid and neighbouring towns, Prime Now customers can also buy products from Mercado de la Paz and Lavinia, a store specializing in wines. "The collaboration with Mercado de la Paz is a pioneering project in the world, it is the first time that the company has teamed up with dozens of retailers from a 19th century public market to offer customers fast deliveries in fresh gourmet products from local stores”, Camille Bur, head of Prime Now in Spain, assures. "As you know, we do not disclose our future plans, but we continue to innovate to provide our customers with the products they are looking for at the best possible price and fast shipment", he adds.
Amazon does not work with a particular customer profile in mind. "We believe it is a convenient option for the general public. Amazon does not request demographic information from its customers, only a delivery address and a means of payment. In the case of the purchase of alcoholic beverages, we request that the client expressly declares that he/she is old enough to buy that type of product”, Bur concludes.
Physical stores adapt to the on-line world
In May 2018 Mercadona launched its new service for on-line purchase through a pilot project called 'Laboratory', thus emulating Amazon’s logistic system. For this purpose, it has built its first store, 'la Colmena’ (The Hive), exclusively for on-line sales, in the Vara de Quart district of Valencia and in 2019 it is going to construct these "hives" in Madrid and Barcelona to extend its online purchase service gradually throughout Spain.
Mercadona will start selling on-line in Barcelona on June 12 and at the end of the year or beginning of next year it will also be doing so in Madrid. One of these warehouses was opened in June in Barcelona, with an expected turnover of 30,000 deliveries per month, will employ 300 people.
Another of the on-line services for buying food over the internet in Spain is Tu Despensa, which solves the problem of food preservation and expiry by either taking the products directly from Mercamadrid to the address where the order was placed or also by using very traditional small businesses such as Frutas Charito and Pescadería Ernesto Prieto, who are based in the Chamartín Market. Frutas Charito also has its own on-line sales service making deliveries to Madrid city.
However, the last barrier to on-line shopping is that it does not facilitate the experience of finding products of true quality and enjoying them, as well as being able to choose them and have the appropriate advice, as happens in specialised stores, unless customers are looking for hard-to-find products in the area where they live. Here, small on-line gourmet stores have a great opportunity to expand.
The work of Ainia
Josep Martínez is the Marketing Digital Manager of the Agrifood Industry Research Association (AINIA), which helps Spanish companies by optimising, on the one hand, their production processes, so that they are flexible and customisable and, on the other, meeting the demands of the market and consumers to know how the competitive environment changes.
According to Martínez, the fresh product on-line buyer profile is becoming increasingly heterogeneous. It is usually a consumer of middle- to high-incomes with children and concerned about their diet or a more demanding consumer seeking exclusive products.
Millennials and young people are a very promising sector for the sale of on-line products as it is increasingly important for them to have a healthy diet, but they seek to optimise their time, which is why it may become increasingly common to purchase fresh products on-line, especially fruit and vegetables. The key will be to achieve consumer confidence by improving the personal experience of the purchase, specifically in terms of product transparency and traceability.