What unique problems are inherent in selling groceries and other perishable products via e-commerce? How can they best be solved to ensure customer satisfaction?

This is a answer to a question on my final project for my business to comsumer ecommerce class. I figure I spent hours writing this I should get atleast a point twards a Borders gift card so I can pay for 1/10 of a text book for my next set of classes starting in...oh god two weeks.

Online grocers like Peapod.com and other sellers of perishable products online face all the same road blocks that other ecommerce companies face. Many consumers are still uncomfortable with the idea of buying products they haven’t seen or touched, and credit card fraud has caused many people to swear of online buying entirely. While there is no way to sooth everyone’s fear, there are easy steps to help build credibility within the sites. Simply keeping the website up to date, free of errors and easy to use goes a long way. Companies like Verisign.com are available to protect customer’s private information, so the customer feels safer giving out their address and credit card number, and shows them that the people behind the company are trustworthy. Selling perishables and groceries online also comes with some unique problems that traditional online businesses don’t have to face.

The most obvious problem is going to be that they items are perishable. Many products are non-perishable, like canned foods and candy bars and require no extra attention, besides basic care to make sure the packaging does not break. Longer term perishable items such as bread and pastries require little extra care as well since they are unlikely to go bad between being ordered and being delivered. The major problem comes with items that must be refrigerated or frozen like milk, ice cream, lunch meat and cheese. Special consideration has to be given for what temperatures the items need to be kept at during delivery as well. Frozen items would need to be kept at a much lower temperature to keep them frozen but placing many refrigerated items in frozen temperatures will harm the items. Many companies that sell perishable items online have teamed up with local businesses that sell the items in order to get the shortest distance between the product and the consumer. Peapod.com works with Ahold USA supermarkets; they are then able to have their own hired delivery people to take the items from the store to the customers door step. They are able to plan their deliveries to make sure the items get to the customer as fast as possible in the most efficient way. When your products can not be purchased from a local business you may have to ship the items. While the cost to the customer will be higher the items can be shipped express to arrive as fast as possible to the customer. With either option special care is going to have to be made to keep the items cold. Items can be packaged in coolers with dry ice to keep them frozen for longer periods of time or refrigerated trucks can be used to transport items. If items are being shipped or if items are being delivered to a home where no one is there special consideration should be made to provide a safe way to keep the items cold while they are outside waiting for the customer.

Another problem online grocers have may seem small but can really add up fast. As you are leaving the store you are faced with one of the biggest temptations, the impulse fixtures. Candy, gum, magazines, toys and other low priced fun items are placed here so while you wait to be checked out you have to look at them and then often find yourself purchasing them. How does a 69 cent candy bar really effect a huge grocery store? It’s simple, most products you buy at a grocery store are basic need items like canned vegetables, produce, milk, cheese and so on. To stay competitive and draw the most people in, grocery stores use very little mark up on these items. An average grocery item markup rate would be around 26% , where as an average mark up price for a candy bar would be over 50%. If a can of peas sells for .89 then the store has a .23 profit on each can sold. If a .69 candy bar is sold the store makes a .35 profit. Grocery stores have often sold items below cost to get people into the store knowing that they will then buy items with high markup prices to compensate. By taking away the impulse area there is a potential to lose out on what makes the store its best profits. To combat this, online grocers can first plan for this and adjust their markups to reflect this. Another option is to try virtual impulse racks during check out. After the shopper has chosen their item and is ready to check out a screen can pop up asking if there are any other items the customer needs and then allow the customer to select between candies, gums, magazines and pop. It may not generate as many sales and does not help the fact that mom is no longer being begged by her children to buy a candy bar, but it is a step in the right direction and can be viewed as helpful by the customer.

Another issue facing online grocery and perishable items sellers is the customer’s expectations and preferences. Customers know what they want and have an expectation of what it will be when they buy an item. For most items sold online or in the store the customer knows what to expect. An iPod is going to look and act the same way no matter where you buy it from. Perishable items are very different from this; each one is a little different. To one person a rose is simply a red flower with thorns; to this person any rose would be acceptable as long as it was in good health. To another person a rose would be unacceptable if it had any brown spots, if it was not full, did not have a long stem and was not a deep but vibrant color of red. There is no way for either of them to know exactly what flower they will receive when they order it but they both expect it to be the image they have in their head. The same is true for food products. For most people an avocado is simply an avocado and whatever one they pick up that is not rotting will do. For me the avocado must be soft enough to dimple when pressed on but not so soft it stays dimpled long after. At the grocery store I would feel each avocado and find the one that I think is best, even thought they all have a ripe sticker on them. When items are delivered that are still considered to be “good” by the grocer but not good by the customer the customer is not only disappointed in their service but they are missing an item that they now need to replace. If the person must then go to the grocery store to buy a new one the entire benefit of the grocery delivery is lost. It is impossible to always satisfy everyone, but efforts can be made to help you satisfy as many as possible. The first thing that should be done is implementing clear standards for products. A flower company can make a standard that no flowers will be used with more than 1% brown on any petals or leaves. Another thing to do is to set up a return policy. A grocery business can create a program where any item that is not to the customer’s standard can be returned and a delivery person will pick up the item and drop of a replacement item at no charge. This can be costly but it can also reassure customers that are hesitant to try the service out in fear of getting bad products. To stop the problem before it starts the grocer can ask for special requests on products like bananas where some shoppers prefer green to yellow colored bananas. This will assure things come out as close to the customers wants as possible from the beginning.

Another problem facing online grocers and perishable sellers is the inability to accommodate customers unexpected needs. If a customer realizes 30 minutes before a dinner party that they have no cranberry sauce. They can not simply order it online and have it show up, they would be waiting hours. Instead they have to go to a traditional grocer to pick up the item. In addition items that come up unexpectedly during the week like flowers for a date, or dinner for an almost forgotten anniversary will mostly be lost business to an online retailer of this type, since the time from order to delivery is far to great. The retailer can do some things in an attempt to reclaim that business however. A small link or pop up in the shopping cart page could be implemented to remind customers of things they may have forgot. The words "forget something?" could be enough to jog people memories. The area could have items like ice, milk, and toilet paper as well as seasonal items like stuffing, cranberry sauce and Halloween candy. Another idea that could also be viewed as a benefit to the customer could be a rotating banner with several phrases like, "Planning a dinner party?" or "Is it someone’s birthday this week?" could lead to a page containing items associated with the phrase. Such things could be used in a loyalty program as well like a birthday card reminder or a dinner party reminder. This could help reclaim a small amount of the business lost to poor planning and/ or forgetfulness.