Ernst, Stanley C.

Heilig, Julia K.

Hooker, Neal H.

English

Research Papers in Economics

A Quantitative Assessment  of E-Grocers
Julia Heilig,  Stan Ernst, and Neal H. Hooker
Most forecasts of the potential share of food retail-
ing likely to be conducted  over the Internet  in the
coming years are small, perhaps only contributing
to two percent of sales. One reason for this small
market share, we suggest,  is the inherent inability
of agribusinesses-here E-grocers-to select opti-
mal online business strategies. It can be argued that
this  selection challenge  is complex,  with roots  in
product characteristics, industry structure, and cul-
ture.  But our  particular  interest here  is the  chal-
lenge E-agribusinesses  face in developing  strate-
gies for signaling the product quality of perishable
items (fresh and frozen). Organoleptic experiences
are traditionally the primary sales tools in market-
ing these  products,  but they do not transfer  well
online.  This  eliminates  the  ability  of traditional
"gateway"  grocery  products-ones  that direct  a
large  proportion  of the  shopping  practices-to
achieve the same position online. The growth of E-
grocery shopping may be limited to items that have
more reliable  or more  easily communicated  qual-
ity attributes; to increase the breadth of sales other
firm signals, a focus on customer-relationship man-
agement tools, and product depth are critical to E-
grocers. This update discusses an ongoing research
project, providing an early quantitative analysis of
food E-commerce  strategies. The authors feel that
frequent and consistent tracking  of such Internet
marketing practices  will highlight useful  lessons,
both  good  and bad.  This paper presents  the first
observations  from this  project.  Data  collected
through an exhaustive quantitative-evaluation tool
developed by the authors and applied to E-grocery
Internet sites  in the third quarter of 2001  provide
the  basis  of our discussion.  The strategies  of 31
large E-grocers are compared using a set of numeri-
cal scores. This tool will be  applied each quarter,
creating  a "Top  30  E-groceries"  list to be  made
available  on the  OSU  E-Agribusiness  Working
Group web  page at http://aede.osu.edu/programs/
e-agbiz/.
Heilig is graduate research associate, Ernst is program manager,
and Hooker is assistant professor at The Ohio State University.

A QUANTITATIVE ASSESSMENT OF E-GROCERS

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Research Papers in Economics