Supermarket e-shops are in trouble

By | May 7, 2023

Costs are rising, dead ends are increasing in the e-channel of organized retail, and the supermarket industry is willing to charge for delivery in online sales to make it profitable. At the same time, however, the punctuality situation has already limited the volume of sales in both the physical and electronic baskets, with 4 out of ten domestic consumers considering the high cost of shipping as an inhibiting factor in choosing it.

According to the estimates of the executives of the chains, free shipping on online orders (since most chains do not charge for orders over 45-50 euros) represents a loss of around 10% of the turnover.

The need to make the process of distributing products for supermarkets profitable from their online stores has been highlighted on numerous occasions since 2020, since except for Lidl and Galaxias -which is also preparing to enter the online channel- all chains sacrifice three percent. capital year to have a presence in e-commerce.

High inflation, the energy crisis and the significant burden on transportation costs that have remained on a high trajectory since last year make the free distribution service in the chains suffocating.

Perhaps if the market hadn’t faced a significant decline in consumer purchasing power, it would have shifted to charging for delivery already this year, but so far it has remained restricted.

Timid steps in this direction have only been taken in the fast trade services that some chains are developing, and it is said that this field will become a “barometer” of the next adjustments in the prices of electronic purchase shipments in the future. next.

Of course, this decision remains difficult because the supermarket sector made the “mistake” in the context of competition to make the e-delivery service available for free from the start, something that did not happen in other retail activities. , for example in electronics stores. Therefore, the consumer has learned about this trade policy and can hardly accept a change that will burden him, even in this situation.

In light of this, the upcoming cost of order delivery may prove to be a game changer for the performance of the supermarket sector in the online channel.

If the distribution commission must be at least 10% of the total value of each order, then for the average basket, which, according to Convert Group, will be 76 euros in the first quarter of 2023, supposes additional costs for the consumer of 7 6 euros, not a negligible amount.

Additionally, choosing food delivery from platforms that charge delivery is already a deterrent for many consumers.

In this context, the supermarket market would be oriented towards the gradual implementation of delivery charges, a development that cannot be ruled out as a pilot even in the second half of the year.

In addition, the electronic channel is emerging as a “necessary evil” for the retail market since, according to EY Greece’s Consumer Research Future Index Greece 2023, online shopping is consolidating and the home tends to become a “hub” in around which more and more activities revolve.

It is indicative that 81% of those surveyed reported that they used the Internet frequently or sometimes to shop in the last quarter. And while online is now established as the primary shopping channel for a significant portion of consumers across all age groups, high costs are a key barrier for 43% of respondents, while home consumers are less concerned. due to delays in delivery (1 to 5) and the difficulty of changing the product.

What should also be noted is that individual questions about online shopping show that while almost half of consumers are positive about it, a significant minority of 27% remain less positive.

In the general framework, it is also necessary to take into account the decrease in consumption, which, especially in the electronic shopping basket, according to figures from Convert Group, in the first quarter of 2023 fell by 10% in absolute proportion to the increase in The channel’s turnover -without including the Q-Commerce Box, eFood Market, Instashop, Pop Market, Rabbit & Wolt players in the measurements- amounted to 76 million euros. The increase in question seems to be a consequence of revaluations.

However, an important parameter is the fact that in the same period, electronic orders increased by 9% compared to the corresponding period last year.

Therefore, the picture that is currently being formed in the e-retail supermarket includes: more orders, fewer items in the basket and more expensive, but also higher costs for retailers.

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