Online turnover triples thanks to smaller purchases

Online turnover triples thanks to smaller purchases

The Dutch buy groceries online at such an increasing speed that online grocery turnover has tripled in 2013 - even though the average spend has dropped 26 % in that same year. 

Nearly 700 million euro in online turnover

 

According to the yearly consumer study from advice agency Deloitte, nearly 6 % of Dutch consumers has bought groceries online at one time or another, while the frequency of online orders has increased more than 70 %.

 

Deloitte says the number of online shoppers has doubled and believes that 2 % of supermarkets' total turnover comes from online purchases. According to GfK, the total 2013 turnover reached 33.3 billion euro, so that would mean that 2013's online turnover nearly reached 700 million euro.

 

"It is a huge increase in speed", says Paul Op Heij, who works for Deloitte's Retail branch. "An increasing number of people knows how to order online. 10 % of consumers believes this is a reason to change stores, especially when their usual supermarket does not offer the service, while a competitor does."

 

Good news, but with downside

 

This is mostly good news for Albert Heijn, that has a huge lead on its competitors when it comes to online infrastructure. Two thirds of online consumers say they shop at Albert Heijn and the chain is doing its utmost to grow its online scale as quickly as possible. It needs to do this if it wishes to become profitable online.

 

It comes with a downside however, as the average online spend is under tremendous pressure. Albert Heijn's average spend in 2013 reached 91.25 euro, nearly 12 % lower than the 103 euro from 2012. That has put additional pressure on the fact that Albert Heijn has to increase its online scale to become profitable.

 

Average online spend drops 26 %

 

That also increases pressure on other retailers, because a drop in online spend spells bad news. Their online average spend was 44.24, sizable smaller than what Albert Heijn manages. Even so low, that it is hard to imagine it represents a base to create a profitable venture.

 

With the low average spend at other retailers, the average spend in 2013 across all retailers dropped to 75.79 euro per online order, a 26 % drop compared to 2012.

 

From decent to bad turnover

 

"The number of supermarket chains that offer an online service has increased and the chains offer a lower or no minimal order size. Existing suppliers have also lowered or cancelled their own minimal order size as a response to the competition. Still, online orders have tripled", Op Heij explained the drop in average online spend.

 

The main question is whether retailers with online grocery services are not basically removing their own profitable turnover to an onerous online system as it is evident that the online growth is cannibalizing sales in physical stores. It remains to be seen whether an average spend of 76 euro can create a profitable business, let alone an overall average spend of 44 euro.

 

Deloitte's report contains a lot more information on Dutch consumer behaviour and preferences. Click here to read the full report

Questions or comments? Please feel free to contact the editors


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