Online Grocery

Partnership Proposal
Mohamed Al-Amoodi July 24 2013
Online Grocery
• Introduction
– We want to offer a shop/delivery
service for groceries in Edmonton
– Customers buy your products from
our website
– We shop in-store/deliver using a
system
– To make the service fast/cheap for
customers we need to form a
partnership
Customers
• Usual customers
– busy young professionals
– value saving 50 mins trip and queue
• 60% of customers
– physically unfit (eg: seniors, pregnant
mothers, injured people, etc)
• 15% of customers

• Usual products
– dry/frozen food and housekeeping
products

* (PR-Newswire, 2013) (Evolution Insight, 2010)

 Customers
• Demands
– low service fee (90% demanded)
– personalized/online-only offers (60% demanded)
– membership/loyalty cards (57% demanded)
– new products requests (50% demanded)
– small delivery slots (50% demanded)
– clear food quality/refund policies
– good website (stable, easy search, fast checkout)
– good customer service

* (ATKearney, 2012) (Poulter, 2011) (Symphony-EYC, 2013) (ePerformance Observatory, 2012) (Mélanie, 2011)
Market Demand
• Summary
– The trend in customer behaviour since 2000 has
been an increasingly rapid migration towards
online shopping - the grocery retail sector is no
exception
– Online grocery shopping was in it’s infancy in
2004 in the UK, but spiked in popularity around
2008, and has risen every year since
 Market Demand
US - online to physical
grocery shopping US - online ($13B) to
market share = 1% physical grocery
(Empower Research, shopping market share
2009) = 1.2% (Hartman
Group, 2012)

UK – top online UK - population

grocery firms annual shopping for groceries
increase in sales = online at least once a
35% (Research year = 20%, at least
Methodology, 2012) once a week = 5.9%
(Key Note, 2013)

US - population
shopping for groceries Internationally -
online 1-3 times per population planning to
month = 4%, at least shop for groceries
UK - online to physical once a week = 2% online = 26% compared
grocery shopping (Demery, 2011) to computer software =
market share = 0.8% 29%, travel reservation
(Yousept & Li, 2004) = 30%, entertainment =
45% (Nielsen’s, 2012)

2004 2004 2005 2006 2007 2008 2009 2010 2011 2012 2012

Color Revenue Market Customer Market

Misc
Description Share Trend Share Trend
 Market Demand

US - population
shopping for groceries
online = 30% (Trassard,
2013)

UK - online (GBP 5.6B) UK - online grocery

to physical grocery shopping = GBP 11.1B
shopping market share (predicted to be double
= 3.5% (Neville, 2013) 2013 sales) (Neville,
2013)

2013 2013 2014 2015 2016 2017 2018 2018

Today

Color Revenue Market Customer Market

Misc
Description Share Trend Share Trend
 Market Demand
• Some established companies
Revenue from online
Firm Delivery cost
grocery sales
Tesco (UK) GBP 3.2B GBP 3-7
Ocado (UK) GBP 0.7B GBP 3-7 (free certain times)
Walmart (US) USD 5-7
Safeway (US) USD 10-13 (free first time)
Grocery Gateway (Longo’s CA) CAD 10
Thrifty Foods (Sobeys CA) CAD 8-10
 Business Solution
• Website/mobile Design
Front Page Filling Cart Checkout

• Login/guest • Favorites • Review/save

• Delivery slot • Department cart
reservation navigation • Upsell (“did
• FAQ • Keyword you forget?”,
• Guarantees search personalized
• Special offers deals)
• Policies
• Payment
Business Solution
• Website/mobile Design
Business Solution
• Server Design
 Business Solution
• Service fee (breakdown)
Average Amount of Customer Purchase by Online Grocery Firm
Peapod average basket price 100CAD per customer
Streamline average basket price 102CAD per customer
Teso average basket price 100CAD per customer
WebVan average basket price 71CAD per customer
HomeGrocer average basket price 102CAD per customer
Average basket price 95CAD per customer

Average Service Fee based on an Average Basket Price

COST – To have a shopper pick up the items from the shelves (26.3 mins per customer) 4.36CAD per customer
COST – For gas spent on the delivery (8.2 km per customer) 0.94CAD per customer
COST – To have the items delivered to the customer (31.2 mins per customer) 5.18CAD per customer
COST – Transaction fee charged by credit card companies (online credit CAD 2.36 per customer) 2.36CAD per customer
COST – Admin cost, food/business license renewals, truck maintenance (CAD 2.38 per customer) 2.38CAD per customer
Overall service fee 15.22CAD per customer

* Calculations available
Business Solution
• Service fee (impact on sales)
Service Fee ($) People who would be interested (%)
0 100%
1-5 48%
5-10 18%
10-20 5%
20+ 1%

Service Fee Impact on Sales 1.5% discount + 2.5% commission

100%
People Interested (%)

Will bring service fee to $11.25 and

80% 10% market share (double sales)

60% Min 1.5% discount (as we

eliminated credit card fees)
40%
Will bring service fee to $13.75
20% and 5% market share
0%
0.00 5.00 10.00 15.00 20.00 25.00
Service Fee ($)

* 857 people surveyed (Site, 2011)

Partnership
• Requirements
– Commission
• for reduction of service fee
– Database connection
• for items, quantity, department/location in shop
– Return policy
• for unsatisfied customers
– Skip checkout
• for increasing speed
• for eliminating 1.5% credit transactions fees
• items will be invoiced and paid at an agreed time
with an agreed payment method
Partnership
• Benefits
– First-mover competitive edge
• Because Edmonton has no good online grocery firm
• Increase in customer loyalty
– Increase in sales and customers
• No investment needed
• Estimated $22.5M revenue and 160,000 customers
in long term in Edmonton
– Free continuous feedback to improve products
• Because we collect data, reviews, forum information
Management Team
• Mohamed Al-Amoodi
– Head Programmer and CEO
– Education: BSc Chemical Engineer, 2011
– Experience:
• Engineer/designer with Pentair (Tyco)
• Programmer/manager with Rehabtronics (Bioness)

* Endorsements available
Management Team
• Khaled Al-Amoodi
– Programmer and CFO
– Education: BSc Electrical Engineer, 2013
– Experience:
• Researcher (on multi-ferric material) with Dr Kim Chow
(University of Alberta)

* Endorsements available
Next Step
• Partnership contract
– Commission
– Database connection
– Return policy
– Skip checkout
• Complete business solution (web/server)
– Obtain license (business/food)
– Advertise to target market
• Flyers/news, email/forum/Facebook, truck paintjob, etc

• Expand(warehouse model/pick-up option)

Questions?
Contact Info
• Name: Mohamed Al-Amoodi
• Email: alamoodi@ualberta.ca
• Phone: +1-587-708-6666
 References
1. Al-Amoodi, M. (2013). Online Grocer. Edmonton: Google Drive.
2. ATKearney. (2012, March 01). Ideas and Insights. Retrieved July 13, 2013, from ATKearney: http://www.atkearney.com/paper/-/asset_publisher/dVxv4Hz2h8bS/content/a-fresh-look-at-online-
grocery/10192
3. Browne, K. (2010, March 04). Grocery shopping online. Retrieved July 11, 2013, from Choice: http://www.choice.com.au/reviews-and-tests/food-and-health/food-and-drink/groceries/grocery-
shopping-online/page/online-versus-instore.aspx
4. Demery, P. (2011, March 18). Online grocery shoppers like home delivery. Retrieved June 16, 2013, from Internet Retailer: http://www.internetretailer.com/2011/03/18/online-grocery-shoppers-home-
delivery
5. Empower Research. (2009, April 09). Empower Research. Retrieved July 11, 2013, from Slide Share: http://www.slideshare.net/incred23/online-grocery-industry
6. ePerformance Observatory. (2012, January 01). Food and Grocery. Retrieved July 11, 2013, from ePerformance Observatory: http://www.eperformance-
observatory.com/etudes.php?titre=Food%20and%20Grocery
7. Evolution Insight. (2010, January 01). Online Grocery Shopper Behaviour. Retrieved July 13, 2013, from SlideShare: http://www.slideshare.net/evolutioninsights/online-food-grocery-the-shopper-
perspective-sample-extract
8. Galante, N. (2013, April 01). The future of online grocery in Europe. London, United Kingdom.
9. Goyalarpit. (2013, April 14). “Online Grocery Retail” Survey Result. Retrieved July 11, 2013, from IspiratO: http://ispirat0.wordpress.com/2013/04/14/online-grocery-retail-survey-result/
10. Hartman Group. (2012, January 01). The Online Grocery Opportunity. Retrieved July 11, 2013, from Hartman Group: http://www.hartman-group.com/downloads/the-online-grocery-opportunity-
2012.pdf
11. Kevin, C. (2001, January 01). Online Grocery Shopping. Retrieved July 13, 2013, from Business Information Systems: http://www.freewebs.com/aimeili/onlinegrocery.pdf
12. Key Note. (2013). E-Commerce: The Internet Grocery Market Report 2013. Computing and IT , 1.
13. Kornum, N. (2004). Grocery eCommerce. Massachusetts: Edward Elgar.
14. Mélanie. (2011, July 5). E-commerce: The Future of Online Supermarkets. Retrieved June 17, 2013, from The Followers: http://blogs.terrapinn.com/internetshow/2011/07/05/commerce-future-online-
supermarkets/
15. Morganosky, M. A., & Cude, B. J. (2000). Consumer response to online grocery shopping. Emerald 28 , 1.
16. Neville, S. (2013, February 18). Online grocery market will double within five years. Retrieved July 08, 2013, from The Guardian: http://www.guardian.co.uk/business/2013/feb/18/supermarkets-online-
grocery-business-value
17. Nielsen’s. (2012). Half of Online Consumers Have Bought a Grocery Product Online. Thetford: MarketingCharts staff.
18. Poulter, S. (2011, June 21). It's back to the shops! Why we’re fed up with buying groceries. Retrieved June 21, 2013, from Mail Online: http://www.dailymail.co.uk/news/article-2006005/Grocery-
shopping-online-Were-fed-shops.html
19. PR-Newswire. (2013, February 13). More Than One-Third of U.S. Adults Currently or Plan to Shop for Groceries Online, Reveals New CouponCabin.com Survey. Retrieved 07 08, 2013, from PR-Newswire:
http://www.prnewswire.com/news-releases/more-than-one-third-of-us-adults-currently-or-plan-to-shop-for-groceries-online-reveals-new-couponcabincom-survey-190992051.html
20. Research Methodology. (2012, July 30). Online Food and Grocery Shopping as a Branch of E-Commerce. Retrieved July 08, 2013, from Research Methodology: http://research-methodology.net/online-
food-and-grocery-shopping-as-a-branch-of-e-commerce/
21. Site, S. (2011). Online Grocery. Chicago: Survey Site.
22. Symphony-EYC. (2013, January 02). Shopper Research 2013, USA. Retrieved July 08, 2013, from Symphony EYC: http://www.symphonyeyc-omni.com/2013_SymphonyEYC_Shopper_Research.pdf
23. Trassard, P. (2013, May 2). Online Grocery Shopping Hasn’t yet Caught on among All US Consumers. Retrieved June 21, 2013, from L'Atelier: http://www.atelier.net/en/trends/articles/online-grocery-
shopping-hasn-t-yet-caught-among-all-us-consumers_419378
24. Web Site Magazine. (2013, June 7). Supermarket Stats Good Retail Benchmark. Retrieved June 21, 2013, from Web Site Magazine:
http://www.websitemagazine.com/content/blogs/ecommerce/archive/2013/06/07/supermarket-stats-good-retail-benchmark.aspx
25. Yousept, I., & Li, F. (2004). Online Supermarkets: Emerging Strategies And Business Models In The UK. Bled eCommerce Conference (pp. 1-22). Bled: University of Newcastle.