Report: There's Hope for Online Groceries

Share this article:
The Internet will command close to 2 percent of U.S. grocery sales by 2006, despite industrywide pessimism about the sector's future, Jupiter Media Metrix said yesterday.


According to Jupiter analysts, Web-based grocery sales will rise from $1 billion in 2001 to $11.3 billion in 2006. The online grocery industry will become profitable if it can convince the consumer packaged goods market to embrace the Web channel, the report said.


The analysts said online grocers also provide a valuable testing ground for new product concepts, improvements, packaging and pricing.


Whether online grocery sales will ever be substantial enough to support fulfillment centers remains to be seen. Most Web-based grocers that have built large, expensive warehouses have gone bankrupt.


Webvan, the only major grocery stand-alone left standing, has tried to make a centralized-fulfillment-center model work in several markets. However, the grocer this year left Atlanta, Dallas and Sacramento, CA, and abandoned plans to enter the New Jersey-New York market after building a $30 million distribution center in North Bergen, NJ.


In addition, the firm has been hit hard by industry criticism of its grocery-delivery business model, and it needs to round up at least $20 million to make it into 2002.


These factors -- along with the Nasdaq seeming primed to delist Webvan, as its stock price recently sunk below 20 cents a share -- have many analysts predicting its demise.


In another example, supermarket chain Albertson's recently shut down its fulfillment center near Seattle in favor of picking and packing orders straight out of area stores.


Share this article:
You must be a registered member of Direct Marketing News to post a comment.
close

Next Article in Digital Marketing

Follow us on Twitter @dmnews

Latest Jobs:

Featured Listings

More in Digital Marketing

Target Better With Facebook, Sandberg Tells Marketers

Target Better With Facebook, Sandberg Tells Marketers

In earnings call, the COO claims Facebook is 44% more accurate than the industry average at targeting and promises increasing investment in ad tech.

Day One on the DMA2014 Show Floor

Day One on the DMA2014 Show Floor

Sprouting from the Direct Marketing Association convention today were retargeting refinements, rules for breach behavior, and, yes, some darn fine Brussels sprouts.

Customer Identity in the Digital Age

Customer Identity in the Digital Age

Industry experts explore the value in a person's cyber identity for marketers.