MyWebGrocer.com and Farm Fresh have launched their online shopping collaboration. Pureplay grocery eRetailing isn’t a profitable business. But smaller bricks and mortar grocers don’t have the technical expertise to build their own operations. This is where ASPs like MyWebGrover come in, allowing grocers to outsource order fulfillment efforts. This not only lowers start-up costs, but also frees small grocers from exorbitant overheads.
Application service provider (ASP) MyWebGrocer.com and small US supermarket chain Farm Fresh have launched their online shopping collaboration. The service allows shoppers to order goods from a range of 25,000 items and pick them up at any of 35 local stores.
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Although receiving little limelight, small neighborhood supermarkets have offered online grocery services since the mid-1990s with much success. Instead of maintaining their own online operation, they sign on with ASPs, who create and maintain personalized websites and also handle order placement for little or no up front investment. Most ASPs instead charge $3 or $4 fees on every order placed. ASPs such as MyWebGrocer.com, Shopeaze Systems, Peachtree Network, and Grocery Shopping Networks free small to midsize brick and mortar (BAM) grocers from high overhead costs. They provide BAM grocers with eCommerce solutions that allow a quick online service launch at low cost.
For small to midsize supermarkets and starters, ASPs clearly offer greater potential for online operations to reach profitability quickly. With the financial market’s skepticism toward eCommerce running high, we can expect ASPs to loom large in the background of the development of online grocery industry.
Datamonitor predicts that the online grocery market will grow at an average 78% per year between 2000 and 2005 to reach a market size of $26.8 billion. With the overall grocery industry forecast to grow at just 4% per year in the same period, it is small wonder that all eyes are fastened to the development of the online channel.
However, building and maintaining your own online grocery operation requires substantial investment. Slower than expected consumer uptake has led almost all pureplays to bankruptcy, as they were unable to recoup the high initial investment costs. As a result, the large BAM supermarkets with strong financial backing are destined to rule the online grocery industry. Still, there’s certainly a niche for smaller, specialized operators.
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