PRODUCT DEVELOPMENT AND PROMOTION

Trends

Most analysts don't think so. People like to shop, and online shopping is not the same as physically shopping. You don't get the immediate gratitude (or guilt) of making a purchase and taking it home. When you purchase clothing over the Internet (or via catalog, for that matter) you don't get to try it on and see how it fits. Last year, more than 43 million people visited the Mall of America last year. Do you think that online shopping could replace that experience?

Certainly online shopping will increase, and yes, to some extent it will take away from the physical market. However, online shopping for the main part will enhance the businesses that already exist, and can be an extension to what businesses are already doing. There are certain types of businesses that do great online. The companies that are doing really well are those that sell books, music, and most things that you don't need to see, feel, and touch before you make that purchase. Food companies are getting into the Internet. Often companies are mainly using the World Wide Web to give consumers information about their companies and their products. It is a new way of advertising. You can see this by going to the Hershey's Chocolate web page (www.hersheys.com) . It is bright and colorful and offers activities for kids to do on their site. What a way to advertise. The children enjoy the activities, and the adults can get a wide range of information, from stock prices and investor information to gift shopping. These new advertising avenues are used to complement the traditional ones. The future is wide open. Consultants say that as food companies become more familiar with the Web, they will develop more sophisticated brand-building strategies.

With the advanced methods of distribution, it is easier for food companies to market their products, sell them, and get the products to the consumer safely and efficiently. In January 1999, Monterey Pasta Co. opened an online store, making it the first pasta manufacturer to have a complete Internet presence. The Web site (www.montereypasta.com) allows consumers to visit their site, learn about their company, and order fresh refrigerated pastas do be delivered directly to the consumer.

Another company that is utilizing the Internet is www.cybermeal.com now known as www.food.com. This company allows a consumer to go online and order from a restaurant in their area and have the food either delivered or ready for take-out. Local companies are listed and the site says that they are expanding all the time. In Corvallis, OR, a local restaurant has a web site so that hungry consumers can order their food to be ready at a specific time, or ready for take-out.

Online grocery shopping. Interesting concept. There seems to be some demand for this. With consumers who are ready to save time and simplify their lives, they see online grocery shopping as a great way to do this. Their seems to be four categories of online shoppers: Shopping Avoiders, who dislike grocery shopping; Necessity Users, who are limited in their ability to go to the store for some reason; New Technologists, who are typically young and comfortable with technology; and Time Starved, who are insensitive to price and will pay extra to free up time on their schedules. Www.peapod.com is the leader in this online category. They service more than 104,000 customers in seven cities and ranked fifth among the top 10 e-commerce companies in June 1998. The site has the option of "test driving" the site to see if really is convenient for you. There is no obligation, simply the experience to let you know if online grocery shopping is right for you. This company delivers your groceries directly to your door. Other grocery stores allow you to order your groceries online and then they will be bagged and ready for you to pick up at the store. This will help save you time and you don't have to go through the hassle of grocery shopping.

Currently Safeway uses a card that gives members a discount in the store. This system keeps track of how much you have spent and offers frequent shopper discounts when you reach a specified dollar amount. Other supermarkets are utilizing the "smart card" which uses silicon chip technology. The chip is imbedded in the card and can hold up to 100 times more information and are used to reward customers with discounts while they enable the store to collect extensive consumer data.

The Internet is growing and the food vendors are stepping aboard. It is hard to tell where we will be 10 years from now. Although the road is not a smooth one, many companies are making the transition to the Web and finding success. The number of online shoppers grows monthly and the number of online businesses is increasing as well.

Below in the references are resources where further information is available. In selected instances where the resources are not likely available, excerpts from some articles are available. With on-line shopping, it is critical to understand the industry by reviewing the current literature. So far it seems to be somewhat transitional and rapidly changing.

REFERENCES

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Briody, Dan. 2000, April 24. Grocers stock online shelves. InfoWorld 22(17):1.

Carlton, J. 2000July 31. Profit delivery stalled, Webvan hits new roads. The Wall Street Journal B1.

Dwyer, Steve. Ad Spots Aim for Cyberspace. Prepared Foods, March 1999. Pg. 25-28.

Heun, C.T.2000, November 27. Back to the future for online grocers. Information Weeks "on-line" paper.
From: InformationWeek's Bizmodel.com
Sent: Monday, November 27, 2000 12:04 AM
Subject: Back to the future for online grocers

Hibbard, Justin. Manufacturers Vie with Retailers Online. Information Week, April 12, 1999. Pg. 36.

Hollingsworth, Pierce. Silicon Chips: Food Trend for the New Millennium. Foodtechnology, December 1998, vol 52, no. 12.

Maney, K. 2000June 27. Webvan lugs a big dream. Company hopes food will whet appetites for a retail revolution.USA Today p. B1. Radosevich, Lynda and Tweney, Dylan. Retooling Retail. Info World. March 22, 1999, vol 21, issue 12.

Roberts-Dominguez, J. 2000, March 8. Programs promise participants a summer of Fresh Harvests. Corvallis Gazette-Times. C1.