COVID-19 brings about a strong increase in the growth rates for online food retail. But the current boom is just a preview of the future for food retail. What does this mean for manufacturers and retailers?
The Corona crisis has become a huge opportunity for manufacturing and trade companies – provided they can sell their food products via own online shops or platforms like Amazon. In March 2020, online orders in Germany were up by 55 percent, according to the German food magazine “Lebensmittelzeitung”. Other countries may have seen an even higher increase.
The crisis has boosted a trend that experts have long seen coming. Oliver Wyman consultants recently forecast a five-fold increase in online grocery sales. In 2019, a survey of Kearny Consulting rated the market opportunities as positive. While consumers still prefer to buy directly in physical stores, part of the grocery shopping has shifted to the internet. Their conclusion, especially niches could be lucrative if they are addressed in the right way.
Food e-commerce only works by integrating an online shop and ERP
This insight alone will not sell your products, at least not online. Plus, an online shop cannot, and need not, be built in a day. As the current e-grocery boom is but a mere preview of the future, consumer behavior is expected to change long-term. Even buyers who preferred to buy at brick-and-mortar stores are finding e-commerce more and more attractive. What you should do now:
1. Your current customer base comes first
By selling your products online, you primarily generate added value for your customers. First, use this customer retention effects instead of hunting for potential new customers that do not yet know your company. This would require a lot more initial investment, as you need to advertise your shop first.
2. Focus on your region
Dreaming of a global showcase for selling your products? Stay at a regional level to begin with, this is much more economical. Marketing your online shop beyond regional borders takes a lot of time and money, and you may risk divergence losses.
3. Use your online shop to replace your “regular” homepage
Consider your investments in an online shop not as an additional cost, but as a substitute for your “regular” homepage. A high-quality display of your products in your shop is what matters most for your customers.
4. Integrate ERP and webshop
Ideally, you have an adequate ERP system in place as the technical basis for the digital shopping carts. ERP is essential here because it lays the foundation for easy implementation of automatic, up-to-date agreements on prices and discounts. You also need a coherent representation of your existing catalog structures. With the perfect integration of both worlds, ERP and online shop, you will be off to a flying start.
OTTO-Gourmet: From food startup to market leader in the premium segment
The brothers Wolfgang, Stephan and Michael Otto have long since demonstrated how it works. Their Company OTTO-Gourmet has sold premium foods like Kobe beef and Wagyu steaks online since 2005. To ensure smooth operation, the Magento Webshop is connected to the ERP software by CSB-System via an interface. This connection is crucial for the success of the digital business model, because it includes price maintenance as well as any food-related aspects, like details on weight, durability dates, lot size and, above all, traceability. The direct communication between the ERP modules and online shop ensures that at the time the order is placed, the availability of the item is automatic and delivery times are taken into account. As soon as the order comes in, picking and dispatch can be initiated. “This way, we guarantee extremely fast response times and, ultimately, a high level of customer satisfaction”, says CEO Wolfgang Otto.
Exciting webshop use cases are also available in the pure B2B area. Two current projects of our customers.
Example #1: Franken-Gut counts on a web portal for an entire subsidiary system
Since last year, EDEKA Franken-Gut has built on an online ordering system for its subsidiaries. Everything that was handled by phone, fax and e-mail in the past is now entirely managed online, which saves a lot of time.
About 160 Edeka stores are currently using the system. Franken-Gut's order assortment is provided as a form on a dedicated web page. In the order screen, which can also be operated with tablets, users can easily choose from a range of more than 2,500 items and enter the requested quantity for the selected delivery dates. Promotional items can be accessed in a separate section, and the entire order history of the individual items can be shown. An additional benefit for the large network of Edeka subsidiaries is the integrated complaint management program. A new complaint processes can be dealt with directly in the portal, while they are also immediately available in the ERP system, including all details required for further processing.
Example #2: Luiten Food reduces costs by shifting the order processes onto the internet
Just like Franken-Gut, Dutch food wholesaler Luiten Food has improved the communication with its customers by using an online shop system. The family-led company has over 75 years' experience in the import and sale of game and poultry, and it offers more than 3,000 products.
This is a demanding business that also places high demands on the web shop - for example, because the placement of products approaching the end of their sell-by date should be available.
In addition to the front end, which is the graphical user interface of the online shop, the back-end interaction with the ERP system is crucial. Item data is presented in the shop without data duplication, the current availability can be shown in various formats, and address-specific prices are retrieved, in accordance with all conditions. “The online shop solution provides us with a future-proof, individual solution to transfer the incoming orders as well as the related processes to the internet, thereby minimizing staff and cost expenditures,” says Roald Heinsbroek.
Webshop technology as a process optimizer and growth driver
At the end of the day, the message is the same for retailers and manufacturers. Investments in an online shop can pay off quickly. Especially in the B2B business, there are ample opportunities to save time and money, to improve customer retention, and to generate more sales revenue. Even if, to date, the optimistic forecasts have not yet come true, despite a steady growth in sales volumes, the e-grocery business may build up further steam after the corona crisis.
The crisis as an opportunity – This is not only management wisdom, it is the new reality of food e-commerce.