The Internet as a Shopping Channel and Database Description: An Empirical Application to Online Grocery Shopping

Abstract

This paper (Chapter 1 of a dissertation on online and multichannel shopping behavior) provides a comprehensive knowledge of the characteristics, circumstances and shopping behaviors around online shopping, and more concretely, online grocery shopping, what seems to be the first milestone for every retailer who attempts to operate across online and offline channels and therefore become a multi-channel retailer. The chapter primarily emphasizes the fact that online and offline channels have their own advantages against the other, that the profile of consumers who usually purchase from them differ, and that not all products are equally suited to be commercialized online. Multichannel retailers should consider these issues while designing their marketing strategies across online and offline channels to be successful at both of them. In this sense, some interesting business strategies to induce the use of the online channel and improve its profitability are proposed also in the chapter. We unique data set of online and offline grocery purchases from the same sample of consumers of a large multichannel grocery chain. This chapter has two clear parts. In the first part, we present an overview of the Internet and the electronic commerce, providing evidence of its current importance and potential. We analyze the unique characteristics of the Internet in comparison with the offline channel, what consequently shows its advantages and disadvantages as a shopping channel, and its a priori better or worse suitability to commercialize certain types of products. In addition, we characterize the profile of the typical online shopper and examine the increasing importance of commercial activities in the online channel all over the world. In the second part, we concentrate on the grocery industry. Grocery shopping accounts for an important share of consumer’s total spending and its purchase in the online channel represents an interesting opportunity for retailers. In this part, our aim is to analyze the purchase of groceries online from a theoretical and an empirical approach. On the one hand, we theoretically examine the reasons that may drive or stop consumers to purchase groceries online. On the other hand, we examine, by means of an exploratory study, the factors that influence consumers to purchase groceries online, when to shop groceries online and the type of grocery products bought in this channel. Meantime, we describe the dataset which will be used in the remaining chapters of the dissertation and which is also used to address these research questions. The chapter closes with a summary and the conclusions from the two parts. Regarding consumer characteristics, we find that that the younger the primary shopper in a household, the more adults in it, the further away it is to the closest offline store with parking and the further away it is to the closest offline store with home-delivery, the more intensively it purchases online. In addition, male-headed households are found to be more likely to shop online than female-headed households. Besides, households who got the grocer’s fidelity card after the opening of the online store are found to purchase more intensively online, than those who did it before. Finally, we observe a negative correlation between the number of trips the households do and their online shopping intensity. Regarding purchase circumstances, the analysis reveals that online shopping is better chosen when it is cold, during weekdays and when households purchase big baskets. Regarding product category characteristics, results show that a grocery category is more likely to be shopped online if it is a CPG (Consumer Packaged Good), it is a non-food category, it is bulky, it is a liquid, it is heavy and has an important share of private label sales. Chapter 1 provides a comprehensive knowledge of the characteristics, circumstances and shopping behaviors around online shopping, and more concretely, online grocery shopping, what seems to be the first milestone for every retailer who attempts to operate across online and offline channels and therefore become a multi-channel retailer. The chapter primarily emphasizes the fact that online and offline channels have their own advantages against the other, that the profile of consumers who usually purchase from them differ, and that not all products are equally suited to be commercialized online. Multichannel retailers should consider these issues while designing their marketing strategies across online and offline channels to be successful at both of them. In this sense, some interesting business strategies to induce the use of the online channel and improve its profitability are proposed also in the chapter.

Keywords: e-commerce, grocery shopping, multichannel retailing

JEL Classification: M3