In 2009 we analyzed the market (link in French) of organic fruits and vegetables baskets in Belgium . We anticipated that some of the players on the market would soon die. What did actually happen ?
Consolidation happened
In 2009 the market was emerging and we took 3 players in our analysis : BioGusto, Cookitude, Reason2Be. We detected some serious problems in terms of online customer experience and online payment process and announced that we could hardly believe the 3 players could survive if they did nothing to improve. Our analysis proved unfortunately right.
Cookitude doesn’t exist anymore, Biogusto has only an online presence but it seems to have become an empty shell. Only Reason2Be is still alive and we were right also in 2009 in saying that Reason2Be was clearly better than its two competitors. They had a better marketing strategy, a better website, provided a better online experience.
How does the market look like today?
Obviously the market has changed and consumers are more than ever keen on organic products. Yet, as you may know, intentions do not always convert into actual sales and the price of organic products still impedes sales from taking up. Short circuits have therefore developed to allow better pricing, and the organic fruits/vegetable baskets are one solution in a constellation of many. Marketplace-type of websites like Efarmz are now offering products from a wider range of producers directly to consumers. This is definitely a very positive steps towards more convenience.
Although it is very unlikely that you can buy everything you need from a website like Efarmz, the situation is far better than it was in 2009 and you may very well limit your visit to the supermarket for some very particular products.
A serious impediment remains however in this business model.
Shipping and preparation costs are a major impediment
What Efarmz is doing wrong is that it puts a major hurdle by asking a preparation fee of 2.5€ per order, and a fixed fee of 6€ for the shipping (under 70€ and unless you go yourself to one of the collect points spread in Belgium’s major cities).
First of all the preparation fee of 2.5€ seems to be completely unreasonable. Why should a customer pay a merchant for preparing his/her order. When you go to the marketplace, do merchant ask you an extra fee to put your fruits/vegetables in a bag and handing it over to you?
Second, proposing free shipping above 70€ is an absolute killer in terms of sales. Not only is the limit far too high (at an average price of 3€ per kilogram of “standard” fruits/vegetables you’ll have to order 24 kg to get free shipping) but it should be set to almost 0€. Numerous studies have shown that consumers see no value in the transport and that any costs claimed for shipping are seen as worthless by customers. In terms of food consumers usually shop once a week. If you are a family of say 4, it is very unlikely (unless you are an organic food apostle) that you’ll spend more than 30€ on fruits and veggies. How do 6+2.5=8.5€ of shipping and handling costs compare to 30€ of food? Far too much.
Advice for your marketing strategy
E-merchants should include the price of transport in their items’ prices. The amazing success of Coolblue is based on just that: making a clear promise in terms of delivery (you order before 23:59 and you get you order the day after) and not charging the customer for it. It’s obviously easier for more expensive items, but Amazon and Coolblue also sell some cheaper stuff and the same rule apply (not always in the Mother Earth’s best interest as this example reveals). We’ll not come back on the importance of offering free returns in e-business. Just read the article we dedicated on that subject in 2013 where we showed how amazingly the metrics could be improved.
Posted in Marketing.
