Selling the power of convenience


17 Jul 2003

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Where supermarkets are concerned, the internet is often seen as a threat as much as an opportunity, but Geraldine Penney (pictured) strongly disagrees.

The business manager at Superquinn4food.ie debunks the notion that because shoppers are not tempted by impulse purchases as they traipse up and down aisles they spend a lot less money online. “On average our online shoppers spend twice as much as our instore shoppers,” she says with evident satisfaction. While it is true that online shoppers tend to shop less frequently than their offline counterparts, they still spend more overall, she adds.

Another common argument against online grocers is that they simply cannibalise the existing customer base and create little in new revenue streams. This might explain why some well-known chains, such as Dunnes Stores, have no online store. But again, Penney has her ammunition ready. “Our research tells us that four out of every ten people using Superquinn4food.ie used to shop at competing supermarkets. That’s a whole new revenue stream we’ve generated.”

Penney was speaking to siliconrepublic.com following the launch last weekend of a new service, Click&Collect, which allows Superquinn customers to shop online but collect their shopping at a dedicated drive-in collection centre at the Lucan branch of the supermarket. Groceries are ready for collection within three hours of ordering and are loaded into a customer’s car on arrival. If the Lucan depot is successful, the Click&Collect concept will be extended to the other 18 Superquinns in greater Dublin.

For all that, it seems a service of dubious value. After all, what’s the point of shopping online if you have to go and collect the groceries yourself? Moreover, the €5 online shopping fee still applies to users of the new service, so there’s no financial incentive either.

“The reason for Click&Collect is a recognition that there’s a whole group of people who want the convenience of shopping online but don’t want the inconvenience of waiting at home for a delivery. We’ve had customers come up and ask us for this service,” says Penney, adding that the €5 fee stays because the cost of picking and packing the goods still needs to be covered.

The collection depot is yet another example of Superquinn’s famed customer service ethos upon which the supermarket’s reputation has been built. But Penney points out that service is not just about offering customers something extra; it also promises to generate new business by bringing online shopping to groups of consumers that are outside the current catchment area of the Superquinn stores. So for example Kildare shoppers will be able to order their groceries online and then collect them from the Lucan branch if they doing some shopping in the nearby Liffey Valley centre.

Penney joined Superquinn two years ago, following a ten-year stint with food processor Glanbia after which she worked on Ingredientsnet.com, the now defunct joint venture between Glanbia and Fyffes, which was designed to help consumer goods companies to buy their global ingredients requirements in one trading transaction.

Superquinn4food.ie is an altogether sturdier proposition. Ireland’s first online grocer when in launched in October 2000, it is accessible through both its own web address and through the shopping portal Buy4Now.ie, which also provides the technical platform for the Superquinn site. The website has 45,000 registered members in Dublin, Meath, Kildare and Wicklow and processes about 2,500 orders every week.

As a private company, Superquinn does not make its results public so the revenue and profits generated by the online arm are not known. Penney will only confirm that the website is profitable and highly successful – a success she attributes to harnessing the power of the Superquinn brand.

“The Superquinn brand is so strong,” she enthuses. “The trust and customer service I don’t think can be beaten by anyone else. We simply bring convenience to the brand. I think we’ve been so successful online because the Irish consumer trusts the Superquinn brand.”

Living up the brand promise is what the website is all about, she believes. “What is critical to our business is that every order a customer receives is on time and in the right condition, as if they were in a [physical] shop.”

She feels the best thing about being the web arm of an existing business is the degree of autonomy you have. “You stand alone within your main company so you can react much faster. It’s been proven with successful internet companies that there is a certain level of autonomy that enables you to make decisions relevant to your customer group fast.”

While the website generates most of its revenue from shopping, marketing services offered to trading partners also contribute an unspecified chunk to its top line. For example, Brand Facts is a service where brand owners can acquire market share data for their brands based on the number of units it is selling through Superquinn outlets.

A second offering called Brand Sample enables a brand owner to bundle its new product with all the deliveries in a given week. “That’s critical for, say, people in the chilled or frozen business who’ve no way of getting a product to a sample group intact,” Penney notes.

Finally, there is a category management service through which a supplier like Coca-Cola can ‘buy’ the soft drinks category on the site and do branding and promotional activity around that.

Penney clearly believes that online grocery sites have much to offer traditional supermarkets: more profit, more revenue and an additional strand of convenience for shoppers. Does she expect rivals such as Dunnes to muscle into the online space? “I really hope not,” she says laughing but then adds on thoughtful note: “I wonder if they have left it too late. When you have an online customer, they are likely to be extremely loyal because there’s a bit of effort required to compile your first shopping list and so on.” New entrants would find it hard to prise customers away, she feels.

Regardless of whether Dunnes does or does not move online the internet shopping market will continue to grow spurred on, feels Penney, by the recent introduction of flat-rate internet access and the growing acceptance of broadband.

By Brian Skelly