David Jinks - ParcelHero
"Huge hypermarkets will become a bit of a white elephant as people increasingly shop online"
David Jinks, Head of Consumer Research at ParcelHero, an online parcel broker in the UK, knows a thing or two about e-commerce and the online shopping world.
"Online grocery shopping is so much more convenient for people, it gets rid of that big weekly shop. There are many ways to do online shopping in the UK, through the likes of Amazon or Ocado or via the supermarket's own online facility.
"What we are seeing is that people are doing the big shop online and then supplementing that with visits to a convenience store through the week, on the way home from work for example. I think this will eventually lead to more smaller convenience shops and less huge supermarkets."
In some European countries it is a different story though: in The Netherlands for example, online grocery shopping has not really taken off in such a big way. The groceries are still mainly done in person at the supermarket. This may be due to the difference in the shopping cultures. In the UK there are out of town superstores based around major towns and cities, supplemented by far smaller supermarkets and convenience stores in smaller towns; while in the The Netherlands every village or small town has at least one decent sized supermarket, and there are no big hypermarkets which sell almost everything - supermarkets in The Netherlands only sell food and household supplies.
Each small town and village will also have a traditional market day and bigger towns have a general market through the week and a fresh produce and fresh food market on a Saturday, which are very well attended. In the UK if you live in a rural area there is not much choice but to shop either online or at a big supermarket in the nearest town and for people who can't travel, online shopping is ideal. The vast majority of UK towns have lost their traditional markets and, while Farmer's markets have seen a rise in popularity, their numbers remain limited.
In the UK even the older generation have embraced to the online shopping trend, for many it is simply easier than heading to town and carrying the shopping home, or for those without a car, it almost becomes essential.
Choosing fresh produce
But when shopping online how can you ensure that your bananas or avocados are just at the ripeness that you want?
The more upmarket online retailers such as Waitrose and Ocado use this question to promote online shopping by saying they will choose the fresh produce that you would choose yourself, you can even specify if you want your fruit ready to eat today or ready to eat in a couple of days. 'Just like you were in the store yourself'.
Amazon in Seattle, US, even have drive-through shopping: where you order online, this is ideal for people who don't want to wait at home for the delivery man to come or working people who can pick it up on the way home, or mums on the school run. They set up pick-up points and you can drive up to them and they put it straight in your car boot.
Amazon Go also has check-out-less stores, where you enter the store and choose the products, with your basket automatically scanning them as you go, and then the total is automatically added to your Amazon account so you are not held up by having to pay at the check out.
Amazon Prime is now offering one hour shopping deliveries, this is already widespread in the US and becoming more popular in the UK. "You order your shopping online and it is delivered to your door within an hour. You do pay extra for this service though and it is only available in urban areas, but it was only introduced 18 months ago in the UK and has spread rapidly and is now in over 20 cities," according to David.
In order to do this they had to build a huge logistic infrastructure to support it, and customers must be an Amazon Prime member, which you also pay for. According to the stats Amazon Prime members are 2/3 time more likely to spend their money with Amazon than non members.
"Setting up these big distribution centres is expensive but not as expensive as setting up big superstores and hypermarkets and delivering from there," says David. "It also eliminates a lot of waste as the produce is not on display and so can be stored in CA until it it is needed for an order.
"I think these huge hypermarkets will become a bit of a white elephant as people increasingly shop online and use convenience stores. These very large supermarkets need to be selling big quantities to keep the prices down and as soon as the prices increase they won't be so popular and will disappear."
The discounters have been winning the supermarket wars in the UK for the last few years but how are they faring in the online side?
"The discounters have been a bit slow to pick up this online trend, they are getting into gear with it now but in the last year they paid the price for not being on top of it," explains David. "The trouble for the discounters is that when you are starting with such low margin it is hard to add delivery costs and it also costs a lot so start up a delivery service."
The power of Amazon
When it comes to home delivery, Amazon had the advantage right from the start, as they have the scale and already had a delivery network in place.
Amazon are steadily increasing their product offering by delivering goods from local delicatessens etc, this works very well for both sides, the little delicatessen can use Amazon's distribution network to get their products out and offer added value to the customer and Amazon gets a wider product range for its customers.
UK supermarket Morrisons was in trouble around a year ago, but it has partnered with Amazon for deliveries and is now looking like being one of the more profitable ones. In fact, Morrisons today (09 March) reported a 50 per cent increase in profit for the year to 29 January.
These days you can buy almost anything from Amazon, from groceries to books to medicines.
The Chinese have been huge on everything online and are way ahead of the rest of the world with online shopping, but there seems to be whispers that some big online companies are slowly supplementing the online system by building physical shops where people can come in and buy goods.