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June 18, 2013

Consumers' desire for local, organic food drives online grocery business

(Continued)

"What we continue to see are varying business models -- everything from natural and organic to conventional, door to door delivery, centralized pick-up, bulk shopping and prepared meals," she said. "Door to Door isn’t trying to completely replace or eliminate traditional grocery shopping. We focus on helping people feed their families good food and becoming the place where a family begins their routine, weekly shop -- much more like your virtual neighborhood grocery or an online Trader Joe's."

There is as yet no standard model. Some online grocers, like Door to Door Organics, deal primarily with organic and locally-grown foods while others, like Relay, also offer canned goods, cereal and other packaged products. Door to Door, as its name implies, delivers directly to homes. Relay uses mostly pick-up locations, parking a truck in a heavily-traveled area where consumers can pick up their order on the way home. Home delivery is available for a $20 monthly fee.

Peapod, supermarket giant Ahold's service, eschews the emphasis on local and organic products and gears itself more to convenience, offering everything a shopper would find at the local Giant or Stop & Shop. AmazonFresh offers a full range of products but emphasizes organic and locally-grown foods. 

This kind of experimentation is good, Vaccaro and Katz agree.

"With only around 2 percent of a $600 billion food-at-home market happening online, competition is a good thing for expanding market awareness and driving innovation in quality, service, price and service expectations. Awareness and demand is great for us all," Vaccaro said.

For now, customers are primarily younger time-pressured families struggling to deal with work, commuting, childcare and serving fresh, healthful food.

A recent study by FGI Research found that more than half of digital shoppers were either young urban professionals and early tech adopters or what market researchers call "passionate planners," shoppers who put a lot of effort into planning their grocery purchases. Vaccaro says 95 percent of Door to Door's customers are women 25-45.

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