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June 18, 2013

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

Just a few years ago, consumers who were fervent about eating locally-grown and organic foods had to head out to the nearest Whole Foods or farmers market.

Now all it takes is a few swipes of the mouse at an online grocer like Door to Door Organics, Relay Foods or AmazonFresh, which last week confirmed it was beginning to roll out its online shopping product beyond its home base of Seattle, opening operations in Los Angeles.

"Quick, easy and affordable doesn't have to mean highly processed," said Cambria Vaccaro, vice president of marketing for Colorado-based Door to Door Organics. "Every family can start making good food choices -- easily. In fact, 90 percent of the people who shop with us, say they eat more fruits and veggies, 88 percent say they’re doing a better job of supporting local, 88 percent say they feel healthier and 83 percent say it’s more convenient that other shopping options."

The boom in online grocery shopping has gone largely unnoticed by most consumers. That changes quickly, however, as entrepreneurial vendors spring up in new markets and word-of-mouth promotion attracts new shoppers.

In interviews with ConsumerAffairs, Vaccaro said her company has grown more than 800 percent in the last four years and expects to exceed that growth rate as it opens new markets and more fully develops existing ones while RelayFoods president and co-founder Arnie Katz is equally bullish about his firm's prospects.

"Our view is that in a decade over 25 to 50 percent of grocery purchases will be done online," Katz said. "The future doesn’t happen, doesn't happen, doesn't happen ... then it happens all at once. We are approaching that day. We think it will happen within the next two years."

Both agree that online grocers aren't expecting to completely eliminate traditional brick-and-mortar stores, although even shoppers who continue to travel to physical stores are increasingly using technology to improve the process. A new study from KSC Kreate finds that more than half (52 percent) of grocery shoppers visit a store's web or mobile site prior to shopping; in addition one-third are using mobile devices while in-store. It's not a stretch to say those shoppers are one click away from moving the entire experience online.

Business models vary

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