GURU ECOMMERCE
***********CASE WILL BE POSTED WITHIN 7 HOURS*********
eCommerece case in 1998;
1)SWOT Business Analysis
2IT Management Strategy: Buy or Build ?
3)To solve new customer acquisition problem using IT, e.g. CRM;
4)To solve operation efficiency problem using IT, e.g. SCM;
5)If you are hired CEO starting July 3, 2020 (5 to 10 term), please propose all potential new IT and solutions to equip your company and make a successful business ahead, e.g. Big Data, 5G, Cloud Computing, IoTs, AR/VR, 3D, AI, Blockchain, etc.
Option 5: Investor Pitching PPT (<= 12 pages) to cover Q1-4, and propose new IT tools: .g. Big Data, 5G, Cloud Computing, IoTs, AR/VR, 3D, AI, Blockchain, etc. 9A98E019 HOMEGROCER.COM David Beckow and Professor Sid L. Huff prepared this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [emailprotected]; www.iveycases.com. Copyright 1998, Richard Ivey School of Business Foundation Version: 2017-05-18 Were using only three trucks, we own ten, and we have yet another ten on order. We had better be right about this thing. Mike Donald had reason to be concerned. Having spent three years and four million private investor and venture capital dollars (including over $100,000 of his own money) to build the Pacific Northwests first online, Internet-based grocery store, he was finding that new customers were signing on more slowly than expected. Were learning that Homegrocer is a deep sell, noted Donald as he bit his lip and glanced across his desk. He was referring to the fact that winning new ongoing customers was proving to be a lot more difficult than simply letting people know that Homegrocer was open for business. A NEW BUSINESS MODEL What makes Homegrocer unique is that it turns the traditional e-commerce business model on its head, exclaimed Terry Drayton, as he headed to yet another meeting with investors. Whereas the traditional Internet business model promises massive economies of scale and efficiency gains through its access to a worldwide market, Homegrocer is trying to make the model work while focusing on only a few square miles of territory. Located in Bellevue, Washington, Homegrocer consisted of a warehouse facility plus an Internet website that allowed wired consumers to log on, purchase groceries via credit card, and have them delivered to their door within 24 hours. Customers could not actually walk into the Homegrocer building, but instead had to order everything over the web. Corporate offices and the sole distribution center were built into a warehouse the size of a Boeing 727 hanger (see Exhibit 1A). Every morning trucks pulled into the loading bay of the warehouse, where each was loaded with the groceries of approximately 30 to 40 customers. Trucks were filled by pickers who wore a Borg-like prosthetic that stretched from their forearm down to the end of their fingers. The LCD screens on their wrists instructed them where to go in the warehouse and what to pick. Upon picking the item, they scanned it with the laser mounted onto the end of their index finger. This approach allowed the company to keep a real-time inventory of every item in the warehouse that, in turn, enabled a very efficient just-in-time replenishment strategy. A ut ho riz ed fo r us e on ly b y S am ee ra T hi la ka ra th na in C M P T 6 40 a t U ni ve rs ity C an ad a W es t f ro m A pr 0 1, 2 02 0 to J ul 0 9, 2 02 0. U se o ut si de th es e pa ra m et er s is a c op yr ig ht v io la tio n. Page 2 9A98E019 As the trucks were being loaded with their days worth of deliveries, a sophisticated routing computer was determining the most efficient route for each truck. This route plan was provided to the driver, who then left to make his deliveries. The routing system was a third-party purchased system, essentially the same system currently used by UPS. Homegrocer had plans to enhance the system by adding a global positioning component that would continuously update the location of trucks to the routing system. That would allow the routing system to make adjustments for local traffic conditions as well as current vehicle locations. Effectiveness of the routing system was important because customers could choose any 45- minute window in which their groceries were delivered. To date, the company had delivered groceries within its requested envelope approximately 98 per cent of the time. Mike Donald elaborated: Orders from customers come right into our server. They are then transferred to our software supplier in Vancouver. He then takes the orders off the server at midnight, converts them, and sends them back down to us. Once we get an order, its put into the routing system, the routes are developed, items are sent out to the picking system and the orders are picked in a certain sequence and are put on a truck. The actual charge for the order is calculated after the order is picked and scanned, so that customers are only billed for what they receive. Trucks go out at about one PM, and continue delivering up until nine oclock at night. You get a copy of the order when its delivered. The customer has to be home to accept delivery. However, customers can schedule delivery times, in 45- minute windows, when they place an order. COMPETITION Homegrocer was not the first Internet-based grocery delivery service to begin operation. Several other players, including Netgrocer and Peapod, had been operating for some time. NetGrocer (see Exhibit 2A) offered national service, but only sold shelf-stable products. Orders took four to five days to be delivered via courier. Netgrocer offered low prices on many products. The Peapod approach was somewhat different (see Exhibit 2B), focusing more on building expertise in the software and logistics surrounding Internet grocery home delivery. The company contracted its expertise to existing grocery operations, such as Safeway, who wished to enter the Internet home delivery market. An existing grocery chain entering the Internet delivery business benefited from two key competitive advantages. First, since the existing grocery outlet already served traditional customers, further utilizing the facility to serve the home shopper produced little additional operating cost. Second, existing grocery chains, such as Safeway, had both a recognizable name and brand equity, which new startups, such as Homegrocer, lacked. Nonetheless, differences between the traditional grocery business and this new business model remained vast. Donald commented: Building a grocery store on the Internet is a very different business from running a traditional grocery business. There is a tremendous amount of integration work to be done in order for the software components to function together properly. Also, the labor component must be minimized. Without automated ordering and automated routing, you need too many people to perform basic clerical operations. Delivery and picking accuracy fail if you have people on phones and by the fax machine, and the whole labor component A ut ho riz ed fo r us e on ly b y S am ee ra T hi la ka ra th na in C M P T 6 40 a t U ni ve rs ity C an ad a W es t f ro m A pr 0 1, 2 02 0 to J ul 0 9, 2 02 0. U se o ut si de th es e pa ra m et er s is a c op yr ig ht v io la tio n. Page 3 9A98E019 gets out of hand very quickly. So its really critical that you get the right systems and software in place from the outset. People ask me what are the barriers to entry? They try to tell me that everybodys going to be in this business in the course of a year. Well, the most likely competition is the regular grocery chains, but theyre so busy doing what theyre trying to do to maintain market share they dont have the time or the people to think about it. Theyre all grocery people. They dont have the technical expertise to understand this new type of business. Companies that are out there running grocery businesses are nowhere near ready to jump into the Internet on their own. One thing weve learned is that the biggest barrier to entry is just the overall complexity of the task. HOMEGROCER ADVANTAGES Homegrocer was unique because it eliminated many of the costs associated with the traditional retail setting. For example, a traditional grocery store would normally be located in a desirable retail district in close proximity to customers. It therefore bore the high costs associated with its location (premium rents both for the store and for sufficient parking, high property taxes, etc). Homegrocer, on the other hand, was located in a much less expensive industrial district; hence, it was not subject to the same high costs as would be mandated by an appropriate retail setting. Homegrocer also benefited from not having to position stock for retail display. In a conventional grocery store, large displays of produce had to be kept cool by refrigerators that pumped cold air straight through the produce and into the store. Because Homegrocer customers only saw an online display of groceries they were buying not the real thing there was no need to store inventory in this fashion. Produce was stored in a large walk-in refrigerator, which was much more efficient than conventional store storage, and resulted in substantial power savings. Also, because large amounts of inventory were necessary to make an attractive display, greater inventory levels with correspondingly higher carrying costs were required by traditional grocery stores. Further, regular stores incurred more spoilage (which must be written off) than did Homegrocer with its JIT system. Finally, Homegrocer was able to deliver a superior product to the consumer. Donald elaborated, We dont order the perishable products until our customers have ordered them from us. As a result, we have the freshest product available. The produce is better, the fish is fresher, and the meat is restaurant quality. The savings possible through the kind of system Homegrocer had established were substantial. Traditional grocery store chains operated with a 28 per cent gross margin, but carried just one per cent or less to the bottom line. While Homegrocer achieved the same 28 per cent gross margins as its rivals (its groceries were priced to sell neither at a premium nor a discount), Mike Donald anticipated that its efficiencies should allow it to carry almost seven per cent to the bottom line. Hence, in theory, Homegrocer should be about six times as profitable as a conventional grocery store. While the potential savings and efficiency gains inherent in Homegrocers system were enticing, up-front costs were substantial. Design of the Homegrocer website alone cost the firm over US$750,000. Considering most successful electronic commerce sites redesigned their websites from the ground up every few years, this was a rather significant cost that a conventional grocery store would not incur. As A ut ho riz ed fo r us e on ly b y S am ee ra T hi la ka ra th na in C M P T 6 40 a t U ni ve rs ity C an ad a W es t f ro m A pr 0 1, 2 02 0 to J ul 0 9, 2 02 0. U se o ut si de th es e pa ra m et er s is a c op yr ig ht v io la tio n. Page 4 9A98E019 well, Homegrocers fleet of refrigerated delivery trucks represented another cost most bricks-and- mortar grocery stores did not face. THE TECHNOLOGY Because of managements lack of IT expertise, Homegrocer outsourced all software and back office system development efforts. Back office and administrative software was purchased largely off the shelf and then modified. Design and maintenance had, to date, been outsourced as well. However, this was beginning to change. Management had begun to realize that, to gain some control over its future development potential, the firm had to take closer control over its IT. According to Donald, effective integration of various technologies formed a substantial barrier to entry, which served to keep traditional grocery stores out of the online delivery business. To that end, the company had begun to hire in-house developers to reduce its reliance on external IT consulting and development firms. While this practice was adding to overhead in the short term, management felt that development of this capability in house would help the firm develop a sustainable competitive advantage. MANAGEMENT Homegrocer was the brainchild of Mike Donalds forum group in the Young Entrepreneurs Organization. The group met occasionally to discuss business opportunities and challenges. Initial discussions about the viability of an Internet-based grocery store took place at Bridges Pub in downtown Vancouver, following YEO Forum Group meetings. Mike Donald was also President of Concord Sales, one of the largest food brokers in British Columbia, and had worked much of his life in the grocery trade. Over the years, he had developed a deep understanding of the grocery business. Donald was joined in the venture by Terry Drayton, another YEO member. Drayton had been working with Loblaws in Ontario to develop home delivery of groceries (without the use of the Internet). Drayton had recently divested himself of Crystal Springs Water Co., a company he had founded ten years before, and was looking to move his career in a new direction. The water business had given him a solid understanding of distribution and home delivery. An MBA with a penchant for academia, he had recently enrolled in UBCs Business Ph.D. Program. However, after he had rediscovered the idea, four more years in school gave way to the excitement of a new business startup. Mike Donald also asked a friend of the family with a history of high tech experience, Ken Deering, to come in and help create the system structure. Drayton came on board as President of Homegrocer, and Donald as Executive Vice President. Donald and Drayton became equal partners; Deering, not having the financing of the others, remained on as an employee. FINANCING ISSUES Homegrocer began on a shoestring, with Mike Donald, Terry Drayton and seed investors funding the first $300,000. As the company business plan began to take shape, James Wilson approached private investors and VC firms in hopes of raising the approximately four million dollars the project required. A ut ho riz ed fo r us e on ly b y S am ee ra T hi la ka ra th na in C M P T 6 40 a t U ni ve rs ity C an ad a W es t f ro m A pr 0 1, 2 02 0 to J ul 0 9, 2 02 0. U se o ut si de th es e pa ra m et er s is a c op yr ig ht v io la tio n. Page 5 9A98E019 One impediment to financing the startup was the initial choice of geographic location. Because the principals all resided in BC, Vancouver seemed a natural location for the company. However, potential investors disagreed. Donald explained: We went to San Francisco to a big trade show and we talked to some investment companies who said, Yeah, thats a really good idea, where are you starting out? We said, Vancouver, and they said, Why there? We said, Well, thats where we live. They would say, Okay, whatever, and then off they would go, and wed never see them again. At one point, a potential institutional investor suggested that the same deal in a techno-sexy town, such as Seattle or Santa Barbara, would make the deal significantly more attractive. In addition, the favorable tax environment offered to firms (and resident employees) in the U.S. further enhanced the financial appeal of the deal. Donald observed: As soon as we changed it to Seattle, everybody perked up and loved the idea. We figured the US was the place to be anyway, because in Canada, there may be a handful of cities you can do well in, while in the US there are hundreds. Furthermore, Mike Donald was of the opinion that if they couldnt make the Homegrocer business work in the Seattle area, with its high proportion of Internet-adept, high tech-oriented workaholics, it seemed unlikely it would work anywhere. Some of the initial financing was secured very creatively by finding people who were willing to work for free initially. According to Donald: In October 1996, we brought in a few people who were out of work at the time. We were lucky to find a delivery guy who would work for nothing and accrue his salary. There were software programmers who worked for nothing with the understanding that once we started to bring in some money, they would start getting paid. The project is so exciting and has so much potential that people wanted to volunteer. The consultant who came in to be our project manager we have now hired on permanently. On more than one occasion, the firm was technically insolvent, and relied on small injections of equity from the principals, as well as services in-kind from employees. However, the firm managed to stay afloat and the principals continued searching for a more permanent source of growth financing. Drayton was able to arrange meetings with a number of VCs. The jewel was Kleiner Perkins, a highly respected high-technology venture capital firm. The merits of a Kleiner underwriting went well beyond the funding provided, per se. The prestige and respect within the e-commerce and investment banking community that accrued from a Kleiner deal often exceeded the actual financing provided, severalfold. Kleiner did not come quickly, however. These folks take the due diligence process pretty damn seriously, remarked Donald with a wry grin. In fact, the entire first round of financing was obtained through local angel investors, plus a major contribution from an Australian friend of Terrys, whom Terry had earlier helped with a business venture in Australia. The need for a major VC like Kleiner still existed, however. Eventually, Kliener completed its due diligence process and was satisfied Homegrocer would be a good investment. A special secondary round of financing was opened to accommodate them. As a result, more than twice the projected financing needs were raised. As it turned out, that was A ut ho riz ed fo r us e on ly b y S am ee ra T hi la ka ra th na in C M P T 6 40 a t U ni ve rs ity C an ad a W es t f ro m A pr 0 1, 2 02 0 to J ul 0 9, 2 02 0. U se o ut si de th es e pa ra m et er s is a c op yr ig ht v io la tio n. Page 6 9A98E019 fortuitous, because the company experienced major cost overruns on its software development, and other parts of the business plan needed to be accelerated. As well, with Kleiner on board, Homegrocers ability to raise more funds inexpensively in the future was greatly enhanced. STARTUP AND GROWTH Homegrocer was located near Seattle in Washington State, partly because the local market contained one of the densest wired populations anywhere. Home to a host of high-tech firms led by Microsoft and Boeing, the Belleview area provided an ideal testing ground to prove the new business model. Homegrocer opened for business in May 1998. Within a month, it had acquired approximately 300 customers. A customer was defined as someone who ordered groceries online three times per month, and purchased at least $75 per order (orders under $75 were subject to a $10 delivery fee). To break even, Mike Donald estimated that the company needed 4000 such customers. Significant profitability would be achieved when the firm attained between 5000 and 7000 customers. Growth projections were based on the current numbers drawn from the wired community as well as projected internet usage growth over the next several years. Homegrocers five-year plan included opening 30 outlets across the US. Expansion was to begin up and down the West Coast, and then spread eastward. Donald expected that the expertise they developed in the initial Bellevue site would reduce both the start-up costs and the learning curve associated with each new location. Further, the proprietary back-end computer technology, as well as the firms website, could be duplicated at very little cost, making additional location start-up costs dependent almost entirely on building and improvements. Donald believed the greatest challenge to getting the necessary customer base was that each new customer acquisition required a very deep sell. When asked to explain, he responded: Because it (ordering groceries online) is such a drastic change in behavior, it demands that you completely change a certain aspect of your way of life. Grocery shopping is not only enjoyable to some people but its also pretty systemic. People go to the store not knowing what they want. They rely on the trip to the store to trigger whole patterns of behavior. A lot of people today would argue that couples with both people working would rather just sit at their terminal at work during their coffee break and click on your site For sure, those people are easy to get. But if youre just a couple, youre not buying enough groceries to make it worthwhile. We need couples with families. Some of the findings that are coming out of other projects across the country are that people on the Internet shop three or four times and then they start to long for the grocery store experience, they miss it. Youve got to be able to make the shopping experience fun and be able to bring new items out to people. The goal is to get three shops a month. If we can do that, were successful. The Homegrocer opening web page, at http://www.homegrocer.com, was quite simple. There was a dialogue box requesting a username and password for current customers, and there were hyperlinks directing prospective customers to both a sign-up page and a quick tour of the website. The rest of the site was designed as one might expect, with category hyperlinks, which, when clicked on, brought up individual category items. Some individual products were accompanied by a picture, while others were not. Exhibits 3A and 3B illustrate pages from the companys website. A ut ho riz ed fo r us e on ly b y S am ee ra T hi la ka ra th na in C M P T 6 40 a t U ni ve rs ity C an ad a W es t f ro m A pr 0 1, 2 02 0 to J ul 0 9, 2 02 0. U se o ut si de th es e pa ra m et er s is a c op yr ig ht v io la tio n. Page 7 9A98E019 The ideal customer for Homegrocer was a family of four. Such families were most likely to place individual grocery orders in excess of the $75 minimum. To encourage new customers to try out Homegrocers service, first-time customers could order any quantity of groceries they desired and have them delivered free of charge. After that, Homegrocer charged a $10 delivery fee for orders less than $75. The groceries themselves were priced comparably with average walk-in grocery stores. There was some concern at Homegrocer regarding the effect of charging a substantial delivery fee for smaller deliveries, and the firms pricing approach was a matter of continuing debate. Homegrocer also planned to charge an annual $35 membership fee, but to entice customers, waived the fee for the first year. Whether they would implement the membership fee idea remained to be seen. In an attempt to generate traffic to the web site, Homegrocer advertised its services in the newspaper as well as through direct mail. It also benefited from its large, easily identified delivery trucks (see Exhibit 1B) roaming the streets delivering groceries. Homegrocer directed its drivers, when not delivering groceries, to distribute door hanger advertising in targeted neighborhoods. They also occasionally directed the drivers to simply drive around the Belleview neighborhoods when not otherwise occupied, so people would see their trucks and become familiar with the logo and name. A smattering of other advertising options had been proposed, but none had been implemented yet, as management was unclear about which promotional options made sense for them. Homegrocer also looked for ways to utilize the informational aspects of the Internet to better serve its customers. One idea they had implemented was the online recipe. A customer could create a personal recipe and save it on the Homegrocer site. Later, clicking on the recipe would automatically load all the necessary ingredients into the customers shopping cart. Homegrocer also offered its own recipes that customers could try out. Despite all these efforts, drawing in new customers had proven to be difficult. Consumers seemed reticent to try the service for the first time. There were several possible reasons for this. The first was that customers might be reluctant to transmit credit card information over the net. Second, there might be a general perception that groceries purchased online were not as fresh as groceries picked up at a store. A third reason was that customers might actually crave the shopping experience, and that a virtual shop precluded the enjoyable impulsive, inspirational purchases made at a conventional grocery store. It appeared to Donald that potential new customers had to visit the site several times before making the decision to sign up and try out the service. THE ROAD AHEAD Recent studies by Forrester Research, Andersen Consulting, Jupiter Communications and The Yankee Capital group all pointed to rapid growth in the Internet grocery business (see Exhibit 4). Unfortunately, these studies did not indicate which approach would win the day. Were firms like Peapod, which piggybacked on existing conventional grocery stores, going to be the big winners? Or would firms like Netgrocer, dealing only in non-perishable goods but offering a wide range of products and servicing the entire country by shipping long distances, be the winners? Or was Homegrocers approach, providing a full line of groceries via a lower-cost warehouse, the right solution? Or perhaps all three? As July turned into August, Mike Donald wondered what lay ahead for the firm. Did their assumptions under this new business model still hold? Was the pricing model the right one? Would senior managements lack of IT experience, and the decision to outsource software development, prove to be a A ut ho riz ed fo r us e on ly b y S am ee ra T hi la ka ra th na in C M P T 6 40 a t U ni ve rs ity C an ad a W es t f ro m A pr 0 1, 2 02 0 to J ul 0 9, 2 02 0. U se o ut si de th es e pa ra m et er s is a c op yr ig ht v io la tio n. Page 8 9A98E019 constraint down the road? Would financing for expansion continue to be as readily available in the future as it had been in the past? Finally, what would it take to get new customers to try the service in sufficient numbers, and subsequently become permanent customers? And these were only the obvious questions. Several more subtle issues lay just beneath the surface. A ut ho riz ed fo r us e on ly b y S am ee ra T hi la ka ra th na in C M P T 6 40 a t U ni ve rs ity C an ad a W es t f ro m A pr 0 1, 2 02 0 to J ul 0 9, 2 02 0. U se o ut si de th es e pa ra m et er s is a c op yr ig ht v io la tio n. Page 9 9A98E019 Exhibit 1 (A and B) HOMEGROCERS WAREHOUSE AND A HOMEGROCER DELIVERY TRUCK A ut ho riz ed fo r us e on ly b y S am ee ra T hi la ka ra th na in C M P T 6 40 a t U ni ve rs ity C an ad a W es t f ro m A pr 0 1, 2 02 0 to J ul 0 9, 2 02 0. U se o ut si de th es e pa ra m et er s is a c op yr ig ht v io la tio n. Page 10 9A98E019 Exhibit 2A NETGROCERS WEBSITE OPENING PAGE Source: http://www.netgrocer.com, November 1998 A ut ho riz ed fo r us e on ly b y S am ee ra T hi la ka ra th na in C M P T 6 40 a t U ni ve rs ity C an ad a W es t f ro m A pr 0 1, 2 02 0 to J ul 0 9, 2 02 0. U se o ut si de th es e pa ra m et er s is a c op yr ig ht v io la tio n. Page 11 9A98E019 Exhibit 2B PEAPODS WEBSITE OPENING PAGE Source: http://www.peapod.com, November 1998 A ut ho riz ed fo r us e on ly b y S am ee ra T hi la ka ra th na in C M P T 6 40 a t U ni ve rs ity C an ad a W es t f ro m A pr 0 1, 2 02 0 to J ul 0 9, 2 02 0. U se o ut si de th es e pa ra m et er s is a c op yr ig ht v io la tio n. Page 12 9A98E019 Exhibit 3A HOMEGROCERS WEBSITE OPENING PAGE Source: http://www.homegrocer.com, November 1998. A ut ho riz ed fo r us e on ly b y S am ee ra T hi la ka ra th na in C M P T 6 40 a t U ni ve rs ity C an ad a W es t f ro m A pr 0 1, 2 02 0 to J ul 0 9, 2 02 0. U se o ut si de th es e pa ra m et er s is a c op yr ig ht v io la tio n. Page 13 9A98E019 Exhibit 3B HOMEGROCERS WEBSITE TYPICAL GROCERY SHOPPING PAGE Source: http://www.homegrocer.com, November 1998 A ut ho riz ed fo r us e on ly b y S am ee ra T hi la ka ra th na in C M P T 6 40 a t U ni ve rs ity C an ad a W es t f ro m A pr 0 1, 2 02 0 to J ul 0 9, 2 02 0. U se o ut si de th es e pa ra m et er s is a c op yr ig ht v io la tio n. Page 14 9A98E019 Exhibit 4 RECENT FORECASTS ABOUT THE INTERNET GROCERY BUSINESS Online Grocery Shopping Projections* September 21, 1998 Analysts are predicting that online grocery shopping could be worth as much as USD1 billion by the year 2000. Andersen Consulting reckon that the market for groceries and retail items such as stamps and photographic services could reach USD85 billion by the year 2000. Meanwhile in another case of disparate projections, Jupiter Communications predict that online grocery revenue will reach USD2.2 billion by 2000 while The Yankee Group put that figure at over USD6 billion. Netsmart recently conducted research which showed that the primary reason people would shop online was for convenience (68 per cent). Sixty six per cent were attracted by the idea of 24-hour access; 60 per cent said it would save time; 57 per cent said it would save money; and 47 per cent were attracted by the idea of comparing prices from the comfort of a PC/Web application. * Excerpted from: The Industry Standard: newsmagazine of The Internet Economy http://www.thestandard.com/ Online Grocery Market Will Remain Tiny* October 2, 1998 The sale of groceries online is predicted to generate USD10.8 billion by 2003 but the fledgling industry still has a long way to go before making an impact on the overall grocery market, according to Forrester Research. While the amount of money that will be spent buying groceries online will increase dramatically on a year-to-year basis, by 2003 this will still only account for two per cent of the whole grocery market. Forrester noted that geographic location, lack of significant demand, delivery fees and a lack of stability in the market were factors impeding the growth of online grocery shopping. The market is expected to remain tiny for the next five years despite a projected 92 per cent growth rate. Convenience is the main attraction of online
