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2020 Insights: Online retail

bp 2020 feature

When it comes to fresh purchases online, Kris Park, from the Food Industry Management Program at Cornell University in Ithaca, NY, is very optimistic.

“For the companies I’ve talked to, produce sales online are equivalent to in-store sales,” she says, noting online produce bestsellers tend to mirror in-store purchases with bananas, apples, tomatoes, and avocados doing well in both environments.

Sajal Rohatgi and Manav Thaker, cofounders of Subziwalla, based in Tucker, GA, say 90 percent of Subziwalla’s orders contain produce items, compared to less than 5 percent nationally for grocers, which they attribute to their focus on quality and service.

The company’s biggest sellers are herbs and leafy greens such as cilantro and spinach, as well as Roma tomatoes, bananas, and specialties such as Thai chilies and round eggplant.

Perceptions of quality, however, can be a challenge. The Lake Success, NY-basedRetail Feedback Group’s U.S. Online Grocery Shopper Study found 4 out of 10 consumers do purchase fresh produce as part of their online shopping, but produce was also the category with the highest percentage (46 percent) of shoppers citing quality issues.

“Just like in-store, things like freshness and quality are very important to online shoppers,” Brian Numainville, principal at Retail Feedback Group.

Both Steve Grinstead, CEO of the FreshEdge companies and Jill Overdorf, director of business development for foodservice at Naturipe Farms BB #:116078 in Salinas, CA, cite packaging as another challenge to online shopping.

Grinstead believes the industry “still has a lot of work to do in the area of packaging for this segment,” but believes online produce sales will continue to grow, despite the difficulties.

Overdorf says specialized packaging for berries in the online space is expensive and represents a barrier to purchase. “The perishability and fragility of berries makes online a challenge,” she says.

Instead, Naturipe is exploring another venue: contributing to salad mixes and fruit cups sold through refrigerated vending machines as a better distribution channel. Farmer’s Fridge is one of these businesses, currently operating in the Chicago, Indianapolis, and Milwaukee metro areas.

This is a multi-part series adapted from the January 2020 issue of Produce Blueprints, featuring a variety of experts predicting what will be top of mind in 2020.