4 ms·

This is an interesting concept. But I see a couple of issues: - You need physical stores. These take a lot of money and expertise to set up and run. And to exp

by retube 15y ago

This is an interesting concept. But I see a couple of issues: - You need physical stores. These take a lot of money and expertise to set up and run. And to expand/scale in any meaningful way will take a LOT of money. Plus of course you've got the added expense of having to actually do the shopping on behalf of your customers (ie walk round your inventory and fill the basket). Kind of the opposite to the Ikea model. As Ryan Air have conclusively proved, people will put up with ANYTHING if it's cheap(er). - Your stores are going to have to be as big as a supermarket to really be of use to people. And on the competition side: - What's the advantage over just ordering my goods online from a supermarket? I don't even need to go to the store then, they just get delivered to my front door. Or do supermarkets not do this in the US? IN the UK at any rate you can choose very specific delivery times as well. And on the marketing side: - 40 minutes in a grocery store? You can easily spend this much time online filling up your basket. Personally I've never felt that online ordering has saved me much time. The USP of online shopping is not time saving, it's "when" saving - I can do it during a quiet time at work for example. But with Ernies I still gotta go pick it up... - 73 hours per year? Doesn't sound like much to me. And walking round the store is healthier than sitting in front of your PC :)

billybob 15y ago
"Your stores are going to have to be as big as a supermarket to really be of use to people." Not necessarily. You could make more efficient use of space if you don't have to arrange the store to be customer-friendly. "I don't even need to go to the store then, they just get delivered to my front door. Or do supermarkets not do this in the US?" Most places, no. Where they do, it's more expensive. "Personally I've never felt that online ordering has saved me much time." It certainly could if it were done well. Don't you normally buy a lot of the same things? A good interface would remember that and help you reorder favorite items quickly. Also, groups of items - "all the stuff I need to make recipe X." The store could even upsell by suggesting a recipe and selling you all the items you need to make it, then including a printout of it. Think how quickly you could shop if you could specify the meals you want to make this week instead of looking for each item individually.
- retube 15y ago
  > You could make more efficient use of space if you don't have to arrange the store to be customer-friendly. I didn't mean physically particularly, I was thinking more about the range of inventory required. Let's imagine 80% of people want 20% the same stuff. So yeah you could optimise by stocking just that 20%. But I bet you people will move back to ordering from the supermarket where they can get 98% or 100% of what they want. It's just easier than ordering from two places, items don't get duped or missed and of course it's quicker.
- vegashacker 15y ago
  The "suggested recipes" idea is the rare kind of upsell that I would love to be offered. I never know what to buy at the grocery store, so I always end up buying the same 20 or so items.
jneal 15y ago
I live in the south east of the US (where this store is hoping to open) and there are no grocery stores that allow you to order online here. The only option is to go to the store and shop for yourself. You are right that you could spend 40 minutes filling up your online basket, but what if you could save your basket and re-order it the next time you "go shopping." Thus you fill up your basket with the items you already buy every time you go the grocery store, then you never have to fill it up again...Could be a big time saver. And 73 hours per year to me I think in terms of what else could I be doing with that time? My going rate is $80 per hour so that's $5840 I could be making instead of grocery shopping. And sure it's more fit to walk around the store, but perhaps I'd rather go to the gym and actually do a real work out?
- retube 15y ago
  From the sounds of things US supermarkets do not have the online and delivery presence that they do in the UK. I reckon the 4 major supermarkets here deliver to 98% of the population, same price as in-store with free delivery (hourly delivery spots do cost a bit extra though). So maybe there is a market for this across the pond. But then you've got the risk that the US supermarkets get their act together (and really it would amazing if they didn't).
  - halostatue 15y ago
    There's a bit of a market. I live where Grocery Gateway runs (Toronto). It went well and I even used it periodically for the first few years, but they ran into the problem that their costs (gas) went up dramatically and they had to make a number of changes. Ultimately, they were bought out by one of the local chains (Longos), who reduced their inventory even further and raised the delivery fee higher, so I haven't shopped with them in years. The biggest problem with grocery delivery in North America is going to be distance. Toronto is about 43km east-west by about 21km north-south, and the GTA is probably 100km east-west and 50km north-south. It's really hard to cover those distances in a time-effective manner, and refrigeration trucks are expensive to buy/lease and maintain; the 401 running through Toronto is one of the busiest highways in the world. You'd need to have the ability for a truck to be able to pull into any of your chain's stores and restock, and there you might run into problems because (a) not all stores are company stores (they may be franchisees; I'm not sure how common this is with grocery stores) and (b) the stores, even if not franchises, tend to do a lot of market segmentation meaning that you may not have all the same products because the neighbourhood has different needs.
rsbrown 15y ago
Good feedback, I appreciate it. "You need physical stores": Sort of. We need physical warehouses. The core of the Ernie's business model is that these locations will be much cheaper to operate than the traditional grocery storefront, therefore increasing net margins. They will take expertise to operate; luckily, this expertise is well-established and readily available. "Your stores are going to have to be as big as a supermarket": Not necessarily. Our SKU count will have to be big enough to be compelling. But Trader Joe's has proven that a very low SKU count can still be compelling if the value proposition is there. Trader Joe's value prop is low prices. Ernie's is convenience. On top of that, we're cramming our SKUs into a warehouse layout. Our real estate footprint will be much, much smaller than a supermarket. "What's the advantage over just ordering my goods online... ?": The advantage is in the operations model. Home delivery will always be a much more expensive grocery offering. This results in some combination of fees and/or higher prices. Ernie's is not price premium offering. No fees. It's cheaper for us to sell the same can of beans to you than it is for Safeway. Much less than a home delivery offering. "40 minutes in a grocery store? / 73 hours per year?": We'll just have to agree to disagree on these points. Those folks that hate wandering around the grocery (or have small children, or are physically challenged, or have better things to do with their time) are who we are marketing to. I, for one, look forward to getting 3 days of my life back every year. :)
- retube 15y ago
  Thoughtful responses. I am looking at this from a very UK perspective, so much of what I've said maybe (and indeed sounds like it is) not relevant to the US. Over here UK supermarkets have matured their online businesses very well. It's no more expensive than in-store and delivery is free to cheap depending on how narrow a delievry window you can handle. Plus of course the US is much larger geographically and much more car-focused, so it might be a much more viable business model. Either way - it's a big project. Good luck!
  - rsbrown 15y ago
    As I've done research for Ernie's, I have been extremely impressed with what the UK grocers have accomplished (led by Tesco). If I had to pick a single grocery supply chain as our "gold standard" to emulate, it would definitely be Tesco.
jgoewert 15y ago
[quote]- 40 minutes in a grocery store? You can easily spend this much time online filling up your basket. Personally I've never felt that online ordering has saved me much time. [/quote] Actually, there is something that I have been saving time with and if Ernie's does this, it would be wonderful. Amazon started creating the ability to have subscriptions for food items. Basically, stuff that I will go through every month and would have to fight my way through CostCo or Sams to get otherwise. For stuff with comparable prices, I may as well just have it shipped in free under Prime instead. My grocery list is 90% the same every week/two weeks so if I had a saved template to reorder from, that saves me the half hour of pacing the store to get the same exact stuff for the same price, I'd be all for it.

by retube 15y ago

billybob 15y ago

"Your stores are going to have to be as big as a supermarket to really be of use to people." Not necessarily. You could make more efficient use of space if you don't have to arrange the store to be customer-friendly. "I don't even need to go to the store then, they just get delivered to my front door. Or do supermarkets not do this in the US?" Most places, no. Where they do, it's more expensive. "Personally I've never felt that online ordering has saved me much time." It certainly could if it were done well. Don't you normally buy a lot of the same things? A good interface would remember that and help you reorder favorite items quickly. Also, groups of items - "all the stuff I need to make recipe X." The store could even upsell by suggesting a recipe and selling you all the items you need to make it, then including a printout of it. Think how quickly you could shop if you could specify the meals you want to make this week instead of looking for each item individually.

retube 15y ago
> You could make more efficient use of space if you don't have to arrange the store to be customer-friendly. I didn't mean physically particularly, I was thinking more about the range of inventory required. Let's imagine 80% of people want 20% the same stuff. So yeah you could optimise by stocking just that 20%. But I bet you people will move back to ordering from the supermarket where they can get 98% or 100% of what they want. It's just easier than ordering from two places, items don't get duped or missed and of course it's quicker.
vegashacker 15y ago
The "suggested recipes" idea is the rare kind of upsell that I would love to be offered. I never know what to buy at the grocery store, so I always end up buying the same 20 or so items.

jneal 15y ago

I live in the south east of the US (where this store is hoping to open) and there are no grocery stores that allow you to order online here. The only option is to go to the store and shop for yourself. You are right that you could spend 40 minutes filling up your online basket, but what if you could save your basket and re-order it the next time you "go shopping." Thus you fill up your basket with the items you already buy every time you go the grocery store, then you never have to fill it up again...Could be a big time saver. And 73 hours per year to me I think in terms of what else could I be doing with that time? My going rate is $80 per hour so that's $5840 I could be making instead of grocery shopping. And sure it's more fit to walk around the store, but perhaps I'd rather go to the gym and actually do a real work out?

retube 15y ago
From the sounds of things US supermarkets do not have the online and delivery presence that they do in the UK. I reckon the 4 major supermarkets here deliver to 98% of the population, same price as in-store with free delivery (hourly delivery spots do cost a bit extra though). So maybe there is a market for this across the pond. But then you've got the risk that the US supermarkets get their act together (and really it would amazing if they didn't).
- halostatue 15y ago
  There's a bit of a market. I live where Grocery Gateway runs (Toronto). It went well and I even used it periodically for the first few years, but they ran into the problem that their costs (gas) went up dramatically and they had to make a number of changes. Ultimately, they were bought out by one of the local chains (Longos), who reduced their inventory even further and raised the delivery fee higher, so I haven't shopped with them in years. The biggest problem with grocery delivery in North America is going to be distance. Toronto is about 43km east-west by about 21km north-south, and the GTA is probably 100km east-west and 50km north-south. It's really hard to cover those distances in a time-effective manner, and refrigeration trucks are expensive to buy/lease and maintain; the 401 running through Toronto is one of the busiest highways in the world. You'd need to have the ability for a truck to be able to pull into any of your chain's stores and restock, and there you might run into problems because (a) not all stores are company stores (they may be franchisees; I'm not sure how common this is with grocery stores) and (b) the stores, even if not franchises, tend to do a lot of market segmentation meaning that you may not have all the same products because the neighbourhood has different needs.

rsbrown 15y ago

Good feedback, I appreciate it. "You need physical stores": Sort of. We need physical warehouses. The core of the Ernie's business model is that these locations will be much cheaper to operate than the traditional grocery storefront, therefore increasing net margins. They will take expertise to operate; luckily, this expertise is well-established and readily available. "Your stores are going to have to be as big as a supermarket": Not necessarily. Our SKU count will have to be big enough to be compelling. But Trader Joe's has proven that a very low SKU count can still be compelling if the value proposition is there. Trader Joe's value prop is low prices. Ernie's is convenience. On top of that, we're cramming our SKUs into a warehouse layout. Our real estate footprint will be much, much smaller than a supermarket. "What's the advantage over just ordering my goods online... ?": The advantage is in the operations model. Home delivery will always be a much more expensive grocery offering. This results in some combination of fees and/or higher prices. Ernie's is not price premium offering. No fees. It's cheaper for us to sell the same can of beans to you than it is for Safeway. Much less than a home delivery offering. "40 minutes in a grocery store? / 73 hours per year?": We'll just have to agree to disagree on these points. Those folks that hate wandering around the grocery (or have small children, or are physically challenged, or have better things to do with their time) are who we are marketing to. I, for one, look forward to getting 3 days of my life back every year. :)

retube 15y ago
Thoughtful responses. I am looking at this from a very UK perspective, so much of what I've said maybe (and indeed sounds like it is) not relevant to the US. Over here UK supermarkets have matured their online businesses very well. It's no more expensive than in-store and delivery is free to cheap depending on how narrow a delievry window you can handle. Plus of course the US is much larger geographically and much more car-focused, so it might be a much more viable business model. Either way - it's a big project. Good luck!
- rsbrown 15y ago
  As I've done research for Ernie's, I have been extremely impressed with what the UK grocers have accomplished (led by Tesco). If I had to pick a single grocery supply chain as our "gold standard" to emulate, it would definitely be Tesco.

jgoewert 15y ago

[quote]- 40 minutes in a grocery store? You can easily spend this much time online filling up your basket. Personally I've never felt that online ordering has saved me much time. [/quote] Actually, there is something that I have been saving time with and if Ernie's does this, it would be wonderful. Amazon started creating the ability to have subscriptions for food items. Basically, stuff that I will go through every month and would have to fight my way through CostCo or Sams to get otherwise. For stuff with comparable prices, I may as well just have it shipped in free under Prime instead. My grocery list is 90% the same every week/two weeks so if I had a saved template to reorder from, that saves me the half hour of pacing the store to get the same exact stuff for the same price, I'd be all for it.