Seafood retailers not on board the e-commerce train need to hop on – and quickly. They are missing a potentially very lucrative piece of the business.
Led by growth in grocery delivery services such as AmazonFresh and Walmart To Go, total U.S. online grocery sales in 2014 will reach an estimated USD 27 billion (EUR 21.3 billion), according to strategic insight firm Brick Meet Click (BMC). By 2023, online grocery sales are projected to range between USD 80 billion (EUR 63.1 billion) and USD 123 billion (EUR 97 billion), BMC projects.
While e-commerce currently represents between 1 and 2 percent of food industry sales, Barrington, Ill.-based retail consulting firm Willard Bishop predicts that e-commerce’s share will continue its rapid annual growth rate of 9.5 percent through 2018.
“Shoppers seem to be getting over their concerns about having e-commerce operations select their fresh products for them,” said Jim Hertel, managing partner at Willard. “In fact, there is a sense that shoppers are beginning to believe that perishables are actually fresher when purchased via e-commerce…they haven’t spent time in the store.”
Amazon’s grocery delivery service is firmly entrenched in Seattle, San Francisco and Los Angeles. This month, AmazonFresh expanded to the East Coast, starting in Brooklyn’s Park Slope neighborhood. AmazonFresh seafood partners, such as Santa Monica, Calif.-based Santa Monica Seafood and Seattle, Wash.-based Pike Place Fish, a vendor inside Pike Place Market, are taking full advantage of consumers’ growing comfort level with buying perishables online.
“People are getting busier and busier. Anything you can do to have your presence online more and make it easier to shop in your place, the better it is for you,” Anders Miller, assistant manager of Pike Place Fish Market, said of the retailer’s relationship with AmazonFresh.
After starting with around 30 SKUs on AmazonFresh several years ago, Pike Place Fish now sells more than 100 fresh and frozen seafood SKUs and prepared items, such as its clam chowder, via the website. “AmazonFresh is steady and, during the leaner months such as after the [Christmas] holiday, Amazon stays pretty consistent. People are still ordering groceries,” Miller said.
The relationship with AmazonFresh over the years has been a good one, according to Miller. “We have a good presence on there. They are happy with us and promote it well.” Plus, Pike Place Fish has its order fulfillment system down fairly well. “We pack the fish behind the counter, while everything else is going on, including shipping orders. We have got it to where, from the beginning of printing off the orders to having them packaged, it takes one guy an hour a day,” Miller said.
In addition, Pike Place Fish has seen e-commerce sales from its own website grow to the point that it now represents around one-third of the retailer’s total sales. Miller believes its online orders have picked up because the retailer got better about keeping up with technology changes and utilizing “free” marketing such as e-newsletters. “For a long time, you couldn’t read our site on a mobile device and now you can. You have to keep up with the times,” Miller said.
Likewise, wholesaler and retailer Santa Monica Seafood is successful online, growing with AmazonFresh. Santa Monica Seafood started selling 15 fresh, frozen, and prepared SKUs via the service and is now up to 60 SKUs.
But AmazonFresh is not the only venue that seafood suppliers and retailers can join in on. There are a number of grocery-delivery services that are becoming more popular. Walmart To Go, for example, offers grocery delivery and pick-up-in-store options to its shoppers in Denver and Walmart will likely expand the program in the future.
Instacart, which delivers perishables and other foods from multiple retailers within hours, recently expanded to Washington, D.C., after having success in San Francisco, Boston and Chicago. In addition, Google recently expanded its Shopping Express service in Northern California, from Fresno to the Oregon border. Shopping Express, already available in San Francisco, Berkeley, Fremont and Oakland, Calif., offers same-day delivery of orders from major retailers such as Staples, Walgreens and Target.
Plus, many retailers and restaurants have operated successful seafood e-commerce sites for years. Take Boston, Mass.-based Legal Sea Foods. Its website also serves as a huge mail order operation, offering to ship everything from Surf and Turf packages to its New England Clam Chowder. E-commerce seafood companies such as Great-Alaska-Seafood.com have been in business for years, and have built a loyal following by overnight shipping fresh Alaska seafood, including crab legs and smoked salmon.
And then there are the multitude of independent fish markets and grocery store chains that offer online sales as a convenience to customers who may have moved out of the area or just desire a more convenient way to receive products. “Brick-and-mortar retailers (e.g. Ahold, Harris Teeter, Kroger and Shop-Rite) are stepping up their e-commerce efforts and trying to steal market share away from Amazon,” according to Willard Bishop’s recent “The Future of Food Retailing” report.