E-commerce is generating great expectations for fruit and vegetables, one of the most advanced sectors in technological terms, which are now being sold online with some promising results.
Online fruit and vegetable sales are here to stay. Allied to the technologies used in production and traceability systems, the fruit and vegetable sector is striving not to get left behind in a sales model that is growing at a dizzying pace and in which other categories are now firmly established. Online purchases of clothes and footwear, which were looked upon with great caution just a short time ago, have now become a trend that is spreading to other segments, such as fresh food.
For almost a decade, China and the United States have taken the lead by including fruit and vegetables with countless online sales references. Although there are very different opinions about the future of the digital sales of these products, the reality is that in our country there is still room for them to triumph, and the evolution of online purchases is looking good.
The B2B (Business to Business) and B2C (Business to Consumer) facets are new commercial challenges for fruit and vegetables in Spain, a sector that leads national exports and which has an enormous playing field available through digital retailers like Amazon, Alibaba, Glovo and leading Spanish and European supermarket chains, SMEs and local traders. If the Spanish fruit and vegetables sector has conquered the markets of the five continents, why not this one?
These companies have not been slow to recognise that this sector has huge growth potential and high expectations. According to the FoodIsDigital report, released in 2017 by IPSOS, the largest independent market research institute in the world, food is already the ninth e-commerce category in our country, accounting for 3.7 percent of all Spanish digital purchases. Four in ten food orders are already made online. The same study shows that perishable products, such as fruit and vegetables, are on the way up (44%), although they are still far behind others such as packaged food (88%), beverages (82%) and dairy products (64%).
There are some significant differences in the findings regarding the speed of progress in the perishable food sector, although most agree that year-on-year growth in online fruit and vegetable sales is strong. In fact, the ‘Report on consumption and food in Spain 2016’, published by the Ministry of Agriculture and Fisheries, Food and Environment, reveals that online sales account for only one percent in volume and value of food overall and 0.4 percent in fresh food, a very small share compared to other places where these products account for percentages up to 30 times higher. However, in just one year, looking at online food sales overall, fruit and vegetables grew by 32.2 per cent and 27.7 per cent respectively.
Moving in the right direction
Despite these data, the reality of e-commerce is moving in the right direction every day. According to El Corte Inglés, “fresh products are increasingly important in the digital basket, especially fruit and vegetables”, an opinion shared by French chain Carrefour for which “the fresh category is occupying a larger share of the basket” considering the online mode “a great opportunity in the coming years”. One-hundred-per-cent online supermarket Ulabox says that “more than half of its first-time customers include fresh produce in their first orders”, which has led, according to Jaume Gomà, CEO of this company, “to an increase in purchase frequency because the consumption cycle is higher “. Another example: the online branch of Uvesco supermarkets grew by 20 percent in 2016, and fresh produce accounted for 25 percent of total purchases.
Supermarket websites are shoppers’ favourite places for placing orders (77 percent), followed to a lesser extent (34 percent) by global shopping sites like Amazon and Glovo, an option chosen mostly by men, while frequent users who make more than one purchase a online month diversify their list among delicatessen ecommerce, food sites and specialised online stores.
Is the Spanish market ready to face the challenges of this new trend? The appearance in Spain of giants like Amazon and the enormous investments made by large supermarket chains to improve their online services indicate that this is a segment to take notice of in a society increasingly concerned about heath eating and where reliance on technology is already a fact.
Amazon is writing the rules of the game in the electronic market. With its US division, Amazon Fresh, this company saw an opportunity to grow in the fresh fruit and vegetable sector that also applies to European cities. In Spain, it has introduced fresh product marketing through the Prime Now service, for the moment, in three cities: Madrid, Barcelona and Valencia. The company founded by Jeff Bezos offers products sold by the Plaza Día, and in the case of Madrid, those of the Mercado de la Paz, “a pioneering project in the world. According to Amazon, this is the first time that the company has allied with dozens of merchants from a public market to offer customers fast deliveries of fresh local products”. Early this year, the alliance was extended to sellers in the Mercat Central de Valencia, Europe’s largest fresh produce trade centre, whose sales increased by 40 per cent in 2017 with its home delivery service.
Platforms that sell perishable products on the internet from Alibaba, Tmall Fresh and Mr. Fresh, aimed only at large importers and distributors and big brands based in China, are expanding to reach millions of consumers, opening to foreign fruit and vegetable exporters and encouraging an increase in sales of these products. opening to foreign fruit and vegetable exporters and encouraging an increase in sales of these products.
The other chains that market their products online are getting their act in order when it comes to digital transformation. Mercadona has announced its online project for the second half of the year with the start in the laboratory in some parts of the city of Valencia, which involves building a new website and mobile application and the creation of a warehouse for distribution with specific vehicles of three temperatures specially designed for this company. Eroski is not far behind in this field. It says that “more than 80 percent of its orders contain some fresh produce, which is well above the sector average”, according to its Online Business Manager, Mari Mar Escrig, based on the Nielsen data. Grupo Día’s Internet businesses, strengthened by its collaboration with Amazon through La Plaza, is constantly growing and adding buyers. The search for experiences will also be a factor that adds value to e-commerce in the fruit and vegetable channel. That’s according to Comenfrutas, an online channel selling horticultural products that offers healthy experiences through an office-based fruit subscription service.
The B2B model is, therefore, an alternative for the fruit and vegetable sector, a way to distribute its products and expand its commercial market with the presence of direct, immediate online circuits, open to operators from different geographical areas where proposals to buy and sell fruit and vegetables are made. Such is the case of global platforms such as Agrelma, which has been operating since 2002, Agrelmarket and M `ennta, the latter two active since 2017, according to the Emarket service of ICEX. In short, it is a direct way of selling, cutting out the middleman and the exorbitant prices of mass distributors. The logistics sector must make the biggest investments and efforts if all this is to be a success. Managing perishable products, providing optimum refrigeration transport conditions and packaging to preserve quality so that everything arrives fresh, intact and unblemished, will be decisive aspects to win in this market.
In short, many believe that the fresh fruit and vegetables sector has numerous opportunities in a sales channel that is constantly evolving and reaching an increasing number of users and homes. Technology is opening doors to the paradigm change in sales in the horticultural sector, creating trends and experiences, value proposals with soul that inspire enough confidence to create customer loyalty, saving costs for producers and time for consumers. Quality, price and delivery times will be key to the success of products whose main drawback is their expiry date.