AEDE-RP-0043-04

E-Grocery: Who is the Ideal Consumer?

Casie Berning, Stan Ernst and Neal H. Hooker

Contact: Hooker.27@osu.edu

April 2004

Until the end of 2002, the biggest news in the E-Grocery sector had been failures of some high-
profile operators such as Webvan and Streamline. Despite this, recent research indicates
continued growth and retailer interest in this sector. As overall E-Commerce activity continues
its steady expansion social and economic trends indicate potential in the E-Grocery sector. The
E-Grocery sector is still an emerging market, with a low adoption rate in both market coverage
and customer base. This paper attempts to identify who the ideal E-Grocery consumer is by
analyzing six studies that have considered the industry. Defining the “ideal” consumer will help
in answering why such a low adoption rate exists within the E-Grocery sector and if E-Grocers
are entering the correct geographic markets. Preliminary results indicate that an ideal consumer
for E-Grocery services (either pick-up or delivery) is 25 to 44 years old, has at least a college
degree, household income between $50,000 and $100,000, and is likely to have children. These
consumers are also less price sensitive than in-store shoppers because they have high opportunity
costs of their time and are more interested in convenience than price.
 OSU AED Economics (AEDE-RP-0043-04)

E-Grocery: Who is the Ideal Consumer?

Until the end of 2002, the biggest news in the E-Grocery sector had been failures of some

high-profile operators such as Webvan and Streamline. Despite this, recent research indicates

continued growth in this sector (MSU press release). As overall E-Commerce activity continues

its steady expansion, social and economic trends indicate potential in the E-Grocery sector. The

E-Grocery sector is still an emerging market, with a low adoption rate in both market coverage

and customer base. It is unclear why the market remains small. Is it due to the incorrect selection

of initial markets by E-Grocers? In order to understand if incorrect markets are being selected,

we must first understand who the ideal consumer for the E-Grocery sector is. This paper

provides a literature review to begin to understand the characteristics of an ideal E-Grocery

consumer, based on various international case studies exploring the market. A useful table,

which summarizes the methodology, number surveyed, and the results of the various journal

articles which are reviewed is included for quick reference.

As a background, consider these interesting facts about E-Commerce. According to a

study from International Data Corp published in Straits Time in 2002, more than 600 million

people accessed the Internet globally by the end of 2002 spending more than $1 trillion buying

goods and services online. This same report also noted that global spending on E-Commerce

exceeded $600 billion in 2001, an increase of 68% over 2000. Chiger (2001) says about 67% of

these online shoppers agreed that convenience was the main reason they had bought via the

Internet with 41% mentioning price as another factor.

What are the characteristics of these consumers that have contributed to the $1 trillion of

online sales? The first article analyzed comes from the Journal of Consumer Marketing, titled

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“Typology of online shoppers” (Kau, et al., 2003). The main focus of this study was to examine

the attitudes and behaviors of online shoppers in Singapore. A questionnaire was hosted on a

commercial companies website, and provided a chance for participants to win an MP3 player.

The questionnaire was available for one month from September 4, to October 3, 2000. Also, an

e-mail newsletter was sent out on September 8 and an advertisement was placed in a local free

newspaper (called Streats) on September 19. By the end of the survey period, a total of 3,712

usable responses were recorded. The survey questionnaire was divided into three sections.

Section 1 included 24 questions, investigating the respondents’ information-seeking patterns

when buying online regarding issues such as branding, sales, promotion, and preference for retail

versus online store shopping. The first part of Section II determined if the consumer had bought

anything online over the last 12 months, and if so, what they bought. If the consumer had

purchased an item online the remaining questions in Section II asked about their level of

satisfaction with online shopping, and if they intended to buy again, as well as their willingness

to recommend buying online to their friends and relatives. In Section III, questions asking

respondents’ opinions of inhibitors of online shopping were included. Finally, Section IV was

devoted to basic demographic information used for classification purposes (Kau, et al., 2003).

Almost two-out-of-three responses (65.7%) were male. The majority of the respondents

were single - only 30% were married. The largest age group was between 20 to 24 years old

(32%). The next most common age group was 25-29 (28.5%), followed by 30 to 34 (13.9%).

Only 2% of the respondents were aged 50 and over. 44.9% of the respondents had a bachelor’s

degree (Kau, et al., 2003).

Using the results of the questionnaire consumers were classified into six categories: The

first category is the On-Off shopper. On-off shoppers are those who like to surf the Internet and

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collect online information but prefer to shop offline. They enjoy looking for online

advertisements, are frequent users of bookmarks and use the same search engine on a regular

basis. They are experienced in surfing and often look for the best deals. This person is likely to

be 15 to 24-years old, and equally likely to be female or male. The second category is the

comparison shopper.

Comparison shoppers are those who contrast product features, prices and brands before

making purchase decisions. They also actively look out for promotional offers. Members of this

group are 25- to 29-years old and also show no gender bias.

The third category is the Traditional Shopper. Traditional shoppers buy from brick-and-

mortar stores. They do not surf the Internet for comparative information, neither do they look for

bargains over the Internet. Most of these shoppers are 40 to 49-years old.

The fourth category is the Dual Shopper. Dual shoppers are more likely to be single

males aged 15 to 24, and like to compare brands and product features. They also rely on the

Internet for information gathering. However, they are not particularly attracted to price-based

marketing tactics.

The fifth category is the called the E-laggard. Most likely to be female aged 35 or older,

this shopper has a low interest in seeking information on the Internet.

Finally, category six is known as the Information surfer. An information surfer is more

likely to be married and between the ages of 15 and 24. He or she loves banner ads and clicks on

them frequently. An information surfer looks for promotions, and has good navigation and

purchase experience (Kau, et al., 2003).

The next article titled, “Exploring motivations for consumer Web use and their

implications for e-commerce” (Joines, et al., 2003), examines the influence of demographic

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variables and dimensions of motivational factors of two types of consumer Web use: percentage

of weekly Web surfing time spent searching for product and service-related information and

online shopping and transactions. This study was based on a sample of 59 web users from the

state of New York, excluding the Greater New York City area. A probability sample of 1,600

New York residents was mailed a questionnaire. A total of 583 subjects volunteered to

participate for a response rate of 37.1%. One question on the questionnaire asked subjects if they

subscribe to an online service such as AOL. Of the 583 subjects, 300 indicated they subscribed

to an online service. These 300 subjects were mailed a letter asking them to participate in the

second phase of the study by filling out another questionnaire related to Web usage. The total

sample size for the second questionnaire was 59 online subscribers. The sample consisted of

more males (73%) than females. The mean age was 49.6 years. 61.8% of all respondents were

college graduates. The average reported was between $40,000 and $49,999 (Joines, et al., 2003).

In this study two categories of independent variables were measured: demographics and

motivations/concerns. In regards to demographics, this study found the following four

hypotheses to be supported: (1) Males are expected to be more likely to shop online than

females. (2) Younger people are expected to be more likely to shop online. (3) Shopping online

will be significantly and positively related to income. (4) Shopping online will be significantly

and positively related to education. In the part of the study based on motivations/concerns the

following five hypotheses were supported: (1) Shopping online will be negatively and

significantly related to transaction-based security and privacy concerns (credit card fraud). (2)

Shopping online will be positively and significantly related to information motivation (useful

product information). (3) Shopping online will be positively and significantly related to

interactive control motivation. (4) Shopping online will be significantly and positively related to

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social motivation. Websites such as E-bay benefit from this social motivation, where interaction

is a part of the purchasing process. (5) Online shopping will be positively and significantly

related to economic motivation (meaning convenience and saving time or money) (Joines, et al.,

2003).

The results of the first two articles indicated that online shoppers are 2 to 3 times more

likely to be male. The next article titled, “Married males and shopping: are they sleeping

partners?” (Dholakai, et al., 1995), attempts to explore this further. This article examines the

environment in which male shopping behaviors are taking place and are likely to take place in

the future. The article also examines how the male shopper evaluates catalogue and online

shopping. 4,500 questionnaires were mailed to households in the major cities and suburbs of

Massachusetts/Vermont, Florida, Georgia, Illinois, and Colorado. Addresses were purchased

from a list broker. Each household had a computer in the home, and household incomes over

$35,000. The majority of the responses came from consumers 35 to 44-years old, with at least a

college education, and a household income between $50,000 and $100,000 (Dholakai, et al.,

1995).

The results concluded that shopping is still largely a female activity, particularly for

household groceries. Married males claimed primary responsibility for groceries in less than

15% of the households. When consumers were asked if the family appreciates their efforts

shopping, a stronger positive response was seen when the man does the (grocery) shopping. This

suggests that married men who carry the primary load for grocery shopping are breaking the

gender stereotype, and are gaining positive feedback from their families, and because of this are

continuing to do the grocery shopping. Comparing market channels; in-store shopping was

considered to be more satisfying, enjoyable, fun, and rewarding than online shopping (Dholakai,

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et al., 1995).

Unlike the first three more general articles, the next three articles focus directly on the E-

Grocery sector. Although none of these articles main focus is to define the ideal consumer, they

help identify key consumer characteristics. Such demographic information will help define the

“ideal” E-grocery consumer.

The first article relating to the E-Grocery sector is titled, “Consumer choice behavior in

online and traditional supermarkets: The effects of brand name, price, and other search

attributes” (Degeratu, et al., 2000). This article examines how various store environments

(online and traditional stores) can differentially affect consumer choices. Longitudinal field data

from separate samples of online and offline shoppers is used. The first data is from Peapod,

where about 300 subscribers in the Chicago suburban area were tracked from May 1996 to July

1997. The second data set is from IRI for 1,039 high-educated panelists who shopped in the

same grocery chain in the same geographic area, although not in the same supermarket as the

Peapod subscribers. (The supermarket from which Peapod customers are served is not part of

the sample of supermarkets that IRI uses to collect its panel data.) These data were collected

between September 1995 and November 1997 from three stores. Two of these supermarkets are

located in the same part of the metropolitan area as the Peapod store and all are in relatively

affluent areas. Individual demographic information is given for the IRI information. For the

Peapod data, aggregate demographic data is available based on a survey conducted by the

company, and individual demographic data is provided for about 40% of the panelists. 66% of

the Peapod shoppers had at least a college degree. 51% were between the ages of 34-54, and

37% were between the ages of 18-34, leaving only 12% over age 54. 41% of Peapod users had

household income between $50,000 and $99,000, and 41% had a household income of over

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$99,000, leaving 18% of Peapod users with a household income of less than $50,000. 53% of

Peapod users had children. 100% of the IRI participants had at least a college education. 55%

were between the ages of 35 and 54; 37% were over 54; and 8% were between 18 and 34-years

old. 56% of the IRI households had income below $50,000, 25% between $50,000 and $75,000,

and 19% over $75,000. 39% of the IRI participants had children (Degeratu, et al., 2000). This

study found the following four hypotheses to be supported: (1) Sensory attributes will have a

smaller impact online than offline. (2) Non-sensory attributes will have a larger impact online

than offline. (3) Brand names have greater impact on choices in store environments where less

total information is available for facilitating consumer choices. Finally, (4) to the extent that

attributes listed in the online store are relevant for choice, price will have a smaller impact on

choices in online supermarkets than in traditional supermarkets (Degeratu, et al., 2000).

The next article relating to the E-Grocery industry is titled, “Consumer demand for

online food retailing: is it really a supply side issue?” (Morganosky, et al., 2002). It examines

the consumer demand for and acceptance of online food retailing using longitudinal data. The

data presented in this paper is collected from three studies of online food shoppers conducted in

1998, 1999, and 2001. In study 1, data were collected April through June 1998 from 243 US

consumers who purchased groceries from Schnucks Express Connection. Once at the site,

consumers were asked to respond to closed-ended and open-ended questions concerning their

food shopping preferences and behaviors. At the time of data collection, Schnucks offered the

service in the St. Louis market area plus nine other markets in Missouri, Illinois, and Indiana.

Both pick-up and delivery options were available. The costs for the service were $13 for same

day, $10 for next-day, and $6 if the customer picked up the order at the store. A minimum order

of $10 was required (Morganosky, et al., 2002). Survey 2, (Morganosky, et al., 2002) used a

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similar procedure to study 1. Data for study 2 was collected in 1999 from 412 online food

shoppers. The purpose of study 2 was to provide a longitudinal perspective to the findings from

the 1998 study. Study 2 asked if consumer experience with online food shopping changed over

time and how experience relates to other food preferences and behaviors. Study 2 asked

permission to re-contact each respondent at a later date. 63% of the participants in study 2

provided an e-mail address for re-contact in study 3. The purpose of study 3 was to extend the

work of the previous two studies and conduct a panel study with the 260 participants from study

2. A 30% response rate (55) was accomplished in study 3 (Morganosky, et al., 2002).

All three studies share similar demographic profiles. The highest percentage of

customers was between the ages of 35 and 44, with the 34-and-younger group a close second.

Also, in all three studies at least 82% of the shoppers were female. Over half of the customers in

all three studies were college graduates. Over half of the customers in all three studies had a

household income of $70,000 and over. At least 63% of the households had at least two adults

living together. In study 1, 83.1% of the customers had at least one child. In study 2, 51.6% of

the customers had at least 1 child and in study 3, 64.6% (Morganosky, et al., 2002).

Behavioral differences were noted between the three studies. For, example only 14% of

study 1 respondents said they had been buying groceries online for more than six months. In

study 2, 43% of the respondents had more than six months experience buying groceries online,

and 58% of the respondents in study 3 had more than 22 months of experience with online

grocery shopping. Respondents in all three studies favored the delivery option over pick up at

the store. There were differences between studies in the willingness of respondents to buy all or

most of their groceries online. For example, a majority of the respondents in study 2 and study 3

said they now buy all or most of their groceries online. Only 19% of the respondents in study 1

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said they were buying all or most of their groceries online. A far higher proportion of study 2

and study 3 respondents were willing to buy any grocery item online. 79% of study 2, and 80%

in study 3, said they were willing to buy any grocery online, compared to 48% of the respondents

in study 1. Nearly a third of the respondents in study 1 listed meat or produce as items they

would not be willing to purchase online. In study 2 this proportion dropped to 15% and by study

3 it was 14%. Study 3 went back and found the customers who were no longer using the E-

Grocery service. The major reasons cited for discontinuation of the service were relocations that

took consumers’ out of the market, online systems that were two slow, competition had moved

into the market, and some consumers felt that the cost out weighed the service (Morganosky, et

al., 2002).

The next article relating to the E-Grocery industry is titled, “Perceived usefulness, ease

of use and electronic supermarket use." (Henderson, et al., 2003). This article examines the

Technology Acceptance Model, within electronic supermarkets. When new users registered with

an electronic supermarket in Auckland, New Zealand they were asked to participate in a research

project examining their attitudes to the website software. 920 participants were sent a

computerized self-report questionnaire package for their completion. The package contained a

questionnaire, a diskette containing the computerized questionnaire, and an informed consent

form that also requested permission to access the users personal shopping data from the

supermarket. 247 useable questionnaires were received. 44% were female and 46% were male.

The average age of the respondents was about 40

The questionnaire measured the perceived ease of use and the perceived usefulness of the

service for the online shopper. Perceived ease of use is defined as the degree to which a person

believes that using a particular system would be free of effort, within these following key

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elements: it gets shopping done efficiently, it is useful in getting shopping done, and provides

more time for other things. Perceived usefulness is defined as the degree to which a person

believes that using a particular system would enhance his/her online shopping performance,

within these following key elements: it is easy to get what you want from system, items are easy

to locate, and items are easy to track. Electronically recorded indicators of use in the form of

deliveries, purchase value, and number of log-ons to the system for 6 months after the consumers

had completed the questionnaire were recorded (Henderson, et al., 2003).

In the month the questionnaire was completed, log-ons, deliveries, and purchase value

increased as consumers became more comfortable with the software, during a period when

perceived ease of use and usefulness increased. During the remaining five months of the study

little evidence of additional impacts of perceived usefulness and perceived ease of use on log-

ons, delivery, and purchase value indicators were seen, suggesting a relatively quick learning

process for adopters (Henderson, et al., 2003).

Analysis

What do these six articles indicate about the ideal consumer for the E-Grocery sector?

• The more E-Grocery-targeted studies suggest the ideal age of the consumer in article 1 is

35 to 54, article 2 suggests 35 – 44, article 3 suggests an average age of 40, and article 4

suggests that consumers aged 25-29 are “almost as ideal” as the 35-44 range.

• More general E-Commerce studies suggest the ideal age to be 25 – 29 and 35 –44

o This seems to suggest an ideal age between 25 and 44.

• Each of the studies suggest that the ideal consumer should at least have a college degree.

This leads to the following “chicken and the egg” type questions

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o Does an ideal consumer have to have a college degree, or is “ideal” really just a

matter of someone with computer skills? Are college graduates more affluent and

likely to adopt and/or adapt to the technology more quickly?

• Even though most of the responses in the general E-Commerce studies come from males

instead of females, the ideal E- Grocery shopper is more likely to be female than male.

• Each study varies a little with respect to household income, but the majority seems to

point towards a household income greater than $50,000.

o Given the distinct geographic markets served by E-Grocers, a cost of living

adjustment to such an ideal income may be appropriate.

• It is interesting to note that with the longitudinal study that was performed with

Schnucks’, over half of the users have children, and almost two out of three users have

two adults living in the household.

• These consumers are looking for convenience, and are, therefore, less price sensitive.

11

Journal
Journal of Consumer
Marketing, Vol.20 No.2 2003,
pp.139-156
Journal of Consumer
Marketing, Vol.20 No.2 2003,
pp.90-108
International Journal of Retail &
Distribution Management, Vol.
23 No. 3 1995, pp 27-33
International Journal of
Research in Marketing 17
(2000) 55-78
International Journal of Retail & Consumer demand for online
Distribution Management, Vol. food retailing: is it really a
30 No. 10 2002, pp 451-458
International Journal of Human- Perceived usefulness, ease of 920 potential consumers in New Zealand who
Computer Studies 59 (2003)
383 - 95
Title of Article
Typology of online shoppers
Exploring motivations for
consumer Web use and their
implications for e-commerce
Married males and shopping:
are they sleeping partners?
Consumer choice behavior in
online and traditional
supermarkets: The effects of
brand name, price, and other
search attributes
supply side issue?
use and electronic supermarket displayed an interest in electronic shopping,
use
Methodology
Surveyed
A website questionnaire was hosted by a
commercial company in Singapore, the
questionnaire was hosted for one month from
September to October in 2000, e-mails, pop-
ups, and news paper ads were used to draw
consumers to the survey
In, 2000 300 subjects in New York were
mailed letters asking to participate in a
questionnaire. The questionnaire could be
completed on the web or on paper and mailed
in.
In spring of 1993, 4,500 questionnaires were
mailed to households in
Massachusetts/Vermont, Florida, Georgia,
Illinois, and Colorado
Two comprehensive data sets were used.
The first data set is from Peapod, where 300
subscribers in Chicago suburban area were
tracked from 1996-1997. The second data
set is from IRI for 1,039 panelists who
shopped in the same grocery chain in the
same geographic area from 1995-1997.
Data presented from three longitudinal
studies. In all three studies the data was
collected from Schnucks Express Connection
from St. Louis, Missouri, Illinois, and Indiana.
Data was collected from 1999 -2001
data collected in 1999-2000.
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OSU AED Economics (AEDE-RP-0043-04)
#
Results
65.7% male, 70% single, 30%
married, 32% were age 20-24, 28.5%
3,712 age 25-29, 13.9% age 30 to 34, and
2% age 50 and over, and 44.9% had
a bachelor degree
73% more males than females, the
mean age was 49.6, 61.8% were
59
college graduates, average income
was $45,000.
27.3% were age 35-44, 34.2%
1,600 college graduate, 38% had household
income between $50- $100,000.
For the Peapod data: 51% age 35-54,
66% had at least a college degree,
53% had children, 41% annual
income between $50-$100,000. For
1,393
the IRI data, 55 age 35-54, 100% had
at least a college education, 39% had
children, 56% had household income
of less than $50,000
37% age 35-44, 58% had a college
degree, 67% had at least on child,
710 54% had household income of over
$70,000, 67% of the households had
at least two adults living in them.
The average was 39.75, 54%
respondents were female, 46% were
247 male, 63% were in full time
employment and use a computer 4.53
hrs/day
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References

Chiger, S., “Consumer Shopping survey”, Catalog Age, November 2001, pp.80-81.

Degeratu, Alexandru M., Rangaswamy, Arvind., Wu, Jianan., “Consumer choice behavior in
online and traditional supermarkets: The effects of brand name, price, and other
search attributes”, International Journal of Research in Marketing, Vol. 17 2000, pp.
55-78.

Dholakia, Ruby R., Pedersen, Birgit.,Hikmet, Neset., “Married Males and shopping: are they
sleeping partners?”, International Journal of Retail & Distribution Management, Vol.
23 NO. 3 1995, pp. 27-33.

Henderson, Ron., Divett, Megan J., “Perceived usefulness, ease of use and electronic
supermarket use”, International Journal of Human-Computer Studies, Vol. 59 2003,
pp. 383-395.

Joines, Jessica L., Scherer, Clifford W., Scheufele, Dietram A., “Exploring motivations for
consumer Web use and their implications for e-commerce”, Journal of Consumer
Marketing, Vol. 20 NO. 2 2003, pp. 90-108.

Kau, Ah Keng., Yingchan, Tang E., Ghose, Sanjoy., “Typology of online shoppers”, Journal of
Consumer Marketing, Vol.20 N0.2 2003, pp.139-156.

Morganosky, Michelle A., Cude, Brenda J., “Consumer demand for online food retailing: is it
really a supply side issue?”, International Journal of Retail & Distribution
Management, Vol. 30 NO. 10 2002, pp. 451-458.

Michigan State University, Department of Marketing & Supply Chain Management. “Second
year results from three year study of Online Ordering & Home Delivery Groceries”,
March 1, 2004.

Straits Times, “Global Internet users to hit 600m this year”, February 14, 2002, pp. 14.

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