Home-Delivery Services Poised For Growth, Change

The number of households ordering products and services via the Internet will grow exponentially to 29 million, and account for at least 9.4 percent of all retail sales by 2010, a new study reveals. E-commerce and grocery delivery services currently make up 4.4 percent of the retail sales market.

Driving the growth will be access to broadband, or high-speed Internet lines, new payment methods and smoother e-commerce logistics and delivery methods, according to the study, which was conducted jointly by Peppers and Rogers Group, a Stamford, Conn.-based consulting firm, and the Menlo Park, Calif.-based Institute for the Future.

The study was sponsored and financed by Ford Motor Co., the Grocery Manufacturers of America, Levi Strauss & Co., Peapod, Procter & Gamble, Unilever, Federal Express and the Direct Marketing Association.

MWT notes that some of the study’s findings - that grocery delivery service will increase dramatically and that the key to successful consumer delivery business is one-to-one marketing, for example - would directly benefit the businesses of some of the sponsors if the predictions come true. Two examples are online grocer Peapod and the Peppers and Rogers Group itself, which specializes in helping companies build customer relationships.

The study also found that more traditional channels for home delivery services, such as catalogs, will drop 17 percent to 50 percent, while the percentage of households ordering from the Internet or through grocery delivery services will triple.

Users of the newer home-delivery methods tend to be more educated and earn more than consumers using the traditional mail and catalog channels, said Julien Beresford, director of research at Peppers and Rogers. The primary reason for using the Internet and grocery delivery services is convenience, while the main reason for using catalogs is the availability of specialty items, Beresford said.

The study was based on initial interviews with more than 25,000 households, from which a few thousand catalog, Web and online grocery shoppers were selected for in-depth interviews. Beresford said the goal of the study was to understand the scope and impact of direct-to-consumer shopping channels and the role of retailers, manufacturers and consumers in the direct-to-consumer marketplace. Peppers and Rogers plans to release annual studies on the issue.