With Bidfood, JJ Foodservice and other wholesalers launching a direct-to-consumer (DTC) service, data insight specialist TWC questions the long-term potential of this strategy:
- Does this have longevity beyond COVID19? Minimum order quantities are higher than retail and this is fine whilst families are stockpiling, but longer term?
- Are foodservice packs appropriate for consumers in terms of pack size, quantities and design/branding, or will the wholesaler need to extend its range?
- Delivering to consumers’ homes is no easy task (as traditional grocers have recently demonstrated)
- Will consumers be able to add to or edit orders before delivery is due? If so, what will be the ‘cut off’ time?
- Will consumers accept a minimum spend of £79-£100 per order, with payment required in advance?
- Will consumers be comfortable with lengthy wholesale terms and conditions versus the ease of an online shop with Tesco?
- If Ocado is struggling with web traffic capacity, are wholesalers that are moving into this space going to find it any easier?
- Dealing with consumers will massively increase these wholesalers’ customer bases; on the face of it this sounds great but the practical issues of servicing a much larger number of customers during a crisis brings its own challenges.
Ultimately, the consumer will probably be the winner as consumer choice will increase, points out TWC, which adds: “Consumers will be able to buy groceries from supermarkets (bricks and mortar, and online), convenience stores, petrol forecourts, discounters, wholesalers (including Booker products in Tesco), club outlets (Costco), subscription services (hello fresh), market stalls, farmers markets, and, of course, Amazon. And that’s before we start talking about foodservice.”
TWC highlights two further questions:
Firstly, do consumers actually want this wide a choice long-term? If you ask them, they always say ‘yes’ but it will be interesting to see where they end up spending their money, because actions speak louder than words (so keep an eye on sales data, not what shoppers say they will do).
Secondly, the thing that makes foodservice operators like Bidfood, JJ and many other wholesalers so successful is their very specialist knowledge. Will they lose part of their DNA by becoming a generalist?
“Notwithstanding the current uncertainty, the one thing we at TWC applaud is wholesalers taking on the multi,” says TWC. “For too long we have sat and watched the retail multiples trying to erode wholesale; it is great to see our channel finally taking on the mults in their own backyard – and consumers’ front door steps literally!”
Tel: TWC (01908) 920602
Published Date: March 25, 2020