Online Grocery Auction: New Business Model in Retail–Part 2

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The previous post discusses some reasons why new business models in retail industry become relevant in the digital era. The new model introduces online grocery auction system. It encourages the shoppers to buy in bulk and allows them to save more from the unit costs. Of course, the shift from conventional individual shopping system to a bulk system must be accompanied by definite benefits for the customers. What are they?

How Online Grocery Auction Works

In the conventional grocery shopping system, each transaction is treated separately. The new system pools grocery orders to maximize the benefits for customers. Large tech companies like Apple, Microsoft, Amazon, and Tesla have large campus buildings, where thousands of people work. Imagine how many groceries, which these associates buy every year!

Statistics show that on average, consumers spend around $5.200 to buy groceries every year. If, for instance, a campus owned by Microsoft employs 50,000 associates, then they spend around $260,000,000 for groceries annually! The same case applies in big campuses owned by Apple, Amazon, Tesla, and many other tech companies.

Online grocery auction

Besides the amount of money spent for the groceries, consider the volume of products purchased every year. Consumer products like ketchup, milk, bread, loaves, peanut butter, cleaning products, and other categories are commonly on the top of the list. The volume is massive, right?

Imagine the delivery costs spent when those products are shipped individually when they are treated as separate transactions! Then, compare the savings that can be made when these logistics are delivered on the same days as they are treated as a single transaction. Delivering the bulk orders to a place where massive people work will be great saving!

How to Implement Online Grocery Auction

This is still a new system, of course. The online grocery auction actually offers great potentials to save more money. The following are some recommendations on how to apply it:

  • Large companies that have many employees can create a platform, in which the employees can select grocer products they need. The platform may display lists of products, which are similar to those displayed in grocery stores. The auction platform must be complete enough to avoid the employers from going to other stores.
  • The platform pools the grocery orders on hourly, daily, or weekly basis. The system clusters the products based on the categories.
  • Then, the company offers the orders to retailers or wholesalers. Then, they can bid each other to serve all the products in the list. This way, the company can choose one that serves all the products at the most competitive prices.

A research cited on Forbes showed that online grocery auction provides the customers with chance to achieve a 50% reduction in the grocery bills every week! This is certainly a fantastic saving, right?

What a company needs is a team or committee to manage the auction platform and place the grocery orders. If the new system works, Aldi and Lidl, cited in the previous post, will be no longer the lowest-priced grocery retailers. Large companies can create their own auction system to help the employees. Therefore, they can cut the monthly grocery bills at a significant rate.

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