Research Implications

6.4.1 Theoretical Implications

The purpose of the master’s thesis was to satisfy some of the academic and practical needs within the field of grocery e-commerce from a Scandinavian market perspective. The primary focus of the literature review was to examine how online grocery evolved from a broader perspective to see if online grocery in Scandinavia is developing and growing based on similar patterns. Accordingly, in the previous chapter, the researcher compared and contrasted findings to existing literature to answer the research questions.

As a result of conducting a study, the researcher addressed some of the previously indicated gaps in the literature.

Since the majority of the research on business models for online grocery focus on the players in the leading markets such as the UK or the US, the author decided to investigate the online grocery landscape in Scandinavia.

Consequently, the author was able to describe the grocery landscape in Scandinavia and assess its future perspective as well as examine the current business models and operational methods. All this led to the striking

observation that even though countries have some similarities, the level of an online grocery market development in all three countries differs. Therefore, the growth perspectives in the near future are different.

Digital transformation has already changed significantly the landscape of retail in other categories, most notably in apparel, media and home electronics. However, the author chose to analyse industry that was one of the latest to move online. Grocery retailers are challenged with substantial barriers that are not met by retailers in other product categories, from which the most significant one is a complex and expensive last-mile distribution.

Nevertheless, some implications from the research can be drawn for other retail categories. First and foremost, it is the omni-channel retailing that is of utmost importance for all retailers. Bricks-and-mortar and e-commerce merging into omni-channel retailing with complete channel integration provide consumers convenience and flexibility to buy when, where and what they want (Hübner et al., 2016; Hays et al., 2005). Therefore, as recognised by the interviewed subject matter experts omni-channel retailing that is now called the new retailing paradigm (Simone & Sabaddin, 2017) is becoming more and more relevant for the consumers [M. Mørk, 2019].

Moreover, researchers argue that the omni-channel retailing leads to higher loyalty to an organisation and has a positive effect on companies’ sales growth (Cao, So, & Yin, 2016; Wollenburg et al., 2018). However, as for grocery industry as well as for other industries it comes with a threat of cannibalisation which in other industries can be felt more strongly than in grocery retail as recognised by the interviewed subject matter experts [K.

Brynell, 2019].

6.4.2 Practical Implications

A thorough examination of business models and operations strategies among major online grocery retailers can help existing online grocers to benchmark their businesses by identifying how they are positioned in terms of their operational model and use this to initiate managerial implications. Moreover, this research paper can shed light on the online grocery landscape for practitioners that want to enter the Scandinavian market. The threat of new entrants was frequently mentioned among the interviewed subject matter experts when discussing factors that can affect online grocery in Scandinavia in the future. However, given the different development levels of the online grocery market in all three countries, it can be assumed that new players would choose different entry strategies based on market conditions.

Starting from Sweden, since all bricks-and-clicks are already combining the different delivery and pick-up options across channels, brick-and-mortar that enters the Swedish online grocery market would have to do the same. As one of the interviewees pointed out: “you need to copy the winner, to be the second” [O. Teigen, 2019].

A similar idea was earlier expressed by Porter (2001, p. 64), who claimed, “gaining a competitive advantage does not require a radically new approach to business. It requires building on the proven principles of an effective

strategy”. Therefore, depending on the overall business strategy of a brick-and-mortar entering the Swedish market, it would have to choose centralized-extended strategy type to compete with the market leaders.

Furthermore, if a new entrant would be a pure-player, it would have to be also in the fourth quadrant together with the established players. Moreover, by adding click-and-collect solutions in neighbourhoods, hospitals, offices in addition to home delivery, new entrant could provide higher value to a particular segment of consumers since currently leading pure player MatHem.se offers only home delivery. Furthermore, the established bricks-and-mortars, in general, are better positioned to leverage the online business channel due to their access to multiple distribution channels that brings economies of scale (Matz et al., 2004; Rabinovich & Bailey, 2004).

Therefore, pure online players without a well-developed infrastructure that would decide to enter the only grocery market would need to focus on providing unique products and services in order not to pale into significance.

Moreover, since the online grocery market in Denmark is yet less developed than in Sweden, competition is less intensive, although increasing. Therefore, if a brick-and-mortar decides to enter the market, it would most likely still enter with a solution requiring less capital investment until the market becomes more mature, for instance, click-and-collect and in-store picking. However, if a new entrant would decide to compete in terms of strategic positioning rather than operational effectiveness, the centralized-extended strategy could bring competitive superiority for such a player. Furthermore, in case a new entrant is pure player warehouse-based picking and home delivery is the obvious choice. However, for a pure-play online grocer, that would need to attract new customers, marketing and advertising costs can be prohibitively expensive. Therefore, a partnership with an already established brick-and-mortar could be another entry to market possibility. Financial backing and brand name recognition from a brick-and-mortar would enable a pure-player to reduce expenses as well as provide the ability to try different channels to reach more consumers (Hays et al., 2005).

Lastly, when talking about Norway, the country has the least mature online grocery market in Scandinavia.

Moreover, only one brick-and-mortar is directly present with the platform for online grocery shopping. However, based on one of the interviewed respondents, brick-and-mortar most likely would have to enter with a home delivery solution to compete in the same way as other players in the market because people are used to this way [O. Teigen, 2019]. Nevertheless, since the existing players are struggling to attract customers beyond bigger cities, innovation in last-mile is indispensable to reach a wider population.

Moreover, during the interviews, respondents identified high store density as one of the main barriers for online grocery shopping in Norway. The latter issue could be addressed by entering the market with a more focused solution by offering daily household goods subscription similarly to Netto fillop while perishable goods people

could still pick themselves in physical stores. This niche strategy could be leveraged by both bricks-and-mortars as well as pure players.