E-food in Switzerland – a market in focus

It’s not only neighbouring countries that are seeing a boom in e-food, i.e. the sale of food via the Internet. In Switzerland too, online food retailing is developing into a business model to be reckoned with. This is reason enough to take a closer look at the Swiss market with a blog series by leading Swiss food expert Dr. Matthias Schu from Lucerne University.

E-food in Switzerland – the special features of a market

For years, online food retailing in Switzerland has been enjoying ever greater popularity with increasing revenues and customer numbers. Then the coronavirus pandemic gave e-food another huge boost. And the struggle for the last “offline bastion of retail” moved up a gear. All players across the board have been inundated with customers in the past 24 months, and they have been operating at maximum capacity for months. New players and startups have also seized this opportunity to grab their portion of the e-food pie and satisfy the rush of customers with sometimes fundamentally different ways of working.

But what specifically distinguishes the Swiss online food market? Which business models are in use and what are the building blocks for success?

This is the subject of the following blog series compiled by Dr. Matthias Schu, consultant and lecturer in e-commerce at Lucerne University and one of the leading e-food experts in the DACH region, in cooperation with the Digital Commerce Team at Swiss Post.

An overview of the topics:

• Changing customer needs and their effects on choosing channels and providers
• The Swiss market and its players
• Fulfilment: options for storage and picking
• The last mile: a focus on delivery models
• Delivery charges: dominant models on the market
• The next few years: where e-food in Switzerland is heading

Retail means change: changing customer needs determine the choice of channel and provider

Retail means change. In recent times, this simple phrase has become even more relevant than in previous decades. Digitization, disruptive movements and new business models have already fundamentally changed many long-established sectors.

But how do such transformations come about? Previously, the buying process was linear and was determined by the choice of channel or provider. And this also defined the product range. These days, the buying process is much more fragmented. Customers usually think first about the product and no longer start with the shopping channel or retailer. The choice of channel and provider is then only considered depending on the particular needs at the moment when the purchase is desired. Also, the number of touchpoints that can trigger the impulse to buy has risen sharply. And these have long ceased to all be within the control of the retailer.

The winners among retailers will be those who operate an almost “no line” policy. This means those who can address customers across the greatest number of needs situations. And they’ll shape these in such a way that it makes no difference to the customer whether the purchase is in the store or online.

The needs situation is the deciding factor

There is now greater focus on the customer’s needs than in the past, in combination with the respective needs situation. The core question here is whether you know the needs of your end customers.

Something else that sets today’s customer base apart is that they aren’t so easily forced into classic schemas like “personas”. It has become more hybrid. These days, one and the same customer acts very differently in different needs situations. And the particular needs situation strongly determines the choice of provider. Also important is the question of whether a customer is acting in a planned way or spontaneously.

Frequently, it’s one and the same customer who simply changes the channel or provider. And they do so depending on what best meets their needs at the time.

The provider must determine which mode between the two poles the customer finds themselves in: a direct unplanned need (where the tendency is to be less sensitive to price), or a rather more “planned” mode with a corresponding lead time.

The transformation of the customer is likewise evident in niches like online food retailing and purchasing behaviour.

Within just one decade, the requirements of consumers with regard to the expected service level from retailers has changed dramatically. Just a few years ago, the food industry was still characterized by one-stop shopping, with selection and experience within one superstore or shopping mall; today, convenience and home delivery have become the norm.

Of course, coronavirus and the new consumer requirement to avoid contact has contributed greatly to this transformation. And this in a market that even before coronavirus didn’t exactly shine with excess capacity. Quick commerce is one example that has seen a brisk influx since the first lockdown in the DACH region, precisely because consumers discovered it as a convenient fallback solution to the weekly e-food shop that wasn’t available.

Since mid-2020, new providers in the German-speaking region have also focused increasingly on new target groups with a different value proposition. It’s not about replacing the weekly shop but enhancing it easily and quickly when certain items are needed.

Instead of large shopping carts and one-stop shopping, new players are focusing on a broad but shallower range, highly focused on convenience, brand-name items, small shopping baskets and direct consumption needs.

The objective is to chip away the former weekly shop from classic e-food providers and to satisfy the immediate need in terms of convenience or emergency purchasing (for example, there’s no pasta sauce or bag of crisps for watching a TV series with friends). However, the third generation of e-food can be considered to be a further niche and not an outright new development.