With the average family spending about £5,000 a year on supermarket goods, it is not difficult to see that regular online repeat buys are very attractive.
But there is a problem. A large supermarket carries upward of 40,000 products, and as many as 15,000 of these will be own-brand. That's a big database to keep up to date. What's more, customers' requirements extend beyond product identification and pricing.
In a recent survey the majority of respondents considered detailed product descriptions an essential part of online shopping. This is particularly true with food. The same survey identified 11 food products that caused allergic reactions in the respondents - requiring very careful attention to labelling.
If 40,000 products sounds small compared with the 1.5 million titles on the online bookstore's lists, bear in mind that literary e-tailers make use of catalogues, with a choice of two databases of books in print. Now the e-grocer also has this option in the form of I-label.
This independent company is already providing a product database to Tesco and Sainsbury's and will soon be supplying Asda, Waitrose, Budgens and more. It is an impressive emergence from nothing, driven by four factors: security of data, stable technology, added value and cost.
Data security is a big issue. Imagine the situation of someone who suffers from a nut allergy checking the I-label assessment of a product to ensure that it is nut-free. If the person subsequently died from eating that product both the retailer and I-label may be liable. Getting this sort of data right, and keeping it intact is a critical responsibility.
I-label uses a multi-layered security fence involving both off-the-shelf and proprietary security techniques, which the company is not prepared to discuss to minimise the chance of a breach. It is protecting data that the food producer will have guaranteed to be accurate using its due diligence procedures.
This is a benefit for the retailer, which would otherwise have to check every aspect of the product data. These security measures are supported by an alerting service to flag up urgent changes to the retailer.
The technology underlying I-label is not leading edge. I-label's central repository is hosted on a Microsoft SQL 7 database server. The retailers involved in the scheme connect up and replicate the database information on their own servers, typically nightly. This data is then incorporated into the retailer's systems.
A small number of substantial companies which feed the repository, such as RHM, Nestle and Unilever, supply data direct using a published Edifact format, or in standard CSV (comma separated variable) files.
Smaller manufacturers that might typically supply 10 to 200 products to a supermarket may not have the appropriate databases to drive these feeds. For these suppliers, I-label provides a client application to input all the appropriate data and synchronise with the repository.
While retail usage is currently primarily in e-tail, this data has much wider potential. For example, the database could be integrated with electronic point of sale (Epos) systems to provide detailed information about the products at the checkout. Similarly, the information could be available in kiosks around the store.
Some supermarkets, Safeway and Waitrose included, are already trialling scan-as-you-go systems, allowing customers to scan their own goods at the trolley. The purchases are then paid for without passing through a checkout, which is the number one cause of complaint about supermarket shopping. When the I-label information is available to these mobile Epos systems, they can provide more intelligent guidance to the shopper.
It is the range of data that makes it possible to add value. At the moment, online supermarkets have little more than a spreadsheet of products to select from. The initial use of the repository has been to enhance these entries with detailed labelling. This can be seen at the Tesco Web site, where an increasing number of products carry an i symbol to indicate extra information.
However this is merely scratching the surface. As more of the product base is present in the I-label repository - and as has happened with the book catalogues, it is increasingly the case that manufacturers can't afford not to be represented - the opportunities grow for giving more of a service.
The data that is particularly valuable here is lifestyle and ingredient based. Once most products are covered by I-label it would be easy to have a Web site that allowed you to effectively design your own store - only carrying vegetarian or Kosher products, for example, or sorted in increasing level of saturated fat content.
At this level, shopping online for groceries does not just offer the convenience of not having to trudge around a supermarket - it actually gives a better shopping experience.
It would not be too fanciful to imagine a company setting up a grocery equivalent of a shopping agent where the customer can select a basket of food against the I-label repository, which the agent will then price up against a number of supermarkets, presenting the purchaser with this week's supermarket of choice.
The final factor influencing the move to the I-label approach is costing. The service is free to the retailer. Such an approach would have been unimaginable only a few years ago, but cost-free information has been a driving force behind the spread of the Web, and is now proving a very effective way of bringing supermarkets onboard. It may even be the case at some point in the future that small shopkeepers also make use of the I-label data, given its ready availability.
With Internet applications, it is often the sexiest or most novel technology that captures the headlines. I-label may not be leading edge, but it provides a combination of technology and customer benefit that makes it hard to beat.
Third-party information provider I-label looks set to revolutionise the way that groceries are sold on the Web with a sophisticated electronic label that should enable consumers to devise their own supermarket, structured to their tastes and dietary requirements.
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