Saturday, March 22, 2008

Random Idea #1: Going Paperless for Grocery Store

I go to CVS on a regular basis. Each time I make a purchase, they give me a long-ass receipt with coupon information even if I buy just a pack of cigarette. Same goes to grocery stores like Ralph's and Mitsuwa. Every time they hand it to me, I feel that I'm wasting paper. Of course, I can tell cashiers that I don't need the receipt and they would put it in the recycle bin. That's a bit more eco-friendly. But it costs money and energy to recycle.

On the way back from CVS a couple nights ago, I thought up this idea: Grocery stores should go paperless.

My idea is very simple yet practical, though it may require some levels of remodeling grocery industry infrastructure. To go paperless, grocery stores can give out electronic receipts to customers. This would be more useful for both companies and consumers (for those people who have Internet connection at home).

Instead of giving out paper receipts, the company can store all purchase information into database for each customer's online account. The portal site can provide coupon and other useful information so they can cut down on expenses related to design/printing/shipping and save paper and ink materials. With coupon information linked to an account, customers do not have to worry about carrying physical coupon (This will also help cashiers' and customers' stress level too... you sometimes see some people flipping through a big fat book of unsorted coupons at the cashier and they do not back down until they find the right one and cashiers give them discount). If checking what's on sale on home computer is not too convenient when walking down aisles, maybe customers can download information onto their cell phone or PDA and use coupon right at the spot. Or, if the coupon information can be pulled out along with your account, they can give you discount automatically. How useful is that?

Current online services offered by grocery companies are limited. They offer coupon information, online shopping, delivery options, etc. This is old school system that has not changed for decades. There are many other ways to utilize what they have.

For a consumer, they can check their online account and see what they have purchases at a glance. If the database is linked to detailed product information, they can even see how much calories they consume, nutrition facts of individual product of gross amount nutrients taken from what you purchase. If they go further and link up with health information, maybe the site can kindly notify consumers that they should buy more vegetables with vitamin B2 or less red meat. You can look at your expenses for arbitrary period of time and help yourself plan a budget for grocery. There are many more possible usage for this. Also, having been provided all these useful features on their account, I believe the customer is likely to stick to one company, so it's good for business as well.

How does this help a business? First, they can save expenses on paper. But, there are new expenses such as server all other related fees including manpower to run this infrastructure, and that could be more expensive (Well, major companies already do have database on their sites anyways). So how could they make a ROI? Well there are several ways I can think on top of my head:

Online ads - Food channels would be thrilled to put their commercials. Any other TV commercials would want to buy commercial spots since the target audience is very clear... whoever go to grocery shopping. There is a difference between online ads on Google and, say, Ralph's sites. Google filters audience and stream ads of arbitrary products that are likely suitable for a user. Ralph's, on the other hand, put ads of what they actually have on their store... it can be more like a coupon. Of course, Ralph's can implement CRM and pull out "you may also like this" products like Amazon as well. Targeting would be much more accurate than Google which bases their CRM based on cookies store on user's computer.

Affiliate programs - There are many forms of online affiliate programs and this one can be quite simple. They probably do not want to limit their portal site as merely a grocery information bulletin board. Since there are thousands of products from hundreds of different companies in different industries on the shelves, opportunities to make useful affiliation is virtually limitless.

Nominal membership fees - Who wants to pay membership fees for this kind of program? I doubt anyone does. But would you mind giving out maybe 10 cent as a donation from each purchase you make? Probably not. Let's say an average family goes grocery shopping 2-3 times a week unless they're big time Costco lovers. $0.10 x 3 times a week x 4 weeks = $1.20. If you multiply that by 12 months, it's $14.4. According to US Census Bureau, the resident population of the United States is about 300 million. Let's say conservatively 1/10 of the population buy something at grocery store on a regular basis. That's still 30 million people. The annual fee of $14.4 x 30 million = $432 million for the whole grocery industry. Can they cover the cost with $432 million? They'd better.

Information stored on their database can be used for research purposes as well. Upon users' consent, demographic and purchase information can be used for health-related research to find out who eats more meat than fish or vegetables in which cities, for example.

I think that grocery stores going paperless can save energy and natural environment, make things easier for shoppers and give more business opportunities.

3 comments:

jeshka said...

stop smoking that is sco friendly too <3

YouKeyOh said...

at opportune time i might stop :)

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