[quinnie0930]

To all the marketers/advertisers,
If I were to create an online grocery shopping store, what would be the estimated advertising costs? Thanks!

[EntrePR]

Wow, deja vu all over again.

Pleas, for the love of all that is holy, do not do this. It's not a good business model. This has been proven by dozens of companies in the 90's.

[akula]

it will cost you more than 10 million to reach break even

that's based on comparable online groceries startups, and your marketing costs being about 30% of your revenues, and the amount of sales you're gonna have to generate trading on a profit margin of 2-5%

but, it will possibly cost much more than just a few million

webvan burned through over $1 billion and still went under

likewise, chains like Woolworths making $100billion+ a year in revenues, project that it will cost them 5-10% of those revenues, over the next 5-10 years, in supply chain and ancillary costs used to facilitate online orders and deliveries

[quinnie0930]

It's all about differentiation and what you can offer that makes your store unique. I have ideas that will save the customers more money than shopping in person. I had the idea a while back, but was discouraged by friends or so. However, today, after reading this article: http://www.msnbc.msn.com/id/7714118/ it motivated me again. Anyhow, I want to start locally first with the few cities surrounding then expand later if sucessful. My business model is a little diff. Instead of having my own grocery, I might partner with the existing ones (ie: Winn dixie, albertsons, etc). Advertising cost shouldn't that much, , shoulfor just a few places locally, should it?
http://www.peapod.com/ has chosen to be very successful.

Any idea how much it'd cost to hire surveys companies to do surveys for me so I can get an idea if there's a market for this in my area? Thanks.

[akula]

quinnie, I don't want you to think that anyone here is encouraging you to do an online groceries venture, so it makes little sense for me to second guess what market research vendors are gonna quote you for that kind of job.

what I will say is this: you're falling victim to confirmation bias and there's nothing successful about peabody

differentiation has nothing to do with anything and peapody is a delisted bubble failure, who are probably still in negative cash flow

btw: they have over 20 years experience in selling groceries, so they wouldn't be a fair comparison anyway

quinnie, I don't understand, have you got like a million dollars you wanna spend to see if you're right or wrong? are you even in a position to be a founder for a consumer facing startup?

if not, why are we discussing these online groceries things?

btw: I hear boca ratton is gorgeous. lucky u

[quinnie0930]

hey akula,
Thanks for your responses. You're right, I don't have a million dollars but why did you just assume that I don't?
If you read the article I posted up (old article, but good info). It stated that grocery online shoppers has increased in the past few years (5% of the consumers as of 2005, add up to 3.7 million people. Compared to US populatoins (which is about 300 million), that's a good 1%, and the number of online grocery shoppers are expected to triple by 2008. FL is ranked the 4 highest population in America. There are a lot of old people who can't drive to go shopping, yet there are also lots of professionals and working profressional woemn who does not have time to go shopping after a 9-6 work day job either. I'm a professional myself and I'd love to use to service if it were available in my area. It has failed in the past, that does not mean that it will continue to keep failing. Plus, when those online grocery startup failed, those were the times when the dot com went down hill. It's just bad timing.

What I meant about differentiations is how you make your product distinguishes from others. Here are some of my ideas:

1) I'd obtain all the sales of the week from different grocery stores, when the shopping list of the customer is compiled, I make sure the individual item is bought from the store with the cheapest price (applied the sale of the day). Normally if you go shopping , you don't want to drive around even if there are sales of your items from a different store. You tend to buy everything at the same store. Why? Because you don't want to run around. With my service, I run around to get the best price for you. But I can do so because I have the group orders. The final savings could be tremendous for the customer.
2) I'm not buying the groceries for my store since I do not have capital, so I would hire drivers and shopper to go shopping and deliver for me. I make money on the shipping cost. If a minimum order is 50. I charge 10%, which is $5, not too bad. It would cost you more time and gas if you were to go shopping yourself. For this reason, my capital cost would remain low. I just have to pay drivers and shoppers only when they have to go out to do the work. High school students are perfect for this.
3) I can offer some smart extras such as, keep track of the person's recipes, favorites and suggest them what to buy for their favorites
4) some other things
5) Development cost and labor cost should not be that much and will depend on the amount of customers I have initially. I just don't know about marketing cost
6) I did some estimates, based on the population of the 10 cities surrounding me 40 miles up north and down south, even only .5% people are interested in this system (as supposed to 1% as from the article consumer reported stated), I would have 12,000 customers.
7) Aside from marketing cost, which I have little ideas, other cost should be less than 50k at the moment I'm calculating.
8) Everyone is skeptical. But I don't want to regret it when I see the first online grocery store is available around here and it's not me.

[akula]

quinnie, I know, I know, I know and (gasp) I know.

It looks wonderful on paper. You have beautifully reasoned and researched business plans which guarantee this venture will nothing less than a smash hit

but so what?

I'm not aware of even a single online groceries venture which has generated even a faint promise of a positive return on investment for its owners

not one. there have been a lot, and they have all gone under.

to move forward: you're looking for an opportunity. you think online groceries is a god opportunity. everyone is telling you the oppoosite because there is no evidence that online groceries is a good idea, and plenty of evidence suggesting that it isn't.

so what are your options?

either change the kind of opportunities that you're targeting, or find at least one professional investor who can tell you that online groceries is a goer.

at the end of the day, we're here as your virtual chat buddies, our role is to help you think twice about doing anything unreasonable (i.e. stupid), but if you refuse to consider the feedback - I suggest to you that you are misusing this resource.

Try asking a question like "Is there any evidence that online groceries is a good idea?". If completely impartial people on this board can find evidence that you can make a buck with this play, that would be a good result for you using this board.

[akula]

also, obviously, I'm not here to assume anything

the reason why asked about money is because there's no point in discussing pipe dreams

any consumer venture calls for an enormous equity investment on the part of founder and unless you can afford to lose all this money, the opportunity you're targeting is unsuitable to your risk profile

[quinnie0930]

Daniel,
Sorry that I'm offended you. I'm here for advices and do appreciate any advices that are given to me since I have little business background. I'll be happy to see all the articles that you can share so I can learn more about why they were failing miserably. A lot of times, a business fails because they suck, not because there isn't a demand for it. If Peapod is still failing, why they're still expanding their business? Amazon (that we all love, and they're sure isn't "Stupid") also just started their online grocery store. Albertson has also started in CA. Check out this article http://www.internetretailer.com/inte...y-shoppin.html
Companies in the 90s are 10 years ago. We're in the 21st century. Things are different now, there are more professonials now, there are more techies now, don't you think?
Again, thanks for your feedbacks. I was just expressing my ideas to how my models would be different. And again, it's within the budget that I might bbe able to manage, it's certainly not a million dollars. I don't reach for something that is unreachable. I like to dream but I'm realistic too.

[akula]

well...

I'm here to help you select the right venture which you can realistically execute and become successful

This definitely does not include me suggesting that starting a direct competitor to Amazon.com is a good opportunity for a novice founder

It doesn't really even matter why online groceries shops fail, or what you can do to lower your chances of following suit, or whether times have changed to create a better environment for thee kinds of shops

It's about you starting something manageable, accumulating some sort of capital and going on to bigger and better things

The cost of entry into the online groceries market is simply too high for you too consider committing to this venture at this particular time in your career

What are your options at this stage?

p.s. don't worry, I'm not offended