Is it worth running an online grocery store in Poland? It is a question asked not only by merchants. Most are convinced that it is not. Using the example of the TOTU Group of Companies, we want to show that it is possible to do business in this industry.
Editorial Staff
On July 16, 1997, the TOTU Group of Companies launched the first online grocery store in Poland. The offer included over 7,000 products from a typical, physical hypermarket. When implementing the totu online store (www.totu.com), two principles were adopted:
1) the base of the online store would be the physical TOTU store,
2) the sale of products in the physical store and via the Internet must take place at the same price, and the Internet should enable additional product presentation.
In 1998, when cooperating with stores in Warsaw and Katowice, the decision was made to launch the TOTU internet platform. Two further assumptions were adopted:
1) goods would be delivered within two hours from the moment the order is confirmed by the store,
2) each physical store presenting its offer on the totu platform would have a defined delivery area for its products, determined by postal codes.
In May 2000, the TOTU Internet Shopping Center was launched – the totu internet platform, to which offers from Polish physical stores operating throughout Poland are successively introduced.
2) the sale of products in the physical store and via the Internet must take place at the same price, and the Internet should enable additional product presentation.
In 1998, when cooperating with stores in Warsaw and Katowice, the decision was made to launch the TOTU internet platform. Two further assumptions were adopted:
1) goods would be delivered within two hours from the moment the order is confirmed by the store,
2) each physical store presenting its offer on the totu platform would have a defined delivery area for its products, determined by postal codes.
In May 2000, the TOTU Internet Shopping Center was launched – the totu internet platform, to which offers from Polish physical stores operating throughout Poland are successively introduced.
The above assumptions for the operation of an online store, adopted by the Group in those years, became the foundation for the implementation of online stores recently created by large retail corporations, e.g., Tesco, Wall Mart. These stores, based on the offers of their physical stores, sometimes exceeding 40,000 products, without incurring logistics costs, show high sales dynamics (in 2001, Tesco sold 7% of its total tonnage in the UK via the Internet). Sales using the Internet significantly contribute to the increase in turnover and income of these chains.
The opposite of the TOTU Group’s concept are the so-called shopping malls created by Polish portals, e.g., Wirtualna Polska, Onet, Gazeta. The stores here offer a modest commercial range, sometimes only a few products. The cost of their operation is high, while the financial results of both the portals and the stores are not encouraging.
The Group’s nearly six years of experience in trade using the Internet as a medium for information and order fulfillment can be the basis for determining the trends and directions for the further development of this retail segment.
Structure of the TOTU Shopping Center
The currently implemented TOTU Internet Shopping Center (ICH TOTU) is the third version of the online store. Everything that has been created over six years is the result of our own reflections and experience, as well as the use of customer feedback.
The TOTU hypermarket, operating from July 16, 1997, to December 14, 1999, was implemented based on Windows NT. The customer reached the product by clicking on industries, sub-industries, and product lists. Some products had an additional description. The adopted structure of the online store corresponded to the structure of the physical store, enabling quick access to the product. In the first period, sales took place in Poznań, Warsaw, and Katowice.
TOTU Shopping Center. Assuming the creation of an online store containing over 500,000 products offered by about 100 physical stores, it was determined, despite many attempts, that it was necessary to move away from existing software solutions. On December 14, 1999, the first store on the Linux platform was launched. In March 2000, specialized showrooms were launched, offering electronics, computers, toys, furniture, etc. The low level of knowledge of manufacturers regarding the Internet, as well as a lack of belief in its marketing power, practically torpedoed the development of the showrooms. In May of the same year, the TOTU internet platform began operations, on which physical grocery hypermarkets from Bielsko-Biała, Katowice, Kraków, Poznań, and Warsaw presented their commercial offer.
The TOTU Internet Shopping Center was launched on July 20, 2002, as the next version of the totu online store. (Fig. 1). Due to the commercial offer exceeding 300,000 products, a number of significant changes were introduced in their search to reach products faster. For the first time, the customer had several purchase paths to choose from, in addition to choosing by the name of a specific product, which significantly accelerated reaching it and making a purchase decision.
It was made possible to select products by: 1) a given manufacturer from the product list, e.g., Tchibo products, 2) a given type, e.g., chocolates with nuts, 3) packaging, e.g., canned beer, 4) desired weight. The latest version is constantly being expanded, and the scope of work largely depends on TOTU’s partners. No changes were made to the showrooms. It is worth noting the Grundig company, which is the only one to present its entire commercial offer for the retail customer in Poland at its preferred prices.
It was made possible to select products by: 1) a given manufacturer from the product list, e.g., Tchibo products, 2) a given type, e.g., chocolates with nuts, 3) packaging, e.g., canned beer, 4) desired weight. The latest version is constantly being expanded, and the scope of work largely depends on TOTU’s partners. No changes were made to the showrooms. It is worth noting the Grundig company, which is the only one to present its entire commercial offer for the retail customer in Poland at its preferred prices.
The Center’s activity is based on four previously developed principles:
1) presentation of the commercial offer of a given store, a TOTU partner,
2) sale of goods at the price of the physical store shelf,
3) operation of each TOTU partner in a specific area designated by postal codes,
4) delivery of goods to the customer within two hours from the moment the order acceptance is confirmed by the store in the area it serves (as of April 21, 2003, the system covered 70.31% of postal codes, including 367 cities); in the remaining area, the offer from Poznań is available, fulfilled within 72 hours.
The article comes from the magazine “Logistyka” 1/2004.