March 5, 2004, 12:00 AM
By Kurt Peters Executive Editor
A shift toward improved customer service in the online grocery industry is paying off in strong growth, with 2003 online sales of food and beverages estimated at $3.7 billion, up 40% from $2.64 billion in 2002, says a study by Michigan State University. Online grocery sales volumes are now running 50% higher than their prior peak in 2000, MSU says.
“Despite the relatively small size of this market niche, it is extremely important for these reasons: it is growing rapidly, online customers are fairly price insensitive and they tend to buy higher margin items,” says Kenneth K. Boyer, co-author of the study and associate professor of supply chain management at MSU.