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Will Germany's e-commerce revolution be a win for seafood?

Changes are coming to the country's retail structure -- but just how big is the potential for seafood suppliers?

Reading the food and retail-related news in Germany over the past few months one might believe the online revolution is finally happening.

While retailers Rewe, Lidl, Kaufland and others already offer questionably successful online shopping services, the concept hasn’t really caught on for fresh food, and remains relatively undeveloped compared to countries such as the United Kingdom or The Netherlands.

But recently there have been indications that the dynamics are changing.

Retail giant Rewe -- the leader in Germany’s languishing online food segment -- for the first time fetched more than €100 million ($94.1 million) of its turnover from online sales last year.

Compared to the overall revenue of €45.6 billion ($42.9 billion) that's still a very small amount, but Rewe CEO Alain Caparros said in a recent interview with magazine Focus the plan is to grow that figure to €800 million ($752.9 million) within three years.

Perhaps the biggest pointer for the change is the news of online delivery giant Amazon frantically working on setting up Amazon Fresh in the capital Berlin. Lebensmittel Zeitung recently wrote the service could be up and running by this April. 

This could mean a significant shake-up of the fresh food market, even though experts are cautioning not to jump to early conclusions. Investments will have to be high and the actual outcome is still unclear.

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Still, suppliers should be aware of the developments as it would mean new ways to market their products.

The big question is, of course, will seafood suppliers be able to jump on the bandwagon and cash in on the new opportunities e-commerce is presenting?

Let’s quickly look at the United Kingdom, where online grocery shopping is booming. Is it also booming for seafood? To a certain extent, yes.

My colleague IntraFish Editor Rachel Mutter cited research by industry body Seafish in an ingenious column last summer, which suggested while most consumers are happy to buy frozen and tinned seafood online, they would rather be able to see their chilled product -- packaged or unpackaged -- before buying it.

I could definitely see the same thing happening in Germany, especially after reading a market study by consulting firm A.T. Kearney, which highlighted the biggest hurdles to online food shopping in Germany, Austria and Switzerland.

A.T. Kearney quizzed shoppers on why they don’t buy their food online and the results were quite revealing. Sixty-eight percent of respondents said they were happy with shopping at stores.

I totally get that. Geographic concentration of supermarkets in Germany is extremely high, especially in cities. There’s an Aldi, Lidl, Netto and Rewe all within five minutes walking distance of my office in Berlin, so the convenience factor of online shopping doesn't really appeal to me.

About half of the interviewees in the study (47 percent) said -- and this is interesting -- they would want to touch and see the products they’re about to buy, which definitely could be a massive hurdle for chilled seafood suppliers.

Shoppers also said they unsure about the product quality and safety when ordering online (41 percent of respondents). I’m pretty sure that percentage would be even higher if they’d been asked specifically about buying fish or seafood online.

So there we are at the root of the problem: Consumers don’t believe it’s safe to buy fresh fish and seafood online. But China's e-commerce boom shows that it can be done.

I recently spoke to Charlie Wu, managing director Asia Pacific at Marine Harvest, and among other things asked him why seafood was doing so well at e-commerce giants Alibaba, TMall and so on.

Curiously enough, he said Chinese consumers believe they are “finding consistently better quality” of fish and seafood online. E-commerce operators simply built up trust and credibility with shoppers in the country, while hyper-markets are having issues with their supply chains.

Can that be done in Germany and in other European countries? Probably, but it would require high investments both in logistics and marketing to change consumer perception.

It’s definitely worth mentioning the example of Bremerhaven-based Deutsche See though. The group launched its online delivery service nation-wide in October last year, after trialling it in cities such as Berlin, Munich and Stuttgart.

Products include a variety of whole fish, fish fillets, seafood, deli salads, sushi and smoked fish, and the offering includes serving suggestions and recipes -- and most of it is chilled.

Orders are either delivered to customers directly, or they can be picked up at one of the 22 Germany-wide branches of Deutsche See. Yes, that’s twenty-two branches. That definitely shows that investment is needed if you want to do it right.

There’s still a long way to go before online grocery and seafood shopping will take off, or even overtake offline shopping. But given the undeniable trends, my suggestion is: get in early, do your research and don't let the opportunity go.

Comments? Email me at elisabeth.fischer@intrafish.com

Twitter: EF_IntraFish

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