Printer Friendly

The World Wide Web in the Food and Beverage Sector in Spain.

GERARD A. RYAN [*]

Despite its potential, the World Wide Web is not yet a real or viable alternative for marketing channels in Spain. This research attempts to identify and evaluate the factors that contribute and facilitate the development of the Web as an environment for commercial activities in the food and beverage sector in Spain. Spanish consumers have traditionally shown little interest in all forms of distance buying and direct marketing. A range of factors may facilitate this development such as continuous growth in access to the Internet, continued evolution of computer technology, reductions in Internet connection tariffs, and communication speed. Consumers' income, the availability of information online, and the online consumption experience may also act as an impulse for commercial developments on the Web. (JEL M31)

Introduction

The interactive nature of the World Wide Web facilitates a permanent dialogue with the consumer and represents significant opportunities to explore new sales opportunities [Brady et al., 1997, p. xix]. According to Whinston et al. [1997, p. 21], the Internet can be used to adapt products to the precise needs of the consumer, forecast future demands, and define business strategies. Nevertheless, in spite of its potential, the Web is not yet a real or viable alternative for marketing channels in Spain. Still, a small number of consumers have access to this virtual channel, and even fewer are using it for buying goods.

This research attempts to identify and evaluate the factors that contribute and facilitate the development of the Web as an environment for commercial activities in Spain. The analysis of these factors is a vital first stage in understanding business success in this new environment.

The Approach to Food and Beverage Sales Systems in Spain

According to research carried out by the Ministerio de Agricultura, Pesca, y Alimentacion (Ministry of Agriculture, Fishing, and Food) (MAPA) [1996], the most commonly used channels by Spanish consumers when buying food and beverage products are, on one hand, traditional retail outlets and, on the other hand, hotel and restaurants, a growing industry sector in Spain.

Though the frequency of eating out by Spanish consumers is increasing (representing approximately 26 percent of total food expenditure), the level is relatively low compared to other countries such as the United Kingdom (32 percent) and the U.S. (47 percent) [MAPA, 1996, p. 41]. On average, European consumers' food expenditures represent 20 percent of their total income. In Spain, this proportion is about 23.5 percent [MAPA, 1996, p. 42].

The total food expenditure in 1995, including home consumption and consumption by hotels, restaurants, and institutions, was 7.9 billion pesetas (ESP), 74 percent of which was spent on domestic consumption. This represents, an approximate annual expenditure of 149.877 ESP per person [MAPA, 1996, pp. 42-4, 69].

Consumers' Eating Habits

General eating habits for both Spanish and European consumers suggest the following trends [MAPA, 1996, p. 39]:

1) There is a general desire for natural and healthy food products and a reduction in total consumption levels.

2) Eating is integrated with leisure activities. High-quality food consumption is linked with prestige and status.

3) Time dedicated to preparing meals is reduced.

4) Eating out has increased.

These changes in buying habits and food consumption do not provide any predictions of consumers' reaction to the possibility of purchasing food products over the Web. [1] In fact, Spanish consumers have traditionally shown little interest in distance buying and direct marketing, as shown in Table 1. The lack of confidence in these selling methods is mainly due to their limitations in terms of product presentation, the popularity of traditional shopping, and the geographic proximity of most retailers, among other reasons.

However, mail-order sales have been rising during the previous two years, [2] and direct response or television sales are increasing in popularity among Spanish consumers. These forms of selling represented 15 billion ESP in 1994, 6 billion of which were sales by El Corte Ingles, the leading retailer in its sector [Del Barrio et al., 1996, p. 130].

Nevertheless, Spanish consumers with free Internet access continue to show little interest in buying goods via the Internet. Food and beverage consumption via television sales is also relatively low and consists mostly of sales via the virtual shop of El Corte Ingles. [3] The state of commerce secretary calculated total Internet sales in Spain in 1997 as just 828 million ESP, with a forecasted increase of 80 billion ESP for the year 2000 [El Pais Digital, 1998; Triper, 1998, p. 26].

Purchase Intentions of Food and Beverages on the World Wide Web

There is a general lack of high-quality research regarding food and beverage sales via the Web. Those studies that do exist suggest contradictory outcomes. Surveys such as that by Greenfield Online (see BBBOnLine [1998]) suggest that most Internet users are "not very excited" about buying food and beverage products through this system. Research by White and Manning [1997a, 1997b] of Internet users with an interest in items related to food and beverages also shows a lack of general interest or desire to use the Internet to purchase such items (see Table 2). In the Spanish market, a regular survey by the AIMC and a further project carried out by the AUI show a low interest in buying through the Internet. [4]

A study by Consumer Direct Cooperative (see Andersen Consulting [1998]) estimates that 200,000 families in the U.S. buy their food and beverage products through the Internet and other online information services. Furthermore, it predicts that this sales method will grow significantly during the coming years, with 15 to 20 million U.S.households utilizing it in 2007, which will lead to approximately $85 billion (U.S. dollars) in food and beverage sales.

Consumer Direct Cooperative's research identifies five segments in the U.S. online food and beverage products market via the Internet. The segments are divided according to attitudes toward time, consumption, and technologies:

1) anticonsumption users are consumers who dislike traditional and regular shopping at retail outlets;

2) special-needs users have limited capabilities to buy goods by themselves;

3) technology lovers are young people feeling comfortable with new technologies;

4) time-worried, nonsensitive-to-price users are ready to pay the extra cost in order to save the time it takes to shop at traditional or real retailers; and

5) responsible users have free time to devote to consumption and are conscious of the effort it involves.

The attitudes of these segments toward the consumption processes are coherent with the advantages of the Web: more convenience, access to dealer information, lack of pressure from salesmen, and time saving [GVU, 1998].

In previous research, White and Cheng [1996] demonstrate a strong relationship between catalog sales and the use of the Web. Products frequently purchased through catalogs and the Internet are often not the same products traditionally acquired at regular retailers. Furthermore, Stem et al. [1989] and Lafrance [1988] found that products sold through catalogs or any other distance systems offer similar opportunities for online channels.

In their research on Internet sales, Shapiro and Wyman [1981] conclude that risk perception by the consumer increases or decreases according to the effort required to make the purchase decision. George [1987] indicates a positive relationship between the propensity to buy through telechannels and familiarity with product brands, as well as an opposite relationship with product complexity and the requirement of the consumer to physically examine or check the product before making the purchase decision.

The potential market of online selling is characterized by the desire and capacity to pay for the convenience, as well as the low resistance to change. Though online selling concerns a specific group of consumers (with a higher than average income, low resistance to innovation, telematic systems users, and the like), the possibilities for expansion of this market are significant.

Commercial Development of the World Wide Web: The Spanish Case

The Web is still in the early stages of development as a commercial environment for Spanish companies, considering that most users perceive a high, potential risk associated with commercial transactions over the Internet. [5] Spanish users show a similar profile as other first-time Internet users: young and mainly male, with a high income and university education--quite dissimilar to the average Spanish profile (see Table 3).

However, research by GVU [1997, 1998] suggests that as the Internet is being adopted by more people, profiles and habits are increasingly less standardized. The authors suggest that it will still be quite some time before Spanish Internet users become a sufficiently attractive commercial segment for most companies.

Though the Internet is considered an alternative or complementary channel and an adequate platform for communication with consumers, [6] few Spanish companies are incorporating and integrating the Internet into their marketing strategies. In general, Web sites demonstrate little understanding of true commercial Internet potential.

The offer of food and beverage products via the Internet in Spain may be represented by two basic distribution systems:

1) Accumulated distribution: This is used by retailers such as El Corte Ingles and Alcampo, [7] who use their own system to distribute products sold through their Internet sites. In this way, they improve and extend their service and, consequently, their market.

2) Logistic contracts: Nonperishable product retailers use logistic companies for transportation and delivery. This option is used by small retailers, such as gourmet-type or nonperishable products, with high unit prices, such as virtual shopping centers such as esc@parate and De Compras BBV.

Until now, virtual retailers in Spain have not followed the example of some U.S. operations by setting up agreements with local retailers to support their Internet sales.

World Wide Web Commercial Development Factors in the Spanish Food and Beverage Market

In reviewing the literature of similar direct marketing methods [De la Ballina, 1993], 25 environmental factors were identified. A panel of experts was developed to evaluate how these factors could help with understanding and developing the commercial aspects of the Web (see Rodriguez [1998]).

Research Methodology

Because of the lack of previous research on the commercial possibilities of the Web, the authors adopted the ideas-generation method of research [Guell, 1995, p. 141 with a group of experts previously elected8 (see Figure 1). This study consisted of an exploratory design [Weaver, 1971, pp. 1-4] using the Delphi technique.

Three kinds of experts were incorporated:

1) specialists, with general experience and knowledge about Internet food and beverage distribution, including articles and various research projects;

2) involved experts which included professionals and managers from areas involved; and

3) facilitators, such as teachers, researchers, and professionals who can contribute to the diffusion and adoption of the Web as part of the marketing strategies.

Results

Most of the factors analyzed obtained high scores from participants, as shown in Table 4. According to experts, these factors show more influence on the adoption patterns of online or telematic sales development of the Internet and information technology, such as the growth in the number of both Internet users and home computers. Also important are falling computer prices, communication speed, and transaction security. On the other hand, the matrix of simple correlation coefficients of the best-situated five variables suggests a strong correlation between the growth in the number of users and decreasing prices for computer items, as well as with communication speed.

Finally, a factor analysis was used to extend the study of the variables. Four factors were selected and these factors explained 56.42 percent of the variance. Following a factorial axis rotation, a factorial matrix was developed to facilitate interpretation:

Factor 1--Internet communication adoption: This shows a high relation with variables related to the development of communication technologies in the Internet.

Factor 2--Economic capacity and consumer consumption demand: This is associated with variables that influence consumers' decision making, such as income and preferences for quality, and an increase in consumption demand.

Factor 3--Household changes: These include changes within household-role distribution as a consequence of the incorporation of women into the labor market as well as changes in family size. It also includes higher education levels.

Factor 4--Companies' new ways of thinking (versus consumers' new ways of thinking): This represents a highly negative association with new consumer style and also a positive relation with companies' Internet investment, as a consequence of companies' new ways of thinking.

Conclusions

The long-term development of the World Wide Web in Spain as an environment for commercial activity is still in its early stages, especially within the food and beverage industry. A range of different factors may facilitate this development. It will depend on continuous growth in access to the Internet by Spanish consumers. This will be determined by the continued evolution of computer technology as well as reductions in Internet connection tariffs and communication speed. Consumers' income, the availability of information online, and the online consumption experience may also act as an impulse for commercial development on the Web. Finally, the willingness of companies in the food and beverage sector to invest in online technology and the integration of the Internet into the marketing strategy as both new communication and distribution channels will be decisive for future development of the Web as a commercial environment in Spain.

(*.) Universitat Oberta de Catalunya and Escola Universitaria del Maresme--Spain.

Footnotes

(1.) Rodriguez [1998, p. 130] considers that by using services and links and including electronic documents, telematic sales on the Web allow the customer to check, select, and acquire any offer through a computer or a mixed-system computer-television connected to the Internet in real time from home or any work location.

(2.) In 1996, income from postal sales was approximately 81.845 billion ESP [Noriega, 1997].

(3.) El Corte Ingles began computer sales in 1987 by using Telefonica Ibertex Service. Since then, they have reached 35,000 customers with an average of 25,000 ESP per purchase [Castello, 1996].

(4.) Only 1.1 percent of Spanish buyers through the Web (76.5 percent of users) have bought food and beverage products through this channel [AIMC, 1998a].

(5.) In the second survey of Internet users by AIMC [1998b], 32.9 percent of Spanish users rated the security of Internet purchase payments as low and 25.6 percent were not secure at all.

(6.) This is according to IPMARK-SIGMA DOS research (see De Haro [1998, pp. 32-5]) and research by Gemini Consulting (see Carrillo [1998, p. 131]).

(7.) As El Corte Ingles distributes its supermarket products throughout Spain, Alcampo offers this service in the Madrid area only.

(8.) This panel, including 30 Spanish experts, was designed by Inma Rodriguez [1998] for research concerning electronic trade in Spain, performing two rounds before obtaining the final results.

References

Andersen Consulting. "Online Grocery Shopping on Track for Rapid Growth," Top Stories Careers, [less than]http://www.ac.com[greater than], January 15, 1998.

Asociacion de Usuarios de Internet. Estudio General de Usuarios, [less than]http://www.aui.es[greater than], June/August 1998.

Asociacion para la Investigacion de Medios de Comunicacion. Navegantes en la Red. Segunda encuesta AIMC a usuarios de Internet, [less than]http://www.arroba.es/aimc[greater than], April-May 1998a.

___. Estudio General de Medios: Tercera ola 1998, [less than]http://www.arroba.es/aimc[greater than], October-November 1998b.

BBBOnLine. "New Survey Indicates How to Increase Consumer Confidence in Shopping Online," BBB Survey, [less than]http://www.bbbonline.org/surveys.html[greater than], 1998.

Brady, R.; Forrest, E.; Mizerski, R. Cybermarketing: Your Interactive Marketing Consultant, Lincolnwood, IL: NTC Business Books, 1997.

Carrillo, S. "El tiron definitivo del comercio electronico, a punto," Expansion, October 2, 1998, p. 13.

Castello, M. "El Corte Ingles abre tienda en Infovia," Expansion, March 21, 1996.

De Haro, M. "Estudio IPMARK-SIGMA DOS sobre las TIC en la empresa anunciante: Amplia implantacion del correo electronico y uso moderado del comercio en Internet," IPMARK, 504, May 1-15, 1998, pp. 32-5.

De la Ballina, F. J. "La evolucion tecnologica de la distribucion sin establecimiento: perspectivas de desarrollo de la venta telematica," doctoral thesis, Universidad de Oviedo, 1993.

Del Barrio, S.; Rodriguez, M. A.; Sanchez, J. "Situacion actual de la venta a distancia: Un estudio empirico," VII Encuentro de Profesores Universitarios de Marketing, Madrid, Spain: ESIC, 1996.

El Pais Digital. "Las ventas por Internet llegaran a 80.000 millones en el ano 2.000," [less than]http://www.elpais.es[greater than], 80, July 20, 1998.

George, R. M. "In-Home Electronic Shopping: Disappointing Past, Uncertain Future," The Journal of Consumer Marketing, 4, 4, 1987, pp. 47-56.

Graphics, Visualization, and Usability Center. "Eighth WWW User Survey," GVU's WWW User Surveys, [less than]http://www.gvu.gatech.edu/gvu/user_surveys[greater than], 1997.

___. "Ninth WWW User Survey," GVU's WWW User Surveys, [less than]http://www.gvu.gatech.edu/gvu/user_surveys[greater than], April 1998.

Guell, A. M. "Directivos del Futuro," AEDIPE, September 1995, pp. 13-5.

Lafrance, J. P. "Telecompra: Cronica de un Nacimiento Anunciado," Revue Francaise du Marketing, 116, 1988.

Ministerio de Agricultura, Pesca, y Alimentacion. La alimentacion en Espana: 1995, Madrid, Spain: MAPA, 1996.

Needham, R. D.; De Loe, R. C. "The Policy Delphi: Purpose, Structure, and Application," The Canadian Geographer, 2, 1990, pp. 133-42.

Noriega, A. "Las empresas de venta por correo salen del letargo al crecer un 9 percent en 1996," Cinco Dias, October 30, 1997, p. 10.

Rodriguez, I. "El reto del comercio electronico en la World Wide Web. Evolucion, alcance y consecuencias para la distribucion comercial. Un estudio para el sector de alimentacion y bebidas," doctoral thesis, Universidad de Barcelona, 1998.

Shapiro, B. P.; Wyman, J. "New Ways to Reach Your Customers," Harvard Business Review, July-August 1981, pp. 103-10.

Stern, L. W.; El-Ansary, Adel I.; Brown, James. Management in Marketing Channels, Englewood Cliffs, NJ: Prentice Hall, 1989.

Triper, J. M. "El comercio en Internet movera 80 millardos en Espana," Cinco Dias, June 23, 1998, P. 26.

Weaver, W. T. "Delphi, a Critical Review," Educational Policy Research Center: Final Report RR-7, Syracuse, NY: Syracuse University Research, 1971.

Whinston, A. B.; Stahl, D. O.; Choi, S. The Economics of Electronic Commerce, Indianapolis, IN: Macmillan Technical Publishing, 1997.

White, G. K.; Cheng, H. "Purchase Behavior of Online Specialty Food and Drink Consumers: Results of an Electronic Survey," Allied Academies International Conference, [less than]http://www.ume.maine.edu/[sim]specfood/demog.html[greater than], 1996.

White, G. K.; Manning, B. J. "Characteristics of Likely Internet Speciality Food and Drink Consumers," American Marketing Association Special Conference, [less than]http://www.ume.maine.edu/[sim]specfood/amal.html[greater than], 1997a.

___. "Commercial WWW Site Appeal: How Does it Affect Online Food and Drink Consumers' Purchasing Behavior?," Internet Research, [less than]http://www.ume.maine.edu/[sim]specfood/amal.html[greater than] 8, 1, 1997b.
                        Purchases via the Internet
                    and Influence on Purchase Decisions
                                         Global    Spanish
Influences                            GVU [*] Data AIMC [*] Data AUI [*] Data
Telematic buying (television sales):      76.2         26.5          23.0
  Percentage of users who bought
  some product using the Internet
Influence on decision making:             89.2         46.8          54.0
  Percentage of users who bought
  products using information obtained
  through the Internet
Sample number of Internet users          12,591       32,282        3,437
Notes: (*.)See Source.
Source: Graphics, Visualization, and Usability Center (GVU) [1998],
Asociacion para la Investigacion de Medios de Comunicacion (AIMC)
[1998a], and Asociacion de Usuarios de Internet (AUI) [1998].
                      Purchase Intentions of Food and
                       Beverages According to Sales
Opinions                 Web Telematic Buying Mail or Catalog Retail
Highly or Quite Unlikely         67.1              64.8        31.3
Indifferent                      13.1              13.2        14.9
Highly or Quite Likely           19.8              22.0        53.8
Notes: Figures are in percentages. Results were obtained
from a sample of 2,192 Internet users considered potential
purchasers of food and beverages through the Web.
Source: White and Manning [1997a, 1997b].
                      Internet User Profile in Spain
Demographic and Socioeconomic Aspects                   Internet Users
Access Location                       Home                   73.6
                                      Work                   44.5
                                      University/School      24.4
                                      Other                   3.6
Time Used                             Weekdays               46.1
                                      Weekends               15.2
                                      Indistinct             38.1
Connection Speed                      14.4 or less            8.2
 (in Kilobits/Second)                 28.8                   14.9
                                      33.6                   48.8
                                      56.0                    8.9
Experience                            Experts                11.7
                                      Intermediate           42.6
                                      Beginners              43.0
Age (in Years) [*]                    14 to 19               10.6
                                      20 to 24               16.7
                                      25 to 34               38.3
                                      35 to 44               20.3
                                      45 and older           14.0
Female [*]                                                   30.9
Lifestyle/Class [*]                   High                   27.6
                                      Medium to High         31.0
                                      Medium                 32.0
                                      Medium to Low           8.0
                                      Low                     1.4
University Education [*]                                     52.0
Demographic and Socioeconomic Aspects Population
Access Location
Time Used
Connection Speed
 (in Kilobits/Second)
Experience
Age (in Years) [*]                        9.9
                                          9.9
                                         19.2
                                         16.5
                                         44.5
Female [*]                               51.3
Lifestyle/Class [*]                       6.6
                                         14.9
                                         40.5
                                         26.1
                                         11.9
University Education [*]                  --
Notes: (*.)denotes total number of Internet users is
1,733,000, percentage over total population is 5.1,
increasing rate (last 12 months) is 56.1 percent, and
sample size is 13,737. Figures are in percentages.
Source: AIMC [1998a, 1998b].
                      Web Development Factor Ranking
Rank Development Factors                  Average Score Median
1    Internet user growth                     4.700     5.000
2    Home computer growth                     4.700     5.000
3    Decreasing computer item pricing         4.567     5.000
4    Higher Internet communication speed      4.567     5.000
5    Secured electronic sales development     4.467     5.000
6    Easiest equipment and programs           4.467     5.000
7    Communications development               4.433     5.000
8    Increasing Internet offers               4.400     5.000
9    Internet access-equipped televisions     4.400     5.000
10 Company Internet-investment growth                  4.167 4.000
11 Higher education level                              4.133 4.000
12 Economic growth                                     3.867 4.000
13 Automatic ordering                                  3.833 4.000
14 More informed consumers                             3.800 4.000
15 Dual-salary households                              3.533 4.000
16 Fast and cheap transportation systems               3.367 4.000
17 Increase in shopping by men                         3.400 3.500
18 More women with jobs                                3.367 3.500
19 Urban population growth                             3.233 3.000
20 More demanding customers                            3.100 3.000
21 Quality priority versus quantity                    2.967 3.000
22 Increasing regulation for new retail establishment  2.833 3.000
23 Increasing concentration of distribution            2.800 3.000
24 Single, divorced, and the like growth               2.500 3.000
25 New ways of thinking (health, sports, and the like) 2.700 2.500
Notes: According to the Delphi methodology, the
following variables were used to rank the factors:
median, mean, minimum value, range, and variance.
                           Research Participants
New Type of Experts              Traditional Experts
   Subjectivity       Decision       Objectivity
     Proximity       Proximity        Proximity
     Involved       Facilitators     Specialists
Source: Adapted from Needham and De Loe [1990].
COPYRIGHT 2000 Atlantic Economic Society
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2000 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Comment:The World Wide Web in the Food and Beverage Sector in Spain.
Author:RODRIGUEZ-ARDURA, INMA; RYAN, GERARD A.
Publication:International Advances in Economic Research
Geographic Code:1USA
Date:Nov 1, 2000
Words:3761
Previous Article:Measuring the Similarity of Economic Processes.
Next Article:The Pedagogy of Tax Evasion: Its Extent and Its Determinants.
Topics:

Terms of use | Privacy policy | Copyright © 2021 Farlex, Inc. | Feedback | For webmasters |