As e-commerce continues to intensify in the business-to-business sector, the food industry has taken a giant leap forward in adopting electronic methods for locating products, according to FoodTRENDS(TM) 2000, a comprehensive annual study on purchasing trends among food industry buyers and specifiers.
FoodTRENDS(TM) 2000 clearly indicates that the food industry is keeping pace with the surging world of e-commerce in terms of electronic sourcing/purchasing and the development of credit/charge card usage. The survey found that areas seeing significant growth include sourcing/purchasing on the Internet or with proprietary software, e-mail communication, and credit card acceptance and use for wholesale purchases.
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The survey sponsored by Thomas Food Industry Register and American Express examined three key market segments — restaurants with fewer than six units, wholesalers/distributors, and food processors.
“The majority of food industry executives are sourcing via the Internet,” says Linda Rigano, Publisher of Thomas Food Industry Register. “With wider product selection online, the ability to buy direct, and the convenience of shopping during non-business hours, more than 80% of respondents expect their online purchases to increase over the next two years.”
The major FoodTRENDS(TM) findings are as follows:
Impact of Electronic Communication
* Food processors and restaurants have more than doubled their use of
e-mail to communicate with their suppliers (from 30% to 61% and from 9%
to 20%, respectively).
* There has been a 50% increase of e-mail usage among
wholesalers/distributors, growing from 38% in 1999 to 58% this year.
Electronic Sourcing on the Rise
* Restaurants show the most significant increase, with online sourcing via
the Internet and proprietary software more than doubling from 23% to
51%.
* In 2000, 65% of food processors source electronically compared to 42% in
1999.
* All three market segments recognize that there are key advantages
electronic sourcing can offer. Among restaurants and
wholesalers/distributors, more than three-quarters cite the ability to
source outside of normal business hours as most important. Locating
hard-to-find products is paramount to 82% of food processors.
Electronic Ordering/Purchasing Accelerates
* Up 22% in 1999, 49% of restaurants now order electronically. Food
processors have also made the leap to electronic methods from 21% last
year to 40% in 2000.
* Food processors show a marked preference for ordering via the Internet,
rising to 33% from 14% a year ago.
* The future for electronic purchasing is optimistic, with over 80% of
respondents in each market segment anticipating electronic purchases to
increase over the next two years.
B-to-B Purchasing With Plastic
* Among restaurants in the FoodTRENDS(TM) 2000 study, 31% are currently
using credit/charge cards to purchase food, equipment or supplies.
About one in three (32%) project card usage for b-to-b purchases will
increase over the next two years.
* Using "plastic" has proven beneficial for customers. Nearly nine out of
ten (89%) of wholesalers/distributors and 84% of food processors who
accept "plastic" say it enables customers to more quickly establish
credit.
Accepting "Plastic" for B-to-B Transactions
* Overall, 84% of wholesalers/distributors and 79% of food processors said
that accepting "plastic" could help them attract new customers and
expand their business. Nearly three out of four of these executives say
card acceptance enables them to provide better customer service.
* FoodTRENDS(TM) 2000 reports that 92% of wholesalers/distributors and 82%
of food processors expect charge card transactions will increase, or at
least remain steady over the next two years.
Accepting Electronic Orders
* Consistent with last year's findings, 54% of wholesalers/distributors
allow their customers to source or order from them online. Among those
accepting orders electronically, 73% agree this method is more
convenient than ordering by phone.
* Despite concerns that online ordering might lead customers to order
directly from manufacturers, 81% of wholesalers/distributors said they
believed their online sales of food products, equipment or supplies will
increase over the next two years.
Company Web Sites on the Rise
* All market segments utilize web sites, but they are most prevalent among
food processors (69%), a one-third growth from 51% a year ago.
Restaurants have seen the greatest growth, rising from 30% in 1999 to
56% this year. The number of wholesalers/distributors maintaining web
sites remains steady (52% versus 51% in 1999).
* Among the three market segments, there is a wide range in the amount
spent on maintaining an online presence (including site development,
online ads and e-commerce). Annual spending ranges from under $5,000 to
more than $1 million among all segments.
The Future
Data from FoodTRENDS(TM) 2000 clearly indicates that the future of electronic business is on the rise. Access to wider product selections with virtually no time constraints for sourcing and purchasing is important to busy executives. E-business is changing the traditional channels of distribution. Convenience has overshadowed the perceived “less personalized” approach of electronic business transactions. Understanding and accepting the shift towards electronic methods will enable the food industry to continue its growth in the b-to-b sector of e-commerce.
Data for FoodTRENDS(TM) 2000 was obtained via nationwide interviews with 800 food executives responsible for overall management decisions, including 300 restaurants (with fewer than six units); 250 wholesalers/distributors; and 250 food processors. The research was conducted by Magnet Communications (New York, NY).
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By GlobalDataThomas Food Industry Register is a product of Thomas Publishing Company, one of the oldest and most respected publishers of trade and industrial directors. Since 1898, buyers and specifiers have relied on TFIR, the single, most comprehensive buying guide for the food industry. American Express Company is a diversified worldwide travel, network, and financial services provider founded in 1850. It is a leader in charge and credit cards, Travelers Cheques, travel, financial planning, investment products, insurance and international banking.
The entire FoodTRENDS(TM) 2000 report, complete with charts and findings by individual market segment, is available free of charge. For further information or to receive a copy of the report, visit http://www.tfir.com
or call Thomas Industry Food Register at 800-305-TFIR or 212-290-7341. E-mail: lrigano@thomaspublishing.com.
