The Service Industries Journal

Vol. 29, No. 11, November 2009, 14791489

Who are the online grocers?

Tak-Kee Hui and David Wan
Department of Management and Organisation, NUS Business School, National University of
Singapore, 1 Business Link, Singapore, 117592
(In final form 26 June 2007)
Online grocery sales experienced a surge in Singapore in the early half of 2003 during
the SARS outbreak. This research uses the technology acceptance model and some
basic demographic variables to study the intended usage of online supermarkets.
Based on a sample size of 211 shoppers, it was found that those 2140 years old
have a higher propensity to use the online grocery stores while those having income
lower than S$2000 a month have less inclination to make use of e-grocery shopping.
The stepwise discriminant analysis shows that two perceived variables, usefulness and
ease of use, and two demographic variables, age and income are significant in
differentiating the intended customers. Our results are different from past studies,
where gender and education were found to be significant. This may be due to the fact
that the bulk of the respondents were under 41 years old with at least tertiary education.
Keywords: online supermarket; Internet shopping; online shopping; e-commerce

Introduction
A supermarket is a large self-service food store (McClelland, 1962). As the grocery industry grew, this definition expanded to encapsulate items such as basic household requisites
although its strongest association remains with groceries. Priluck (2001) revealed that consumers in the USA make an average of 2.2 visits to a supermarket per week to shop for
groceries, signaling the importance of such an activity. Today, traditional brick and
mortar stores are increasingly eager to enter the online market in an attempt to leverage
brand awareness and create distribution (Kempiak & Fox, 2002). With the advent of the
Internet and increased competition, grocery shopping has taken on a new dimension
(Hackney, Grant, & Birtwistle, 2006). Riding on the rising trend of online retailing, supermarkets, and logistics companies have launched their own version of online supermarkets.
Nonetheless, not all is rosy for the players trying to create their own sphere in the
e-grocery businesses. Britains No. 1 supermarket chain Tesco has watched one rival
after another put up the white flag on their e-grocery businesses. In the USA, the failure
of the Webvan Group Inc. in trying to establish a purely Web-based grocer was caused
by the low customer demand that was insufficient for Webvan to operate its facilities at
anywhere near capacity (Kamarainen, Smaros, Jaakola, & Holmstrom, 2001).
Given the mixed success of online grocery retailers, it is vital for supermarket operators to understand how people decide whether they will use online grocery services
because systems that are not used cannot be effective, no matter what their technological
merits. This is particularly relevant in the increasingly competitive online grocery retail
environment, in which numerous supermarkets compete among themselves within a


Corresponding author. Email: bizwantw@nus.edu.sg

ISSN 0264-2069 print/ISSN 1743-9507 online

# 2009 Taylor & Francis
DOI: 10.1080/02642060902793334
http://www.informaworld.com

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T.-K. Hui and D. Wan

relatively stable market (Rohm & Swaminathan, 2004). Furthermore, from a managerial
perspective, classification of potential users provides the basis for understanding and targeting different groups of consumers.
Given that online grocery shopping is nascent in Singapore, a typology specific to this
medium of purchasing will enable us to identify distinct segments of potential consumers,
thereby allowing retailers to effectively tailor their offerings to different customer types.
Consequently, it is important for supermarket operators to understand their consumers
attitudes toward using online services. Our objective is to identify and profile the characteristics of potential users of online supermarkets and in turn, make a preliminary assessment of consumer demand for online grocery shopping services.
More importantly, we have attempted to use a well-established model, the technology
acceptance model (TAM), which serves to articulate the core psychological aspects associated with technology use. Based on a generic model of attitude and behavior, the TAM
provides a robust and valuable framework to investigate information technology acceptance
by potential mainstream users (Taylor & Todd, 1995). The TAM also seems to provide
good prediction of an individuals intention to use a particular information system (IS).
To date, Singapore enjoys reliable and sophisticated networks for information technology and telecommunications services, transportation and utilities. High-speed Internet
connections and the telecommunication infrastructure of the city-state are particularly
well developed. In an online survey of 38 countries in May 2005, the global research
firm AC Nielsen noted that at least 8 out of 10 Singaporean Web users have made a purchase online, buying about six items a month online. Furthermore, Singapore is found to be
way ahead of its Southeast Asian neighbors in terms of e-shopping. This is due to the fact
that the country has a high percentage of households owning computers (74%) and an
Internet penetration rate of 65%. In terms of items purchased online by Singaporeans,
air ticket/reservations is the most popular, followed by tours/hotel reservation; books;
clothing/accessories; videos/DVDs/games; computer software; cosmetics/nutrition
supplies; groceries; toys; and sporting goods (Straits Times, 6 November 2005).
In a separate study by the Infocomm Development Authority of Singapore, it was
found that the number of Singaporeans who made online purchases increased from 20%
in 2003 to 30% in 2004. These consumers also bought more things and spent more
money (Straits Times, 24 March 2005).
Online grocery sales in Singapore experienced a surge in 2003, particularly in the early
half of the year during the SARS outbreak. This was good news for NTUC Fairprice and
Cold Storage, the two main supermarkets in Singapore that offer online grocery shopping.
It remains to be seen whether these increases can be sustained in Singapore.
It is our goal to construct a forecasting model to predict consumer intentions toward online
grocery shopping, which in turn could give a reasonable estimation of actual system use.
Specifically, we want to target consumers who have access to the Internet, and seek an understanding of their attitudes toward online grocery services. With this goal in mind, the balance
of the paper is structured as follows. In the next section, we shall review the literature on online
grocery shopping and the TAM. We will then discuss the methodology and data collection
procedure. Next, we will present our analyses and the results. Lastly, we discuss the limitations
and the implications of this study, and draw a conclusion.
Profile of e-grocery shoppers
In the late-1990s, online grocery shopping in the US accounted for an insignificant percentage of the total supermarket sales. As the Internet continues to grow, the new format of

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selling groceries online has gained significant momentum in the last few years. In the long
run, online retail sales may even pose a challenge to the traditional supermarket business
model. However, the task of selling groceries on the Internet and delivering them to the
homes of the consumers can be more difficult than previously expected (Tanskanen,
Yrjola, & Holmstrom, 2002).
There is an extensive range of literature in relation to online shopping behavior.
However, those studies that specifically examine e-grocery shopping are rather limited
(Ramus & Nielsen, 2005). In addition to research that explore the benefits and pitfalls
of online grocery shopping (Huang & Oppewal, 2006; Keh & Shieh, 2001; Tanskanen
et al., 2002), various demographic studies have been carried out to identify the various consumer groups associated with online grocery shopping (Hansen, 2005a; Hansen, Jensen, &
Solgaard, 2004; Pechtl, 2003; Verhoef & Langerak, 2001). Other researchers focus on
understanding shoppers expectations of online grocery retailing (Rafiq & Fulford,
2005; Wilson-Jeanselme & Reynolds, 2006), cost effectiveness in the e-grocery business
(Kamarainen et al., 2001), creating customer value in e-grocery shopping (Anckar,
Walden, & Jelassi, 2002; De Kervenoael, Soopramanien, Elms, & Hallsworth, 2006) as
well as online grocery pricing.
The study by Hiser, Nayga, and Capps (1999) revealed that attributes such as income,
number of people living in the same household, the presence of children and gender were
not significant determinants to the usage of online grocery shopping services. Age and
education were found to have a positive impact on consumer propensity to use such
services. For example, they noted that people above age 50 were less likely to consider
the service, when compared with people in the 18 29-year-old category.
A survey carried out by Priluck (2001) revealed that education was the main demographic variable affecting the tendency to buy groceries online, while other demographic
variables were found to be less significantly related to consumers willingness to use these
services. Those who shopped for groceries online were generally well educated, with the
majority having obtained at least a college degree.
The study by Sieber (2000) noted that online shoppers are generally younger than the
average Internet user and that their educational level is higher. Morganosky and Cude
(2000, 2002) commented that online grocery customers, like other online shoppers, are
younger with higher education and income. The only difference was that while there seem
to be more male online shoppers, more female online grocery shoppers are observed. This
is not surprising because women are more likely to engage in grocery shopping than men.
Hansen (2005a) surveyed 1058 Swedish online consumers and found that perceived
information accessibility, perceived relative advantage, perceived order accessibility, perceived online grocery risk as well as attitude toward online grocery shopping are important
in explaining variations in consumers online buying intention. Furthermore, he noted that
low perceived information accessibility is possibly an action barrier for female consumers
but not for male consumers, whereas low perceived order accessibility (easiness to order
groceries) may negatively affect the attitude toward e-grocery shopping for older consumers with low income.
Using discriminant analysis, Hansen (2005b) in another study examined the extent to
which consumers who already have purchased groceries through the Internet (segment 1)
perceived this innovation (online grocery shopping) differently from other online users
(segment 2) and online purchasers (segment 3). He concluded that online grocery shoppers
did perceive characteristics of e-grocery shopping differently from the other two groups.
They also have higher household incomes than the other consumer groups. In addition, no
other demographic variables were significantly different across segments.

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These studies on online grocery shoppers demographics provide a basis for understanding and targeting different customer groups. Furthermore, through the identification
of different online shopper segments, retailers can formulate strategy to tailor their offerings to the needs of specific market segments.
Technology acceptance model
In an attempt to better understand user acceptance of new IS, Davis, Bagozzi, and
Warchaw (1989) developed the TAM. They postulated how users attitudes toward
using a computer system influence the actual adoption, or acceptance of this system.
Two major design features are the perceived usefulness of the system, and the perceived
ease of use. The former is defined as the degree to which an individual believes that using
a particular system would enhance his or her job performance. The latter is defined as the
degree to which an individual believes that using a particular system would alleviate physical and mental effort. It was argued that these two features shaped users attitudes toward
using a computer system (Davis, 1993; Figure 1).
Research in social psychology has shown that behavior can be predicted by an individuals attitude and perception. However, it is difficult to estimate eventual system use if the
system does not yet exist. Nevertheless, an individuals intention to use the system could be
measured. There is considerable evidence that intention to perform a behavior under
different research contexts predicts behavioral intent and/or actual behavior (Hsu & Lu,
2004; Robinson, Marshall, & Stamps, 2005; Saade & Bahli, 2005; Wu & Wang, 2005).
For example, McCoy, Everard, and Jones (2005) tested TAM in the Latin America setting
and examined email usage among two distinct populations, namely, Uruguay and the
USA. They concluded that TAM functions reasonably well across cross-cultural boundaries.
Salib and Wahba (2005) further extended Davis TAM to study telecom consumers in Egypt.
They found that, as in developed countries, TAM variables (perceived usefulness and value,
perceived ease of use) also have significant impact on consumers acceptance of technology
in their country. Moreover, there was a high acceptance for Internet self-service.
Refinements to TAM have been carried out over the years. Chan and Lu (2004) combined TAM with the social cognitive theory to identify factors that would affect the adoption and usage of Internet banking in Hong Kong. In the study conducted by Fusilier and
Durlabhji (2005), user experience was incorporated into TAM and the theory of planned
behavior (TPB) to predict student Internet usage in India. Yang and Yoo (2004) expanded
TAM by considering the role of both affective attitude and cognitive attitude. They found
that cognitive attitude is an important predictor in explaining IS usage behaviors.
Other studies focus on the impact of TAM on organizational performance. For
example, Zain, Rose, Adbullah, and Masrom (2005) explored the relationship between

Figure 1. The TAM.

Note: This paper only tests those variables highlighted in bold.

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IT acceptance and organizational agility so as to better understand how the acceptance of

technology might contribute to a firms competitiveness.
Methodology
Data collection
The research sample employed in this empirical study consists of customers of two
supermarkets in Singapore, namely, NTUC FairPrice and Cold Storage. Data were
collected at each supermarket. The sample consisted of 211 shoppers who had just made
their purchases from the supermarkets. Furthermore, we administered our questionnaires
to those shoppers who have Internet access at home. The purpose of targeting only
grocery shoppers who have Internet access at home allows us to gain a specific understanding of the propensity of these shoppers to shop for groceries online. Furthermore,
we use the systematic random sampling scheme by approaching every third person who
came out of the supermarkets to ensure randomness.
Measures
The survey questionnaire is divided into three sections. The first section requires respondents to provide information on their socio-economic background. In the second section,
we present two dichotomous questions that are used to elicit their responses toward their
use of and intention to use online supermarkets. As the e-grocery services in Singapore just
take off, we postulate that the number of online grocery shoppers has yet to reach a critical
mass. This is borne out by the fact that only two of our respondents have ever used the
Internet to purchase groceries. It is, thus, appropriate for us to get acquainted with the
consumers intention to use, as opposed to seeking consumers who have used such
services. This is supported by the TAM as explicated previously.
Finally, a set of multiple-item scales is constructed under two main variables, which are
guided by the TAM framework. The questionnaire contains six attitudinal statements on a
five-point Likert scale anchored by strongly agree to strongly disagree. These items
examine the consumers attitudes and perceptions toward the use of online grocery services.
Contingency analysis is first used to test whether the demographic variables are
associated with the respondents intention to embark e-grocery purchases.
Factor analysis is then used to classify the initial six variables derived from the
attitudinal measures in the questionnaire into two distinct factors, namely, perceived
usefulness and perceived ease of use using principal analysis and Varimax rotation.
The resulting factor scores will be used for subsequent analyses.
Using the factor scores and the profile of the respondents, we proceed to use the
discriminant analysis technique to evaluate whether the consumers perceptions of
Internet as a shopping medium for grocery purchase and their profile characteristics
can be used to predict their intention of using e-grocery services in the next 1 year.
In this study, we have identified six predictor variables (based on the demographic profiles and the TAM) to predict the intention of an individual to use the e-grocery services.
Furthermore, we use only 190 responses as an estimation sample to construct the classification rule, reserving the remaining 21 cases for use as a validation set to enable us to
perform a post-hoc test of our model.
Results
As seen in Table 1, the number of male and female respondents in the sample is almost the
same. However, the majority of the respondents are below 40 years old which accounts for

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T.-K. Hui and D. Wan

Table 1. Demographic profile of respondents (n 211).

Do you intend to use online grocery
services in the next 1 year?

Gender
Male
Female
Age
20 years old and below
21 40 years old
41 years old and above
Education
O0 /N0 levels and below
A0 levels/diploma
Undergraduate/graduate/postgraduate
Monthly income
S$2000 and below
S$2001$4000
S$4001 and above

Yes

No

Total

30
31

78
72

108
103

10
37
14

72
53
25

82
90
39

5
36
20

92
32
26

97
68
46

11
32
18

102
39
9

113
71
27

81.5% of the total number of respondents. About 21.8% of the respondents have a degree
or above while the majority of them hold a diploma or below. A total of 53.5% reported a
monthly income of S$2000 or less.
The chi-square tests derived from the contingency analysis (Table 2) reveal the presence of a relationship between the three profile variables (age, education, and income
levels) and the intention to shop for groceries online (all p-value , 0.05), but not the
gender variable (p-value 0.710 . 0.05). We, thus, conclude that the intention to use
this service is associated with the age, education, and income levels of consumers, but
not their gender.
From the data set, it is noted that 21 40 year olds have a higher propensity to use
online grocery services. This is expected since this group of respondents is the most
economically stable. On the same note, those who have some form of tertiary education
have also expressed their intention to use such services in the near future. Those who
earn less than S$2000 a month have little inclination to using e-grocery services. In contrast, the chances of consumers of any gender having the intention to use such services are
almost equal. This initial profiling of the between variable relationships provides a basis
for the affirmation of the results in the later analyses.
Two factors were extracted using principal component analysis and rotated
using Varimax with Kaiser normalization. About 75% of the result can be explained
Table 2. Contingency analysis of the demographic variables.
Demographic variables
Gender
Age
Education
Monthly income
*Insignificant at 5%.

Chi-squares statistics


0.138
18.593
50.492
47.967

Degree of freedom
1
2
2
2

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Table 3. Factor analysis of six variables.

Measures and factors

Factor loading

Factor 1: perceived ease of use (55.05% of variance)

Grocery shopping offers wide variety
It is easy to purchase grocery items online
It is easy to find the grocery items needed
It is easy to check the availability of grocery items
Factor 2: perceived usefulness (19.77% of variance)
Perceived grocery shopping online to be done efficiently
Perceived grocery shopping online as time-saving and convenient

0.716
0.859
0.821
0.802
0.632
0.627

by the two components, namely, perceived usefulness and perceived ease of use
(Table 3).
The factor scores derived from the above factor analysis (for the components of
perceived usefulness and perceived ease of use) are included as independent variables
in the stepwise discriminant analysis. Other independent variables consist of gender,
age, income, and education levels. The discriminant function equation was found to be
Z 2:065 0:413 Age 0:837 Monthly income 0:747 Perceived ease of use
0:824 Perceived usefulness:
The Wilks lambda (p-value 0.00) shows that the discriminant function is highly
significant (Table 4). The success rate for the predictions of membership (i.e. intention
to shop for groceries online) is 87.4%. As for the out-sample test, the success rate is
85.7%, which is also comparable to the in-sample classification. Thus, both results
reveal that subjects with no intention to shop for groceries online are accurately classified
for most of the cases.
Discussion
The prediction model obtained through discriminant analysis is able to predict the
intended usage of online grocers with an accuracy of 87.4% for the in-sample and
85.7% for the out-sample, given their demographic and psychographic profiles. It is interesting to note that the discriminant analysis has yielded a result different from those of
Hiser et al. (1999), Morganosky and Cude (2000), Priluck (2001), and Hansen (2005a).
In their studies, age and education level are the key variables in the determination of
online grocery shoppers. They find that online grocery shoppers tend to skew toward a
Table 4. Canonical coefficients of the discriminant function.
Variables
Age
Monthly income
Perceived ease of use
Perceived usefulness
Constant


Canonical coefficients
0.413
0.837
0.747
0.824
22.065

Wilks lambda of the function is 0.514 (p-value 0.00).

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T.-K. Hui and D. Wan

certain age group and that they are mostly well educated, having obtained at least a
university degree. In this study, age though of influence has a smaller coefficient in the
discriminant function, compared with monthly income, perceived ease of use and
perceived usefulness. The two predictors, gender and educational level, are not retained.
The inclusion of income level and the exclusion of education level from the discriminant analysis can be explained from the respondents profile. An analysis of the survey
data reveals that most of our respondents are under 41 years old with a tertiary or
higher level of education and, also those with an income level below S$2000 do not
intend to purchase their groceries online in the next 1 year. These respondents are
mainly made up of tertiary educated students who have no necessity to purchase groceries
on a regular basis. Their parents would purchase the groceries for the family in most cases.
Even if this is not the case, this group of respondents is less constrained by lack of time and
family commitments.
Furthermore, it is observed that a significant number of working professionals under
the same age group with a tertiary level of education and above, have intentions to use
the online grocery shopping service in the next year. In-depth analysis of their survey
responses reveals that the convenience and time-saving that online grocers provide are
their main motives for intending to shop for groceries online. The main differentiating
factor between the above two groups of respondents is their income level, as the latter
group of respondents earns a monthly income of S$2001 or above. Therefore, this
results in income level having a greater influence than education level in the determination
of intention to shop for groceries online.
This study has some limitations. First, given the few variables identified, the respondents might be given too few options to indicate their preferences over the choices provided. It is likely that other important variables that are associated with home shopping
could explain ones propensity to shop for groceries online. These variables, such as
price, quality of products, or Internet accessibility, have not been studied in this paper
and, thus, constitute a limitation of this research. More variables (e.g. product range,
risk of receiving inferior quality groceries, role of delivery fees) should have been included
to produce a more comprehensive and robust model in order to capture the variance that is
not explained by the variables we have identified. Huang and Oppewal (2006), for
instance, concluded that delivery charges, though of influence, are not the most important
factor in determining a persons intention to engage in online grocery shopping.
Conclusion
E-retailing in Singapore will grow in importance in the near future since it provides new
opportunities for Internet commerce. Indeed, electronic commerce has the potential to
become a platform for integrated marketing that takes customers needs into consideration
while at the same time enhancing customer communication, online shopping involvement
and enjoyment. Firms can leverage the advantage of time-saving over physical shopping
with online information to build customer relationships (Huang & Oppewal, 2006; Kim,
Fiore, & Lee, 2007).
There is empirical evidence that intention to perform a behavior predicts actual behavior. As such, understanding consumer motivations for web site usage is crucial. Using
discriminant analysis, our model validates the empirical support for the prediction of
intention toward the use or acceptance of electronic supermarkets. Other than attitudinal
influence, the results have also illustrated how certain demographic variables such as
age and income level significantly influence users perceptions and intention toward the

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usage of online supermarkets. These findings enable us to build a forecasting model that
provides good prediction of an individuals intention to use the online grocery system. As
predicted by the TAM, the findings also suggest that consumers will be motivated to shop
for groceries online if they perceive the services offered by the online grocer to be useful
and easy to use. This has implications for retail and marketing managers who intend to or
have already set up an online grocery business.
From the results reported, marketers can target the specific age and income groups that
show a higher tendency to shop for groceries online. They could design their online
grocery service to cater to the needs of these consumers, such as providing a large
variety of products or making the online shopping process quick and hassle free.
Anckar et al. (2002) called for the need to create customer value in online grocery shopping. De Kervenoael et al. (2006) argued that if e-grocery is to become a mainstream retail
channel in its own right, companies must have a better understanding of customer value for
online grocery purchases. Marketers could utilize our reported results to interpret those
factors that are keeping other consumers from using such a service, e.g. the opinion that
online grocery shopping is neither convenient nor time-saving, and examine ways to
improve the online retailing environment.
Online grocery shopping is a relatively new phenomenon in Singapore. While e-shopping is unlikely to have a significant effect on retail purchases, consumers nowadays often
consult the Internet before making a purchase from a store (Weltevreden, 2007). The
characteristics of the sample used in our research may change when the trend starts to
be widely adopted, signaling the need for further research. Most of the past studies are conducted and analyzed in the American or European context, which might culturally differ
from the Singaporean context presented here. In addition, it is recommended that future
research explore those factors associated with the possible mediation effect of usefulness
upon ease of use in a local context.
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