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The Toronto Globe and Mail reports that GroceryGateway.com, the Canadian e-grocery company, is using targeted mailings to reach out specifically to former customers who have abandoned the service.

“Our biggest barrier to growth is not pricing or delivery,” John Mozas, executive vice-president and co-founder of Grocery Gateway, told the paper. “People have a hard time getting into the routine of on-line grocery shopping. That's our biggest challenge.”

GroceryGateway.com recently did a survey that suggested that it had a high enough profile and awareness among Canadian shoppers - so it decided to pull the plug on its mass advertising campaign and instead focus on disaffected former users. The e-grocer says it has 105,000 customers, but fewer than a third of those have ordered from the company during the past three months. While the total is a lot higher than the 15,000 customers the company had two years ago, the rate of repeat ordering needs to be increased if the company is to become profitable -- which, as of now, it is not.
KC's View:
Just another example of how much e-grocery retailing resembles the brick-and-mortar variety; it has long been a truism that it is cheaper to retain customers than it is to get new ones. Apparently, this is true no matter how you do your shopping.

One thing we do find intriguing is that the company is using discounts and deals to attract back customers, while still charging a delivery fee that is the equivalent of $5 (US). If indeed it believes that money is the objection, wouldn’t it make more sense to create a program that offers free delivery to people who order twice a month or more, therefore encouraging repeat usage?

And if cost isn’t the problem, then why offer discounts?

Whether in the physical or virtual shopping environment, discounts always seem to be the first line of offense and defense for retailers, when in fact it may not be lack of discounts that is driving consumer behavior.