Online Grocery Shopping: A New Single-Copy Crisis?

Folio: The Magazine for Magazine Management, July 1, 2000 by Eric Butterman

As online grocery shopping becomes big business, publishers are plagued by the possibility that checkout sales may suffer.

Publishers may have reason to gripe about current newsstand conditions: Costs continue to balloon while sales plummet; further wholesaler bankruptcies are a real threat to the structure of the distribution system; and calls for greater efficiency and profitability have led to sharp cuts in draw and the number of retail outlets served. But things could always be worse. For instance, supermarket checkouts lines--where about 42 percent of all single-copy sales are made--could be replaced by online shopping.

While it's not likely that supermarkets will become desolate anytime soon, this form of stay-at-home buying could potentially erode a big chunk of the business. According to industry estimates, online grocery shopping will account for as much as 5 to 20 percent of the overall grocery market within the next five years. And those numbers, say publishers, are cause for concern.

In a twist of fate, however, it's the largest publishers that stand to take the biggest hit from this latest potential menace. "Technology has always seemed to kill the smaller publication," says David Obey, director of consumer marketing for Cond[acute{e}] Nast. "But this will affect the huge checkout titles in an unbelievable way. If there's a virtual grocery store, then it stands to reason that there will be a virtual checkout stand, but that's not the same thing," he says. "Online, you'll probably have to click a magazine advertisement that's out of your field of vision--unlike the grocery line, where you have no choice but to view the magazines."

Some of the largest checkout titles are taking a proactive stance. "We have no choice but to take these projections seriously," says Steven Shure, vice president, consumer marketing and development of People. "Our key, whether in grocery stores or online, is establishing prominence. When there is a substantial move toward online purchase, there will obviously be a major effect." Shure believes the online environment is more conducive to a subscription sales model than to single-copy sales. "But we're definitely going to stay open to both," he says.

Other large checkout titles, however, are less concerned. "We maintain a healthy 50-50 balance between newsstand and subscription," says Deborah Fine, publisher of Glamour. "With strong newsstand distribution, we feel that we'll do well regardless of online grocery channels." But titles that are heavily dependent on checkout sales "will have to be concerned," she says.

Fine adds that this form of online shopping might represent an opportunity, rather than an obstacle. "We have an interest in any channel that can promote our product; online grocery may be that in the future."

Simon Aronin, circulation director for Consumer Reports, is less optimistic. Publications must be made physically available, he says. "Copies have to be where people can touch them. It isn't just seeing the cover, it's being able to get inside the publication and look around," Aronin says.

Most circulation professionals say they are waiting for online grocery results, not projections, before they make any major moves. "It really has a lot to do with the success of the online grocery as an entity," says John Harrington, publisher of "Single-Copy News" newsletter. "How long will delivery service take? Will the product they describe consistently be the one you get? What about personal service? All these questions need to be answered before these online grocery success estimates are going to have a chance to come true.

John Icke, CEO of Westwood, Massachusetts-based ShopLink.com, an online grocer serving three Eastern states, says these questions have already been answered. "Consumers are voting with their feet. Most of the grocery shoppers are women, and the majority are in the work force, so the advent of online grocery shopping has been very favorable."

To date, ShopLink.com has not sold a single magazine. "We haven't had one request for them by our consumers," says Icke. "Maybe they already have subscriptions to all the magazines they want, maybe not."