Dot.com businesses the world over may be experiencing problems, including those in the grocery industry to some degree, but a new study by Datamonitor suggests the online grocery market is ripe with potential. In fact, the report says the U.S. online grocery sector “will reach a market value of $26.8 billion by 2005.”

This success will require some effort, however. Consumers, for the most part, are unaware of these services in their local area and may not know which websites to visit. To combat this lack of awareness, online grocer executives should pay particular attention to marketing, says Datamonitor's “Online Grocery in the U.S., 2001.”

As noted by Erlina Hendarwan, consumer analyst with Datamonitor, “Grocery executives are not accustomed to building brand awareness and marketing on the Internet. Traditionally, they have limited marketing to a localized audience. To exploit the market potential of online grocery, these executives should begin to build brand awareness and consumer demand now, in preparation for online grocery developments in the future.”

Key to this success will be adequate order fulfillment, service availability and customer support, says Datamonitor. In addition, online grocers need marketing and production plans with an efficient logistics and supply chain system and should link automated order processing with personalized marketing efforts.

Who may become the most important players in the online grocery industry? Datamonitor says brick-and-mortar retailers who invest heavily in online shopping services. These grocers provide consumers with additional conveniences: a full range of items and a “more flexible and less expensive order fulfillment system of in-store pick-up.”