The pandemic has radically altered consumer behavior when it comes to online shopping for agricultural produce – a habit which may stick around once the coronavirus pandemic has blown over.
E-commerce has taken Georgia by storm in recent years, with new online vendors popping up almost on the daily and offering a wide range of goods. Agricultural goods and groceries, however, have remained an item that consumers have preferred to buy in person, perhaps a function of a desire to control for quality.
But Covid-19 and the necessity of maintaining social distancing have changed these habits for many, and likely for good—Georgian consumers are now actively buying produce online.
This trend took off during the period of Georgia’s most stringent anti-coronavirus regulations between April and May.
At that time, the Georgian Farmers’ Association (GFA) conducted a study to assess the impact of Covid-19 on agriculture, which showed that the decrease in demand for the hospitaity sector led to an increase in e-commerce and home consumption, given that fewer people were dining out.
Natia Ninikelashvili is the founder of Soplidan.ge [Geo. from the village], a company which has been selling agricultural products online since 2015. Soplidan.ge acts as a ‘bridge’ between rural vendors of agricultural goods and urban areas, simplifying the process of selling and buying agricultural goods from the village with the help of their online platform.
Judging by the amount of activity on the Soplidan.ge website, Ninikelashvili told Investor.ge, the epidemic has drastically changed the behavior and the thinking of consumers. So much so, that the growth the company experienced during the early stages of the pandemic was only expected by the business four years down the road.
“During the pandemic, in particular in March-May 2020 when strict quarantine measures were declared in the country, the number of orders increased tenfold. In the past, we’ve only had a similar peak of orders in the pre-New Year period,” Ninikelashvili told Investor.ge.
The conditions of the pandemic, including curfews, transportation limitations and other regulations, posed a series of challenges for Soplidan.ge, bringing about further integration of the agricultural produce business into the country’s e-commerce scene, in addition to a change in the business management model—for good:
“The pandemic made me see that we had to outsource distribution completely and order from delivery service companies, such as Wolt, Glovo and others,” Ninikelashvili said.
Despite the difficulties of the beginning of the lockdown, Soplidan.ge made the best of it, revamped the website and its offerings. Initially, the site offered some 15 products, largely regional specialty products, such as Gouda cheese from Tusheti, Kakhetian sunflower oil, churchkhela, village eggs and poultry. Now, the site offers more than 250 products, whose origins are visible, as are the identities of suppliers. Soplidan.ge now intends to launch a mobile application in the coming months.
Moving forward, Soplidan.ge is working to retain loyal customers—who are mostly young families—and provide them with information about new products, improved services and discounts through social media and websites.
Customer retention will be crucial for e-commerce grocery sites, the Georgian Farmers’ Association report noted, as changing consumer behaviors over the long term is difficult, and at some point, consumers of Georgian farm products will be able to return to tasting cheeses while buying wines in person, and will no longer be daunted by the idea of going to the grocery store.
Marketer Giorgi Berechikidze says this is indeed a concern for the industry, as an eventual slowdown in the pandemic may entail another change in consumer behavior, moving from online shopping back to retail.
“Companies need to increase brand awareness in the online space, in which case businesses will be able to retain new customers and secure them on the list of loyal customers. While a short-term reaction is needed to survive, a long-term view will make winners,” Berechikidze said.
Already some agricultural-product companies are seeing signs of this trend, and say online sales have fallen again since the more severe lockdown regulations were relaxed, including milk processing and cheese company Shiraqi, which also experienced a boost in online sales during the initial lockdown period.
“During the lockdown period, I received 35 orders a day, Now, I receive up to five orders [a day]. In order to deliver products to the customer on the same day, I even acquired some scooters (motorcycles), but now they’re sitting around unused. I spent a lot of money on online marketing, but still I’ve been unable to increase sales,” said Nikoloz Beniaidze, owner of Shiraqi.
However, Berechikidze believes that investing in online marketing will still bring results for companies. In the long run, bold companies that invest ambitiously and timely in their online business are likely to emerge as market leaders. Brand awareness will increase, and whether online or not, retail sales at markets will still increase, he says.
Nestan Mermanishvili, the GFA’s Association Development Specialist of the Safety and Quality Investment in Livestock (SQIL) project funded by the U.S. Department of Agriculture, says most dairy and cheese industry sales are in crisis, but that producers have begun to move substantial portions of their business online.
“Industrial entrepreneurs supply their products to supermarkets, so during the pandemic, especially during the lockdown, they did not have problems in this area, and their brands are well known in the community. SMEs [small and medium-sized enterprises] began online sales during this period, but their knowledge and experience is very low in this regard”, said Mermanishvili.
The SQIL project is implemented by America-based company Land O’Lakes Venture37 in partnership of Georgian Farmers ’Association that unites about 4,000 farmers across Georgia.
Shako Iosava, Marketing Manager at food delivery service Glovo, confirms that demand for agricultural products has increased significantly during the pandemic and quarantine period.
“Bread and eggs became the top-selling products. During this period especially, many agribusinesses were added to the Glovo platform. Sales in the food category in general increased by about 60% during the lockdown period. Of course, sales have declined since the lifting of the lockdown, but consumer demand remains high,” Iosava said.