Offline Store Dawn Delivery Doubled Consumer Spending... "Perfect Match with Large Marts"

Professor Im Boram of Hanyang University Analyzes Fresh Food Purchase Data
"Dawn Delivery Increases Consumer Loyalty and Purchase Incentives"

A study found that consumers who experienced dawn delivery increased their purchase frequency and spending on the respective shopping platform. In particular, the expansion of consumer spending was even greater when offline stores were nearby, suggesting that easing the operating hour restrictions on large supermarkets?President Yoon Suk-yeol administration's first deregulation policy?could help stimulate consumption.

According to the distribution industry on the 16th, Professor Im Boram of Hanyang University's Department of Business Administration published a paper titled "An Analysis of the Effects of Dawn Delivery Service Provision by Grocery Retailers" in the 'Distribution Research' journal of the Korea Distribution Science Association, released at the end of last month.

The paper tested two main hypotheses through an econometrics model using consumer purchase data: ▲ the impact of dawn delivery usage experience on subsequent spending amount and shopping frequency, and ▲ the moderating effect of offline stores on the impact of dawn delivery usage experience.

The econometrics model is a research methodology in economics that applies statistics. It is used to verify economic theories using economic data or to determine which of two or more competing theories is correct. While previous consumer behavior studies on dawn delivery were based on surveys, this study is the first to measure changes in consumer spending and shopping frequency to derive results.

Professor Im analyzed fresh food purchase data from 920 consumers between January and June 2021. Of these, a total of 481 samples were used for analysis.

The study found that consumers increased their weekly spending and shopping frequency after experiencing dawn delivery. Consumers using the sample company spent about 11,990 KRW weekly before experiencing dawn delivery, with an average shopping frequency of 0.39 times per week. However, after experiencing dawn delivery, the average weekly spending rose to 13,700 KRW, a 3% increase, and the average weekly shopping frequency increased to 0.5 times, an 18% rise.

Professor Im stated, "When consumers realize the benefits of dawn delivery, they tend to increase both spending and shopping frequency. While increased spending is positive for companies, considering that the increase in shopping frequency is greater than the spending increase, companies must also account for the negative impact of higher delivery costs."

Especially when offline stores are present nearby, the sales increase effect from dawn delivery for the brand was more pronounced. When no offline stores were nearby, the weekly shopping amount increased by 3% from 11,745 KRW before dawn delivery experience to 12,131 KRW after. Shopping frequency also rose by 18%, from 0.38 times to 0.45 times per week.

However, consumers with offline stores nearby spent an average of 13,568 KRW weekly before experiencing dawn delivery, but after the experience, their spending rose to 24,124 KRW, a 78% increase. Shopping frequency nearly doubled from 0.43 times to 0.83 times per week.

Professor Im explained, "It is clear that the effect of dawn delivery is overwhelmingly higher when the brand's offline stores are nearby. This shows that the presence of offline stores increases brand awareness and significantly contributes to enhancing the effectiveness of online services." He added, "Offline and online are not separate independent shopping channels but can create synergy. Especially for fresh food, this study shows that dawn delivery and the presence of offline stores can create synergy."

The paper also suggests that dawn delivery can attract consumers from competitors. According to Statistics Korea, the average monthly spending of Korean consumers on groceries was 250,000 KRW in 2017, 250,000 KRW in 2019, and 240,000 KRW in 2020, showing little change. However, considering the study's finding that consumers increased their purchase amounts from the same seller after using dawn delivery, Professor Im explains this can be interpreted as consumers switching from competitors they previously used.

This content was produced with the assistance of AI translation services.