An analysis of the extent of value creation through e-commerce in the organic food retail industry
Monica Vicol 10527435 Bachelor thesis
Supervised by Willem Dorrestijn University of Amsterdam Faculty of Economics and Business
Statement of Originality
This document is written by Student Monica Vicol who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Table of Contents
Abstract ... 4
1. Introduction ... 5
2. Literature review ... 6
2.1 The organic food system ... 7
2.1.1 Perceived benefits and barriers in the consumption of organic food ... 7
2.1.2 Organic food distribution channels ... 9
2.2 E-commerce and consumers’ trust in e-commerce ... 10
3. Theoretical Framework ... 12
4. Methodology ... 15
4.1 Research design... 15
4.2. Sample ... 16
5. Results ... 17
5.1 The impact of e-commerce on price of organic foods ... 17
5.2 The impact of e-commerce on information availability on organic foods ... 18
5.3 The impact of e-commerce on organic foods consumers’ trust ... 19
5.4 The impact of e-commerce on the product range of organic foods ... 20
6. Discussion ... 21
7. Limitations ... 27
8. Conclusion ... 27
Bibliography... 29
Abstract
This study examines the extent of value creation through e-commerce in the organic food retail industry based on the current barriers encountered by consumers: price, information availability, consumers’ trust and product availability. To do so, the model of Amit et al. (2001) is being applied. The study results have found that e-commerce can have a positive impact on price by eliminating food and paper waste, a positive impact on information availability by facilitating the update of information on organic products’ traceability and origin, a positive impact on consumers’ trust by integrating values underlying the organic approach in the value chain such as elimination of food and paper waste and a positive impact on the product range by facilitating the keeping of both innovative and niche products in the product mix. However, the study has found that the extent of value creation through e-commerce in the organic foods retail highly depends on the type of market and grocery shopping culture of that market. Finally, in order to capture maximum value created through e-commerce in the organic food retail, an integrative perspective of the sources of value creation needs to be adopted and the values underlying the organic approach need to be integrated in the entire value chain of the organic food e-retail company.
The extent of value creation through e-commerce in the organic food retail industry
1. Introduction
Organic food is one of the fastest growing segments of the food industry in Europe, United States, Canada, and Australia with sales increasing by 7.6 percent in 2014 in the European market, thus reaching the overall value of 23.9 billion euros spent on organic food. Countries such as Sweden and Norway experienced double-digit growth rates in the same year (FiBL, 2016). The factors causing continuous growth of this food segment are the pull factor from the consumers’ side whose awareness of health, environmental and animal welfare issues is increasing and the push factor from the sellers’ side who engage in aggressive marketing and promotion strategies of the consumption benefits of organic products (Oraman, 2014, p. 1031). Consequently, the market growth and profit capturing opportunities have led to a major shift in the number and types of organic food retailers, manufacturers, distributors and widened the retail customer base (Carolyn et al., 2008, p. 2). The distribution channels for the organic food can be divided into standard (e.g., supermarkets) or alternative (e.g., specialty stores, farmers’ market, internet sales) distribution channels (Essoussi et al., 2013, p. 293). In her study, Foster (2005) has found that from all distribution channels consumers of organic products have least trust in supermarkets and large retail stores as they do not promote the values underlying the organic approach and therefore, prefer the alternative channels.
The current literature in the organic industry has mainly focused on the demand side by describing trends, organic consumer segments, their motivations and barriers in consumption of organic products, and on the supply side by analyzing opportunities in investing in the organic industry and the international policies regulating organic food production. However, there has been little research on the alternative sales channels and the added value which they can bring. More specifically, a more widely adopted distribution channel for selling organic products is e-commerce (Brynjolfsson et el., 2000, p. 564). While the benefits of using e-commerce in various industries have been studied extensively, the value gained by companies who adopt this strategy for selling organic products might differ from other industries for several reasons.
First, organic food systems are highly based on trust and credibility because the extent to which organic can be distinguished from conventional is only limited (Choe et al., 2008, pp. 168- 170). Therefore, advantages of e-commerce should be studied to explore how credibility can be maintained using this sales channel and how barriers to maintaining trust and credibility can be overcome from the perspective of e-retailers. Second, as the findings from current studies have shown, consumers associate alternative sales channels as being more value laden and in-line with
their aspirations and perceptions of the organic approach (Essoussi et al., 2013, p. 299). Moreover, it has been found that consumers of organic products are well-educated, skilled and well-informed, therefore requiring superior customer service and information availability regarding traceability, production methods, origin, etc. (Lea et al., 2005, p. 860). Hence, it is relevant to analyze the sources of value creation and barriers brought by e-commerce in adding value and meeting customers’ service needs. The purpose of this study is to address these issues which will help answering the central question: To what extent does an e-commerce strategy create value for retailers in the organic food retail industry?
Regarding the structure, the analysis starts with a general literature review on the organic food system, on the perceived benefits and barriers in the consumption of organic food and on its distribution scheme. Next, theory on e-commerce and consumers’ trust in e-commerce is being reviewed. Based on this literature, current perceived issues related to the consumption of organic foods that lead to a marginal increase only in their overall consumption and issues related to consumers’ trust in online retail as a sales channel are being highlighted. As a next step, a theoretical model which emphasizes the sources of value creation in e-business is being analyzed. Consequently, combining the model with the previous literature findings, several sub-questions are being raised as propositions:
• What is the impact of an e-commerce strategy on the price of organic foods?
• What is the impact of an e-commerce strategy on the information availability about organic foods?
• What is the impact of an e-commerce strategy on building consumers’ trust with regard to organic foods?
• What is the impact of an e-commerce strategy on the product range and product mix for a retailer of organic foods?
• What are the sources of value creation by an e-retailer in the organic food industry? The next section, methodology, describes the sampling and data collection process resulting in four interviews with four e-retailers of organic foods from three different countries. The results and discussion section elaborates on the findings from the interviews and relates them to the literature presented in the theoretical part of the paper. Consequently, the study ends with a conclusion summarizing all the findings on the extent of value creation in the organic food retail industry by adopting an e-commerce strategy and answering the central question. In addition, limitations and the need for further research are discussed as well.
2.1 The organic food system
2.1.1 Perceived benefits and barriers in the consumption of organic food
The definition of organic production according to the United States Department of Agriculture is a “production system which avoids or largely excludes the use of synthetic compounded fertilizers, pesticides, growth regulators and livestock feed additives and relies to maximum extent possible upon crop rotations, crop residues, animal manures and other measures which preserve and increase soil biodiversity, its nutrients and therefore enhancing soil productivity”. Moreover, organic is also an approach which progresses towards an entire organic production chain, its principles including concerns about food safety, environment and animal welfare as well as social responsibility and justice (IFOAM, 1997), (Browne et al., 2000, p. 77). Regarding the healthiness superiority of organic foods however, current studies did not find any evidence about them having a higher level of health-related benefits in the long-run, relative to conventional foods (Dangour et al., 2009, p. ). Still, according to the consumers, there are several motives for consuming organic products, namely: health consciousness, taste preference, freshness, ethics, concerns about the environment and animal welfare. These motives have been classified into two types of benefits (Wier et al., 2008, pp. 406-407):
• Private benefits — perceived attributes of organic food to have a positive impact on health, nutrition, taste, quality relative to conventional food
• Public benefits — perceived attributes of organic food to have a positive impact on environmental and animal welfare relative to conventional food
These perceived benefits have led the organic food industry to move from the niche market to mainstream markets (Essoussi et al., 2013, p. 293). Still, the growth of this industry is only marginal because of the barriers which consumers encounter (Perrini et al., 2010), (Viterso et al., 2014), (Wier et al., 2008), etc. The main barriers found in these studies are the following:
1. The premium price of organic food which accounts for the higher production costs, lower land productivity because of non-usage of pesticides and synthetic fertilizers and resulting in reduced crop yields, and an inefficient distribution chain (Kihlberg and Risvik, 2007).
2. The limited availability of organic food in the market which is explained by both lower production levels relative to the conventional food ones and limited distribution in the retail chains which
include lower quantities, varieties, number of stores offering organic products (Lea and Worsley, 2005).
3. The lack of trust in the enforcement of organic standards, which decreases the credibility in the application of production methods which correspond to the organic norms, in the reliability of organic labels used on packaging and in the trustworthiness of organic products in general (Padel and Foster, 2005)
4. The limited information about organic food with regard to product attributes, producer and production methods (Wier at el., 2008)
While the first two barriers are important to overcome in order to stimulate consumers’ purchase behavior, after they already perceive organic products as bringing added value, the last two barriers are essential to overcome in order to increase consumers’ trust in organic products, in their authenticity, trustworthiness and perceived added value relative to the conventional ones. One possible explanation for the occurrence of the last two barriers is the class of goods organic products are part of (Perrini et al., 2009, p. 515). And namely, they can be categorized as being part of the “credence goods” class. Conversely to “search goods” the attributes of which can be detected at the pre-purchase stage and to “experience goods” the attributes of which can be discovered after the purchase or consumption stage, the attributes of “credence goods” cannot be identified or tested immediately after consumption or purchase. With some exceptions, certain products can be verified through a sensorial testing (taste, smell), however in order to increase consumers’ trust, more reliable and credible indicators should be communicated. In other words, this class of products relies on the transparency of the vendor and on the accuracy of valid information communication (Perrini et al., 2009, pp. 515-516). The first such indicator is the organic label which each individual product sold by retailers carries, and it serves as a guarantee that the production, harvesting, processing, storing and packaging processes have been completed according to an approved inspection body’s (e.g. USDA, ECOCERT) regulations and norms (Vitterso et al., 2015, pp. 96-97). The current literature presents different findings about the current labelling schemes. Hijelmar (2011) has found that Danish consumers generally appear to trust the Danish organic label (Ø-label) as the inspection bodies approving the organic certification are being perceived as trustworthy (p. 339). Conversely, Vitterso (2015) states that consumers tend to get confused by the numerous labelling schemes and therefore are not convinced in their objectivity and transparency (pp. 96-97). These findings prove that the current labelling scheme is not entirely effective and that consumers rely on additional sources of trust in their decision making process regarding the purchasing of organic products. Therefore, it is relevant to explore how the different distribution channels influence trust in organic products and what are their impact on the current barriers consumers encounter in the purchasing of organic
products. Next section will describe the types of distribution channels for organic products and present the current findings on consumers’ perceived advantages and disadvantages with regard to the distribution channels.
2.1.2 Organic food distribution channels
The distribution channels for the organic products can be divided into standard (e.g., supermarkets) or alternative (e.g., specialty stores, farmers’ market, internet sales) distribution channels (Essoussi et al., 2013, p. 293). In her study, Foster (2005) has found that from all distribution channels consumers of organic products have least trust in supermarkets and large retail stores as they do not promote the values underlying the organic approach. In addition, Wier et al. (2008) argue that while light users prefer supermarkets as sales channels for organic food because of ease of access and stable supply, heavy users, who account for three-fourth of total sales of organic products, perceive that an industrialized and concentrated market structure tends to undermine trust in organic and therefore prefer direct sales channels. The standard channels which offer organic products as an addition to the conventional ones are targeted towards consumers who search for convenience in a one-stop grocery experience, while the alternative channels are targeted towards consumers looking for a more complete experience, who are interested in being communicated information on the production methods, product attributes, origin, cooking tips, etc., of the purchased items. (Essoussi et al., 2013, p. 293).
One of the alternative sales channels for organic products is e-commerce. E-commerce is a sub-set of the e-business and represents purchasing and selling products or services online via Internet. This paper will focus on Business-to-consumer (B2C) e-commerce, which refers to conducting commerce by companies with final consumers (Grandon & Pearson, 2004). From the business perspective the advantages of using e-commerce are back-end efficiency, market expansion, inventory management, cost reduction, control of data and customer service benefits. However, the potential negative effects of e-commerce perceived by consumers, such as unreliable delivery, misuse of personal information, higher prices, lack of personal inspection of products, lack of interaction with personnel can create barriers for consumers’ purchase intention (Lea et al., 2005, p. 862).
Therefore, this paper will explore the possible benefits of having an e-commerce strategy in the organic food retail industry by investigating consumers’ service needs such as credibility, trust, information availability, aligned values throughout the whole value chain delivering the organic products, accessibility of prices and sales channels, as well as possible barriers for e-retailers of organic products. The next section will discuss more in depth the concept of trust and its implications in an e-commerce environment. By combining the model of McKnight et al. (2002) describing the
four dimensions and sources of trust in e-commerce as a sales channel with findings from studies on consumers’ trust in the organic food system, three levels of trust an e-retailer of organic foods needs to address in order to reinforce consumer’s trust will be highlighted.
2.2 E-commerce and consumers’ trust in e-commerce
Trust is a concept that has been defined in many fields of research such as psychology, sociology, marketing, management, economics, etc. (Bhattacharya et al., 1998, p. 460). Still, despite the vast literature on trust-related topics, there is no one universally accepted definition among scholars. In this research, the definition of Bhattacharya et al. (1998) will be used. They define trust as “an expectancy of positive or nonnegative outcomes that one can perceive based on the expected action of another party in an interaction based on uncertainty” (p. 462). This definition is a rather mathematical one as it shows that there exists a direct relation between the degree of trust and the extent of expectancy, the latter one reflecting the predictability aspect of trust as a matter of possible outcomes. Also, it highlights the fact that trust can exist in risky and uncertain environments only.
This is especially important in B2C e-commerce as customers perceive a higher risk in a virtual shopping environment than in an offline one. The higher perceived risk is related to the physical distance between the buyer and seller including lack of body language, physical distance between buyer and product, impossibility of directly analyzing and perceiving other party’s behavior, virtual identity and lack of regulation (Corbitt et al, 2003, p. 206). Moreover, according to the social exchange theory, trust is the mediator for individuals to engage in an exchange relationship. Consequently, the concept of trust is considered to be a critical factor in any buyer-seller relationship. For these reasons it is relevant to study the concept of trust of B2C commerce in a virtual environment and explore the possibilities and barriers of e-retailers of organic foods to ensure consumers’ trust.
McKnight et al. (2002) define trust as a multidimensional concept and offer a model for the sources affecting web trust in particular (p. 334). The model includes four constructs: disposition to trust, institution-based trust, trusting beliefs and trusting intentions. First, the disposition to trust reflects the tendency of an individual to be willing to trust another party and is affected by both external factors which depend on the characteristics of the party being trusted and by one’s personal inclination to trust others, which is independent of the trusted party’s characteristics. Theo et al. (2007) have found in their study that consumer’s disposition to trust has a significant positive relationship on their trust in e-vendors (p. 35). The explanation for this is that individuals’ previous experiences and perceptions on the outcome of trusting another party play a significant role in influencing future trust in others. Second, institution-based trust represents one’s perceptions of the Internet environment in general and is affected by structural assurance which is the belief that official
laws, regulations, guarantees, security and privacy policies, etc. lead to a safe and successful outcome of an online transaction and situational normality reflecting the belief that the Internet environment is a favorable, well ordered and an appropriate one (McKnight et al., 2002, pp. 336-338). Third, trusting beliefs highlight one’s beliefs and perceptions of a certain online vendor. Chen et al. (2003) argue that the degree to which consumers trust an online vendor depend on three attributes of that vendor: competence, benevolence and integrity. Competence refers to the ability of the company to deliver the promised product and/or service. Benevolence is the company’s delivered to customers perception that its actions are sincere and prioritize customers’ interest rather than its own. Integrity is company’s ability to act in an ethical, consistent and reliable manner while delivering the product and/or service (p. 305).
Finally, the fourth dimension, trusting intentions reflects customer’s willingness to engage in trust-related behaviors with a certain e-vendor and is proven to accurately predict one’s actual behavior to engage in purchasing or sharing information with the e-vendor (McKnight et al., 2002, p. 337). While the first, the second and the fourth dimension can be influenced by e-vendors to a lower extent as they mainly depend on consumer’s perceptions and propensity to trust, this paper will examine in more detail the third construct, and namely the trusting beliefs. Based on organic food e-vendors’ experiences, insights can be gained into how a company can deliver perceptions of its competence, benevolence and integrity and increase consumers’ trust. These criteria for gaining trust are however points-of-parity across all online retailers. They are expected to be fulfilled by all e-vendors who aim to increase customers’ trusting beliefs of their company and thus, stimulate their purchasing behavior.
By combining the findings of studies exploring the concept of trust with regard to the consumption of organic products with the ones exploring trust in e-commerce as an alternative distribution and sales channel, one observes that there are three levels of trust an e-retailer of organic products needs to address in order to gain consumers’ trust and thus stimulate their purchase behavior. The first level of trust is the one consumers have in organic products as a class in general. For an e-retailer this means delivering consumers both the private and public benefits and perceived added value of organic products relative to conventional ones, thus increasing their trust and intention of purchase. The second level is the one concerning the perceived trustworthiness and authenticity of organic labels the offered products carry. At this level, the role of the e-retailer is providing extensive information required by consumers, such as product technical specifications including product attributes, properties, possible contaminations with allergens, production methods, origin, traceability. In this way, consumers get more insights about the norms and standards standing behind the organic labels and are being transmitted a larger number of signals regarding the authenticity of the organic labels, hence increasing consumers’ propensity of trusting them. Last but not least, is the
level of trust related to the e-retailer him-/herself. As stated in the previous studies investigating the sources of consumer trust in online commerce, in order for a certain e-retailer to be perceived as trustworthy and credible, three attributes need to be signaled: competence, benevolence and integrity. Hence, it is relevant to explore how organic food e-retailers approach the three levels of consumers’ trust necessary to stimulate consumers’ purchasing behavior and thus create value for the company.
3. Theoretical Framework
Theoretical model for the sources of value creation in e-commerce
In order to examine the value e-commerce brings to retailers of organic products, the model of Amit et al. (2001) from Figure 1. (see next page) will be used. This model depicts the main sources of value creation for companies who adopt an e-business strategy. The sources of value represent any factors which increase the total value of the e-business including the value created for its customers, suppliers and strategic partners. The model has been chosen because it draws on theories from both the strategic management and entrepreneurship literature to explain the sources for value creation in e-business and integrates theoretical models such as the value chain analysis, Schumpeterian innovation, the resource-based view of the firm, strategic networks and transaction costs economics. While the model includes all sources of value creation e-business brings to a company, this paper will only focus on the downstream side of the value chain, the e-commerce. Based on the findings about the barriers for consumers to purchase organic products encountered in previous studies and enumerated in the previous sections, this study will focus on the impact e-commerce strategy has on
these barriers and on the sources of value it can bring to the company as a consequence. The four sources of value creation presented by the model of Amit et. al (2001) are efficiency, novelty, lock-in and complementaries.
Efficiency is explained by Williamson’s (1975) transaction cost theory which argues that the lower the cost of a transaction, the more efficient it is. Efficiency in e-commerce can be achieved in several ways. First, the marketing, sales, inventory, distribution and transaction-processing costs can be reduced due to disintermediation of the distribution channel and scalability which allows for maintaining the level of performance when increasing or decreasing the number of transactions. This in turn leads to a lower total transaction cost and therefore in increased perceived value for customers (Amit et al., 2001, p. 504). Chen et al. (2003) have found that selling via Internet can be up to 15% less costly than selling through standard offline distribution channels. Similar findings have been found by Brynjolfsson et al. (2000) claiming that e-retailers are able to charge lower prices than standard retailers, including the delivery costs, therefore, making them more price competitive (p. 580). Based on the findings mentioned in the previous sections, which state that price is one of the barriers for consumers to purchase organic products, the first proposition to be discussed in this paper is the following:
Proposition one (P1): E-commerce can have a positive impact on price of organic products (Efficiency)
In addition, efficiency can result from decreasing the information asymmetries between producers and consumers by constantly providing updated and accurate information. The Internet characteristics facilitate information flow to be speedy, accessible and easy to use relative to the offline environments. Consequently, this leads to a more informed decision for consumers and additionally, it reduces their search and informational costs (Amit et al., 2001, pp. 503-504). In the commerce of organic food this is especially important because besides being communicated the benefits of consuming organic food, consumers of organic products require detailed information on the production and farming methods, product attributes, origin, etc. This essential for the heavy users, who account for about three-fourth of the total organic food consumption (Wier et al. 2008, p. ). Hence, the second proposition to be discussed is the following:
Proposition two (P2): E-commerce can have a positive impact on information availability about organic products (traceability, origin, production methods, etc.) (Efficiency + Lock-in)
The second dimension, complementaries represent the value creation by bundling goods and services which have a higher total value than the sum of their individual value. Complementaries can be divided into two categories: vertical complementaries which are provided by one and the same company (e.g., after-sales service) and horizontal complementaries which are provided by partner companies (e.g., one-stop shopping) (Amit et al., 2001, pp. 504-505). Additionally, an e-business can create complementaries among activities such as supply chain integration, among resources such as the integration of e-commerce capability and IT infrastructure and among strategic partners within a network (Amit et al., 2001, p. 504), (Zhu, 2004, p. 167).
Third, lock-in encompasses the value creation of an e-business by the extent to which it manages to retain its customers and stimulate their repeated purchase behavior. Also, it includes the extent to which the e-business incentivizes its strategic partners to enhance their collaboration and partnership, thus decreasing company’s opportunity costs. Lock-in can be achieved in several ways: through loyalty programs (e.g. points systems) by rewarding customers with discounts as part of an affiliation with a strategic partner or nonaffiliated; through creation of virtual communities where customers as well as strategic partners can interact on a collective platform; through ensuring transaction safety and security via a third party through customization strategies by analyzing purchase patterns, clickstream, information shared by the customers which allows for personalizing offers, product features, ordering processes, information communication etc. (Amit et al., 2001, pp. 504-505). In this way, customers perceive to be more connected to the e-company’s system, their trust and loyalty being therefore enhanced. As mentioned in the previous sections, trust is an essential dimension in the retail of organic foods. This study analyses the impact of e-commerce on three levels of consumers’ trust: trust in organic products as a class of goods, trust in organic labels and trust in the e-retailer itself. However, the paper will discuss the third level of trust more thoroughly as the model of Amit et al. assumes that consumers’ trust in the e-retailer has a direct impact on e-retailer’s extent of value creation. Hence, the third proposition is the following:
Proposition three (P3): E-commerce can have a positive impact on trust and credibility of consumers in the offered organic products (Lock-in)
Last but not least, novelty, represents the potential for innovation related to product and service mix, production methods, distribution, marketing, structuring of transactions. Due to the online presence, there are no shelf space constrains, thus allowing online retailers to offer a wider range of products relative to offline retailers. Moreover, this allows companies to follow the latest trends in organic food consumption and update the product mix more frequently than other distribution channels. Therefore, the fourth proposition is as follows:
Proposition four (P4): E-commerce can have a positive impact on product range by increasing the product mix including sub-segments of organic products (allergen-free, sugar-free, vegan, superfoods, etc.) (Novelty + Efficiency)
Finally, the model of Amit et al. states that in order for an e-business to explore its potential of value creation, an integrative approach of the four dimensions (efficiency, complementaries, lock-in and novelty) has to be adopted. Therefore, the last proposition is:
Proposition five (P5): Based on P1, P2, P3 and P4, e-commerce can result in value creation in the organic food retail industry.
4. Methodology
4.1 Research design
To perform the analysis which in turn will examine the five propositions and answer the central research question, a qualitative study will be carried out. A qualitative approach allows for gaining deeper insights into e-retailers’ real life experiences in the organic food retail industry relative to a quantitative approach. Knowledge can be gained about the sources of value creation from e-commerce in the organic industry and the possible barriers which can be encountered. Moreover, it can be explored whether e-commerce is just the starting strategy or whether it can also bring value in the long term.
In order to gain relevant data for the investigation, the adopted data collection method is semi-structured interviews, meaning that the research choice is mono method. Due to its open nature, this method allows gaining new insights from e-retailers’ real life experiences. This is an important advantage as currently there is little research on the topic of e-commerce in the industry of organic foods. In this way, while the structured part of the interview draws on the current literature about consumers’ barriers in purchasing and consuming organic products and focuses on the sources of value creation for retailers adopting an online strategy based on these barriers, the open part allows interviewees to add new insights about potential sources of value creation in e-commerce and potential barriers.
Each interview question from the structured part was designed by first introducing literature findings on the topic of the question that are presented in a comprehensible fashion, consequently followed by the question itself. In total there are five major questions in the structured part covering
the following topics: the impact of e-commerce on providing consumers with extensive information on organic foods relative to other sales channels, its impact on consumers’ three levels of trust: trust in organic foods, trust in the organic labels and trust in the e-retailer itself, its impact on price and product range of the supplied products. The unstructured part consists of one broad question regarding other possible advantages and barriers of e-commerce as a sales channel for organic products relative to other sales channels, rather than the ones mentioned in the structured part (see Appendix A). In addition, probing was used throughout all interviews by asking follow-up questions in order to reconfirm some responses or to gain deeper insights regarding a certain issue.
During the interviews, the interviewees’ statements were systematically recorded in order to guarantee that all relevant information is captured and not distorted through the interviewer’s own perception. Subsequently, the information from the interview transcripts was grouped and ordered in a meaningful way in order to relate each of the four sources of value creation of e-commerce in the organic food industry to the total value brought to the company.
Regarding the time horizon of the research, since the collection of data was held at a specific point in time, the study can be classified as a cross-sectional one.
4.2. Sample
For the sampling process, a non-probability sampling technique was adopted and namely, judgmental sampling. This sampling technique fits the design strategy of this study as there is only a limited part of the population matching the criteria for the data collection, the judgement of the researcher being therefore required in the selection of subjects. More specifically, the criteria for choosing the subjects were one of the two:
• E-commerce of organic foods being company’s main activity
• The company owes a physical retail shop of organic foods, but their activity started with an online shop (not the other way round)
During the sampling process, sixteen e-retailers from three different countries within Europe (Netherlands, Germany, Romania) were approached both by e-mail and phone. From the sixteen approached companies, four accepted to participate in the interview (n=4). This results in a response rate of 25%. During the first interaction, a recap of the study and the topics to be addressed in the interview were presented (e.g., “The interview will cover questions about advantages and barriers in selling organic food online and about your personal experience on how does e-commerce affect customers’ trust in organic foods, the product range of organic products you can offer, the prices of products and on information availability requested by the customers”. Additionally, the confidentiality conditions were explained with the following statement: “All responses will be held
in strict confidence and will only be used for the scope of this study. All names and details will be held anonymously.”
Throughout the paper, the references to the four interviewees will be categorized as follows: interviewee 1, 2, 3 and 4 respectively. Interviewee 1 and 4 are e-retailers of organic foods in Romania, interviewees 2 in the Netherlands and interviewee 3 in Germany. For three of the four subjects the first criterion of subject selection was valid and namely that e-commerce of organic foods is company’s main activity. For interviewee 1 the second criterion was valid meaning that the company holds both a physical and an online shop of organic foods, however the online shop was established first. All four interviews were conducted via phone as the geographical distance and time constraints did not allow for a facto-face interview. The first and the fourth interviews with the Romanian e-retailers have been conducted in Romanian and later transcribed in English, and the other two interviews were conducted in English. The average duration of the interviews was 20 minutes, as some of the subjects had limited time resources (e.g., duration of interview 1 was 13 minutes). In the next section, an in-depth description and analysis of the interviews will be provided, which will help gain insights into the perspective of retailers of organic foods on the advantages and barriers of e-commerce in this specific industry, and consequently lead to answering the subquestions and the central question of this study.
5. Results
5.1 The impact of e-commerce on price of organic foods
After conducting the four interviews, insights were gained with regard to all five propositions derived in the Theoretical Framework section. The first proposition stating that an e-commerce strategy in the organic industry can create value by offering a more competitive price relative to other distribution channels was partially supported. Two of the interviewees stated that selling organic foods online leads to a higher level of efficiency and therefore to a decrease in costs. Namely, interviewees 2 and 3 argued that e-commerce allows for significantly decreasing the usage of paper, hence building a paperless system. While the reduction in paper usage is an advantage for most companies adopting an e-commerce strategy, for the organic food retailers this is especially important for two reasons. First, it has a positive effect on the e-retailers’ price offering and second, it supports the value they deliver to the customers about the organic approach as an integrated method progressing throughout the entire value chain. This argument is highlighted in the following statement by interviewee 3: “Because we sell our products online, we can digitize the whole process starting with the order processing, invoicing and even for the deliveries our customers use our mobile app to
receive all the necessary information and documents. We managed to create a paperless system which is in line with our mission statement supporting the environment and looking to the future of our planet but which also saves some costs for acquiring paper, printing and storing”. In addition, interviewees 1 and 4 stated similar ideas arguing that the offered prices are directly affected by the number of orders and transactions: “When our company grew two times its initial size, we were able to save transport costs and offer better prices” (Interviewee 4, Romania). In other words, according to interviewee 4 the size of the company has a direct impact on the offered prices. This is in line with the transaction costs theory referring to the value creation through efficiency generally. Namely, the larger the number of transactions, the greater the efficiency because the proportion of fixed costs spread among transactions is higher and therefore the total costs are lower.
Conversely, interviewee 2 argued that relative to other distribution channels such as supermarkets or specialized organic food stores, their online shop cannot provide any discounts throughout the year, therefore making their offers less competitive with respect to price. The reason for this is because due to the online presence, the company is able to implement a “Just-in-time” inventory management. This allows the retailer to supply fresh products (e.g., meat, dairy products, vegetables, fruits) that are produced by local farmers on an everyday basis. Consequently, as almost no goods are being stored in inventory, there are no products with an expiration date running short that need to be promoted through discounts. From these findings we conclude that an e-commerce strategy can create value through having a positive impact on price in two ways: through the digitization of the entire value chain and eliminating paper waste which leads to a decrease in costs and additionally creating customer lock-in by delivering values in line with the organic approach, and through enlarging the size of the firm by increasing the number of transactions in order to decrease delivery expenses and decrease product prices as a consequence. On the other hand, if the e-retailer delivers fresh organic products only, no product discounts are being made and therefore, there is a negative impact on price relative to other types of retailers.
5.2 The impact of e-commerce on information availability on organic foods
The proposition stating that e-commerce has a positive impact on information availability regarding organic products has been partly supported by the four respondents. Based on the interviews, it has been found that information availability has been triggered by both legal regulations enforced by governmental bodies and consumers’ need to be communicated detailed information about the products prior to their purchase. On one hand, according to interviewees 2 and 3, all retailers of both organic and conventional products are obliged by food control inspection bodies (e.g., NFVA, NSVA, etc.) to provide technical specifications for all the offered products. This means that the
product attributes, its properties, ingredients used during its processing as well as nutrition facts cannot be claimed unless confirmed and approved by an inspection body (“After the new regulations enforced from January 1st 2015, you have to be very specific as a retailer about the products you supply”, interviewee 2, Netherlands)).
On the other hand, interviewee 1 has highlighted the fact that as an e-retailer one has more advantages and possibilities in providing the necessary information regarding the traceability, origin and production methods relative to other distribution channels. Namely, the respondent stated that for the locally grown foods, the name and address of the farm where the goods have been produced and processed are being provided for most items and customers are being encouraged to visit the farmers in order to increase their trust and credibility in the authenticity of the applied organic methods during production. For the imported goods, the contact details of the farm are also being provided to ensure full traceability, which according to interviewee 3: “is the key element differentiating the organic approach from the conventional one, creating an integrated organic food system”. Additionally, interviewee 4 has claimed that e-commerce facilitates the updating of products’ information, certifications, certificates of analysis, but also the providing of additional information about the history of some products and cooking recipes as a stage of the purchasing process on the online shop. These findings have important implications for the lock-in dimension and namely trust, which will be discussed in more detail in the next section.
5.3 The impact of e-commerce on organic foods consumers’ trust
During the interviews, several insights have been gained regarding the impact of e-commerce on the trust of consumers of organic foods. According to the interviewees, there are several ways in which e-commerce can enhance consumers’ trust. First, as mentioned above, interviewee 3 has argued that e-commerce allows for full transparency and traceability between the supplier, retailer and customer. Namely, due to the ease of keeping updated the relevant information on the supplied organic products and the possibility of directly providing contact details of farmers depending on the product of interest, information asymmetries among the three parties are being eliminated. Thus, consumer’s trust in the authenticity of applied organic methods in the origins is enhanced. Second, three out of four respondents highlighted the idea that an e-commerce strategy allows for the integration of the values underlying the organic approach throughout the whole value chain. As an example, interviewee 2 has stated that through an e-commerce strategy, their company has completely eliminated food waste by maintaining low inventory levels and preparing the goods only when an order is being placed. Additionally, e-commerce has facilitated reduction in paper waste through digitizing the administration part and through eliminating paper packaging. Moreover, they
implemented a delivery system running on green gas only. As a result, customers are being communicated values which are in line with the organic methods, such as concern and responsibility for environmental and animal welfare. Moreover, all four respondents have mentioned the fact that their firms are directly involved in voluntary projects such as “Save the bees” (a project founded by Green Peace), “Care” (project supporting food safety in several regions of Laos), “Clinica Nera” (Romanian Cancer Foundation), “Sfanta Irina” (Cancer Foundation). The involvement in such projects delivers customers perceptions of integrity and benevolence, two of the three attributes an e-retailer needs to possess in order to be perceived as trustworthy, but also, perceptions of the company as being responsible with regard to environmental animal and social welfare (Chen et al.2003). On the other hand, interviewee 1 and 4 have stated that the consumers in their market (Romania), are at the stage of gaining trust in online shopping as an alternative sales channel. This finding shows that the potential of value creation by e-commerce in the organic industry depends on the type of market and on the country’s shopping culture. However, interviewee 2 (Netherlands) has argued that: “In order to build mutual trust with the customers, they first need to know the people behind e-commerce”. She claimed that it is essential to personalize the interaction with the customers as much as possible in order to enhance their trust in organic products and the retailer itself. One strategy they use is having one and the same driver for a certain delivery region, which customers recognize and get familiar with. Similarly, interviewee 3 has stated that as an e-retailer one needs to build a sense of community in order to enhance consumers’ trust. Their strategy is incorporating a blog on their shop web-site where customers can post and share among each other recipes using organic products. Additionally, there is an option where by clicking on a chosen recipe, belonging to the customer him/herself or to another group member, all the ingredients needed for that recipe are being added to the shopping list. In this way, trust in the e-retailer is enhanced through lock-in by personalizing customers’ shopping cart and by creating a collective platform where customers with similar interests can interact.
5.4 The impact of e-commerce on the product range of organic foods
The proposition that e-commerce has a positive impact on the product range of organic products has been supported by the four interviewees. Interviewee 3 and 4 highlighted the same idea and namely that e-commerce is an advantageous strategy in expanding the product mix in the organic food retail industry. They claim that as this industry is being characterized by continuous product innovations, e-commerce facilitates the introduction of the newly developed products in the assortment due to its efficiency and “lack of shelf space” (“We are able to follow latest market trends by offering our customers innovative products. We are continuously enlarging our product categories
such as organic crackers, crisps, raw chocolate, biscuits, pasta by introducing products with new ingredients combinations, but also products which are produced through innovative methods such as sprouting of various organic seeds and grains”, interviewee 3, Germany). In addition, interviewees 1, 2 and 4 have stated that by selling organic foods online, the e-retailer is able to maintain in the product range niche products which are being sold in small quantities only (“Some of our products like organic food supplements, proteins, superfoods are still quite unfamiliar to a part of our customers, but it is important to inform them about the availability of these products and their benefits, to educate our consumers and create our own market”… “These specialty products attract a niche customer group who by firstly buying the niche products, become consumers of other mainstream organic products from our assortment”, interviewee 1, Romania). In this way, e-retailers have an advantage over standard retailers of organic foods by being able to offer a more complete assortment of products including both innovative and niche products. The implications of these findings will be further discussed in the next section.
6. Discussion
Based on the literature analysis and the results from the conducted interviews with four e-retailers of organic food, deeper insights have been gained into the impact of e-commerce on the current barriers consumers of organic products have: accessibility of price, information availability, trust in the organic foods and product availability. After discussing and summarizing the implications of e-commerce on these factors based on the study results, an answer to the sub-questions of the study will be provided. Consequently, the central question of the paper will be answered and the extent of value creation through e-commerce in the organic food retail industry will be concluded.
First, P1 stating that e-commerce can have a positive impact on price of organic food has been partly supported. On one hand, there are findings that due to the complete digitization of the value chain, e-retailers are able to design a paperless system thus decreasing the final product costs. However, another important finding highlighted in the interviews is the fact that the efficiency created by e-commerce in managing companies’ transactions besides positively affecting prices, can also have a positive effect on the trust of customers and their lock-in. More specifically, the message delivered to the customers about the e-retailer’s complete elimination of paper waste, creates a perception of responsibility and benevolence towards environmental welfare. Furthermore, the fact that this message is in line with the values behind the organic approach and that a paperless system is designed as part of the company’s integrated value chain, creates a perception of its integrity, therefore enhancing consumers’ trust and credibility in the e-retailer. These findings support the main idea behind the model of Amit et al. (2001) claiming that in order to assess the total value created by
an e-commerce strategy, an integrative perspective of all sources of value creation needs to be adopted. In this context, efficiency has a combined effect on both price and lock-in. Similarly, both e-retailers from Romania, have argued that e-commerce in the organic food retail industry can have a positive impact on efficiency, however, its extent being directly affected by the size of the company, a variable which is being measured by the total number of transactions. According to the two interviewees, the higher the number of total transactions, the lower the delivery costs and therefore the lower the final price of products. As mentioned in the results section, this is in line with the transaction cost theory which applies for companies from various industries adopting an e-commerce strategy.
On the other hand, another result shows that conversely to other types of retailers in the organic food industry, an e-commerce strategy does not allow for product discounts and promotions. However, this finding is valid for e-retailers that deliver fresh organic products only. More specifically, by adopting a “Just-in-time” inventory management strategy, the e-retailer delivers its customers products which are freshly produced by the local farmers, therefore being able to considerably eliminate its levels of food waste. Similar to the findings from above, this has implications for two of the dimensions of value creation in e-commerce: efficiency and lock-in. Due to the virtual environment of the Internet, e-commerce allows e-retailers for efficiency by maintaining low inventory levels and constantly supplying customers with fresh products. In addition to these benefits, customers are being communicated a message about the company eliminating food waste to a significant extent, which is in line with the values underlying the organic approach. However, as there are no inventory levels which need to be sold and replaced with new stocks, e-retailers of organic fresh foods are not able to sell their products under discounts throughout the year, hence negatively affecting products’ overall price. To sum up the discussion about the impact of e-commerce on price of organic products, this strategy can have a positive impact by creating efficiency through the digitization of the entire value chain and elimination of paper waste, through the increase of the number of transactions to decrease delivery and transport costs, through the design of a “Just-in-time” inventory system which significantly decreases food waste and thus, cuts costs. At the same time, if the e-retailer supplies fresh products only, discounts throughout the year cannot be offered, therefore negatively affecting the overall price relative to other types of retailers.
Second, P2 claiming that e-commerce can have a positive impact on information availability for consumers of organic foods has been partly supported as well. On one hand results show that providing extensive information on the supplied organic foods is enforced as a regulation by the inspection bodies of organic food. In other words, governmental legislations serve as an external factor affecting the availability of detailed information on organic foods, regardless of retailer’s strategy. On the other hand, several respondents have argued that due to its efficiency of managing
data, e-commerce facilitates updating the information on supplied organic foods such as certificates of analysis, product technical specifications. Moreover, the flow of information can be handled as an individual step in the purchasing process by accessing it through several clicks, which allows for efficiency, accessibility and convenience. In addition, e-commerce facilitates providing information on the traceability of the supplied products by communicating contact and location details of the farms or factories in the origins of each product. This is an important advantage as according to one of the interviewees, traceability is key in preserving the integrity of the organic food system.
Third, P3 stating that e-commerce can have a positive impact on organic food consumers’ trust, has been partly supported by the four respondents. Firstly, as mentioned above, due to the efficient information management capability of e-commerce, retailers can provide complete information on the traceability of organic products by communicating contact details of farms and factories in the origins. This has a positive impact on consumers’ first and second level of trust and namely on the trust in the supplied organic products and in the authenticity of applied organic methods during production which are reflected on the organic labels. Furthermore, due to the virtual presence created by e-commerce e-retailers are able to fully digitize their value chain and consequently design a paperless system. Similarly, they are able to create a “Just-in-time” inventory management system which allows for elimination of food waste. Consequently, these factors can have a positive impact on consumers’ third level of trust which depicts the trust in the e-retailer itself. By integrating the values representing the organic value approach such as concern, responsibility and protection of environmental and animal welfare throughout the whole value chain, companies are delivering perceptions of benevolence and integrity. As mentioned above, according to the literature, these attributes are key for an e-retailer to enhance consumers’ trust and credibility in itself. Therefore, it can be argued that through its efficiency, e-commerce can have a positive impact on organic consumers’ three levels of trust.
In addition, results show that all four interviewed e-retailers are member of a project involved in either environmental, animal or social sustainability in a certain region. This has positive implications on consumers’ trust in the e-retailer by creating perceptions of benevolence towards the consumers. However, this is not a factor impacted by e-commerce, but can apply to all types of retailers.
Conversely, it has been found that consumers’ trust in the e-retailer and in the organic products supplied online, depends on the country, type of market and shopping culture. Based on the responses provided by the two e-retailers from Romania, it can be concluded that as for the Romanian market the organic food system is still an emerging trend and additionally online grocery shopping is still in a developing stage, the extent of positive impact an e-commerce strategy can have on organic foods’ consumer trust is lower than for other markets where these trends are at a more expanded phase.
However, other results show that in order to enhance mutual trust between the e-retailer and its consumers, it is important to personalize the interaction. The reason for this is that because of the physical distance between the buyer and seller and because of the lack of possibility to sensorially test the products prior to their purchase, consumers cannot assess the authenticity of the offered organic products and the trustworthiness of the e-retailer. Hence, a personalized interaction is essential in overcoming the physical distance barriers and therefore increase consumers’ trust in both the e-retails and its supplied organic products. Some examples of personalized interaction provided by the respondents are having one driver for one and the same region of deliveries to enhance interaction and familiarity, creating a platform where by exchanging cooking recipes from the organic products supplied by the e-retailer, customers can order through a click the entire list of products used for a certain recipe, therefore personalizing loyal customers’ shopping cart and building a sense of community. To sum up the findings regarding P3, e-commerce can have a positive impact on all three levels of organic foods consumers’ trust by providing extensive information on the traceability of the supplied organic products, by aligning the values underlining the organic approach throughout the complete value chain, such as complete elimination of food and paper waste, by engaging in projects which are as well following the values behind the organic method such as concern and responsibility for animal, environmental and societal welfare. At the same time, the extent of positive impact e-commerce can have on consumers’ trust depends on the country’s type of market and shopping culture. If either the trend of consumption of organic foods or the one of doing grocery shopping online or both simultaneously are at early stage of development, e-commerce in the organic food retail industry in such type of market can create value to a limited degree.
Next, P4 stating that e-commerce can have a positive impact on the product range of organic foods has been fully supported. Findings show that the organic food industry is currently being characterized by continuous product innovation including both innovative ingredients and production methods. Consequently, due to the efficiency of e-commerce and its sources of novelty characterized by online presence and “lack of shelf space”, the introduction of newly developed products in the product range is therefore facilitated. In addition, this allows the e-retailers to maintain in their product range niche products which are being sold in small quantities only. Consequently, this brings two advantages. Firstly, by educating current consumers about the availability of these niche products and their benefits through providing extensive information on them during the purchase process, e-retailers are able to develop their own market by guiding consumers from the awareness to the consideration and purchase stage. Additionally, e-retailers of organic foods can profit from the synergy created by the niche group of customers who first engage in purchasing due to the niche products, subsequently becoming loyal customers of a wider range of products.
By summarizing all the above mentioned findings it can be concluded that P5, which also reflects the research question of this study stating that based on P1, P2, P3 and P4 an e-commerce strategy can create value in the organic food retail industry, has been supported to a large extent. Namely, results show that the sources of value creation of e-commerce from the model of Amit et al. (2001) in the organic food retail industry are efficiency, lock-in and novelty. E-commerce efficiency has a positive impact on price, which according to the literature is one of the barriers limiting the increase in consumption of organic food, by allowing e-retailers to design a paperless system through the digitization of the value chain, hence leading to a decrease in expenses for purchasing, printing and storing paper, by facilitating the creation of a “Just-in-time” inventory management system which leads to considerable elimination of food waste, therefore decreasing overall price and creating value. These results have implications for the lock-in dimension as well. By eliminating paper and food waste, e-retailers deliver customers a message about their concern and responsibility towards animal and environmental welfare, hence increasing consumers’ trust which in turn creates value.
At the same time, to design a “Just-in-time” inventory system, the condition for the e-retailer is to supply fresh organic products only. Consequently, as there are no inventory levels required to be sold and replaced, discounted prices cannot be offered, thus leading to a negative impact on overall price and on the extent of value creation relative to other types of e-retailers.
Efficiency has a positive impact on information availability as well, which is one of the current barriers consumers of organic products encounter. Due to the efficient management of information, e-commerce allows for constant updating of relevant information for the organic foods consumers such as product technical specifications, information on traceability and origins. Consequently, through customer lock-in, value creation is enhanced by strengthening the trust relationship between customer, supplier and e-retailer, therefore also increasing trust in the authenticity of the products and organic methods used during production.
Lastly, e-commerce efficiency has a positive impact on product range due to the online presence which is being characterized by not having shelf space constraints. In this way, e-commerce facilitates the introduction of newly developed products on the market and the maintaining of the niche products sold in small amounts only, but which are important for both targeting the group of customers specifically interested in the niche products and making use of the synergy by transforming the niche customers into loyal customers of a wider range of organic products from the assortment in the long term.
The second dimension of the model depicting the sources of value creation in e-business, lock-in, has a positive impact on the organic food retail industry by being able to build community platforms which allow consumers with similar interests to share cooking recipes and experiences with organic products. Additionally, e-commerce allows for the personalization of the shopping cart which
is an advantage creating value by providing accessibility and convenience to customers. The other positive implications lock-in has on value creation in the organic food retail have been described and analyzed in the previous paragraphs.
Conversely, findings show that the extent of value creation by e-commerce in this industry depends on the type of market and online shopping culture. In our study, based on the responses of the two Romanian e-retailers, it can be concluded that in a market where organic food as well as online grocery shopping are still emerging trends, the extent of value creation by e-commerce in this industry is limited. However, the extent of value creation can be enhanced by personalizing the interaction with customers through familiarizing them with the employees behind the e-retail shop and by building online platforms (e.g., blogs) to create a sense of community. Subsequently, this has a positive impact on customer lock-in as well, by creating mutual trust between the consumers in the e-retailer and the supplied organic products.
Finally, the third source of value creation found in the study is novelty. Due to the online presence created by e-commerce, the introduction of newly innovated products into the product range is being facilitated. This is an important advantage in the organic food industry as according to the literature, limited availability of a wide product range is still a barrier for consumers of organic foods. Therefore, by continuously improving the product mix through the introduction of innovative products developed with innovative ingredients or production methods, e-commerce can create value in the organic food retail industry.
In concluding the findings regarding the central question of the study, it is essential to highlight that to entirely assess the extent of value creation by e-commerce in the organic food retail, an integrative perspective of the sources of value creation should be adopted. For instance, as already discussed above, the impact of one source of value creation (e.g., efficiency) can only be fully estimated by simultaneously analyzing its interaction with the other sources (e.g., lock-in and novelty). Therefore, in order to provide a complete image of the sources of value creation of e-commerce in organic food retail, an integrated view of the model of Amit et al. (2001) should be adopted.
In this section the results from the four interviews were discussed, compared across them and to the current findings from the literature. Consequently, an answer to each of the four sub-questions of the study in form of propositions were provided and finally, a conclusion based on the answers of the four propositions was drawn to answer the fifth proposition which also reflects the central research question of the paper examining the extent of value creation through e-commerce in the organic food retail industry. In the next section the limitations will be discussed and finally a conclusion of the entire study will be drawn.
7. Limitations
In order to assess the validity, reliability and generalizability of the current study investigating the extent of value creation by e-commerce in the organic food retail industry, its limitations need to be discussed.
First, because of the time resources constraint, only a sample of four subjects could be interviewed, which resulted in a response rate of 25%. Still, as only a small part of the population matches the criteria for participating in the study, it has been expected to obtain a higher response rate. The main explanation for this result is the lack of time availability for an in-depth interview from the side of the e-retailers. With the total number of the researched population being not available, it is still assumed that the sample size is not representative. This aspect should be taken into consideration upon generalizing the results. In order to improve external validity and generalizability, the sample size should be selected such that conducting further in-depth interviews with organic food e-retailers does not add new perspectives.
Additionally, because of the limited time resources, only one data collection method has been used and namely semi-structured interviews. In order to improve the internal validity of the study, triangulation methods should be applied additionally. In this case, a questionnaire at the end of the interviews could be a suitable approach for triangulation in order to empirically test the five propositions. As this technique is anonymous in nature and participants would already be familiarized with the researched topic, the extent of respondent bias could be diminished.
8. Conclusion
To conclude, this study has attempted to examine the sources of value creation through e-commerce in the organic food retail industry from the e-retailers’ perspective by focusing on overcoming the current barriers organic food consumers encounter. Based on the reviewed literature, four barriers were detected: price, information availability, trust in organic foods and product availability. Consequently, these findings together with the literature findings on e-commerce and consumers’ trust in e-retailers were combined with the model of Amit et al. (2001) describing the sources of value creation in e-business, in order to suggest four sub-questions, which later built up in answering the central question of the study. These sub-questions were raised as propositions claiming that e-commerce can have a positive impact on price, information availability, consumers’ trust and product range of organic foods. Consequently, based on these propositions, the final proposition was raised arguing that e-commerce can lead to value creation for retailers in the organic food retail.
