Nowadays, it’s all about making fast deliveries

17. February 2017, Editorial

The must-have of e-commerce in food retailing is currently the fastest possible delivery of fresh products. A huge challenge.


amazon fresh


© Moodley Brand Identity/ Alex Krischner
Customers still prefer to buy offline. With the emphasis on ‘still’.

We’re a society that loves convenience. Optimising each 24-hour period to cram in as many activities as possible and yet avoid daily chores. Such as shopping at the supermarket. That’s why delivery services that bring everything to the customer’s doorstep are popping out of the ground like ripe vegetables. And this isn’t a new phenomenon. All retailers have discovered the online shopping business, while some have even been forced into it. Now, however, it’s about being better than the competition. Faster delivery, fresher food. This creates logistical as well as financial challenges for supermarkets. Not least because one of the players in food retailing is already writing the rules in many other segments: Amazon.

Only fast is good enough.

Delivering fresh products is really expensive because it takes an unbelievable amount of time and effort. Fruit, meat and milk need to be fresh and, if possible, delivered to the customer the same day. Even though businesses have minimum order amounts and delivery costs, these are not nearly enough to cover the costs of the logistics, personnel and IT. The Austrian supermarket chain Spar, for example, says that less than one percent of its sales is currently generated online. Spar CEO Gerhard Drexel is projecting this to grow to four percent at the most. In the UK, six percent of food products are already sold online, and the British industry association IGD is projecting this figure will double by 2019. Around the world, the trend is unstoppable. Which is why the ‘trial and error’ phase in Austria should be taken advantage of. Supermarkets that miss out on establishing their e-commerce business today will struggle in the future. Because even if there isn’t much going on with digital stores right now, there is no way of getting around them. Even if slightly modified form of stationary retailing continues, the advantage of convenience that online shopping offers in the food segment cannot be ignored. And it is exactly that convenience which more and more people are coming to appreciate.

Even Amazon, which already has the logistics required as well as a large and loyal customer base, is still fine-tuning its food delivery service to make it more cost efficient – in some US cities and in England. Amazon’s Pantry Service has been offering household products for some time now, but fresh or frozen products are new territory for the online retailer. That’s why it has made a deal with Britain’s fourth-biggest supermarket chain, Morrisons, from which it will procure products. In return, Morrisons doesn’t need to establish its own logistics network – a win-win situation.

A robot at the door.

It wouldn’t be Amazon, however, if the focus was purely on delivery. The various delivery services have been competing heavily against one another in terms of delivery times. The faster, the better. Amazon Prime Now promises to deliver chilled and frozen products within one hour, as does the British supermarket chain Sainsbury’s, at least in London. “Speed plays an important role for many customers,” says Jon Rudoe, responsible for digital developments and new technologies at Sainsbury’s. “Having reflected on a concept, we realised that delivery by bicycle courier would work the best for this.” If only 60 minutes are allowed to pass between a customer placing an order and the courier ringing the customer’s doorbell, more personnel will be needed. Employees to put packages together and employees to pedal across London. That creates new jobs but is also associated with additional costs for the supermarkets. However, according to REWE CEO Alain Caparros, the advantages over Amazon can be summarised in three key words: Trust, freshness, origin. The digital offer of local supermarkets has a home advantage in all three areas because customers are usually already familiar with the quality of the store’s products. Customers will also prefer ordering online where they would otherwise have done their shopping offline. For e-commerce that means finding new, properly considered ways to communicate the digital offer. A world of images showing juicy apples and fresh salad works. But more transparency, such as a “This is how we do it” video illustrating the process from selection to delivery and an employee wrapping up a finished online delivery package, can also work.

Bote mit Fahrrad, der an einer Kreuzung hält

In Silicon Valley – where else? – things are a few steps ahead. The question of personnel will probably no longer exist there in the near future because Starship Technologies is already busy testing delivery robots that will take over the job of the bicycle couriers in order to reduce costs for the supermarkets. On six wheels, just 60 centimetres tall and weighing in at 20 kg (without a load), they can travel at about six kilometres per hour from the warehouse or restaurant to the correct front door. They are nippy enough to be able to literally go around traffic. “Starship is reinventing the last metres of the delivery process in order to make a convenient and sustainable solution with robots possible,” says Ahti Heinla, CEO and co-founder of the company along with Janus Frii. (Incidentally: Both men were also co-founders of Skype. The tests have been promising. Only one thing is uncertain: how will people respond to the robots on the pavement? Will they ignore them? Will they accept them? Will they vandalise them? Or even steal them? Just imagine if they smelled like our favourite pizza….

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