Grocery is a very unique business model. While being a true B2C scenario, it couldn’t be more different than traditional retail B2C. Which is why today’s grocers are very hesitant to make their move online. But as the trend has now officially crossed over from Europe to North America, and the Walmarts, Amazons and Costcos of the world are stealing market share, grocery banners wanting to claim their piece of the pie in this new digital era of connected consumers don’t have many other options.
What do grocers dream about when they think e-grocery?
We’ve done a lot of research on that subject as we develop innovative solutions for our clients in the grocery industry. And the two pain points that top the list are meeting customer expectations with consistent in-store and online products and assortments, and managing last-mile fulfillment logistics to eliminate errors and lost sales.
In the world of online shopping, errors and returns weigh heavily in the decision process, with more than three quarters of consumers choosing brand A over brand B if they have a more flexible returns policy. Especially when in many cases the return is due to the retailer's error: wrong item shipped, item received is different than the way it appeared online, or item was received damaged. Online grocery shoppers are far less likely to go through the hassle of returning a wrong grocery item, but when it happens consistently, the damage will inevitably be done.
The caveat for grocers is that the above statistics are based on fulfilling an average online order of two or three items. Translate the risk of error for an average grocery order of 20-30 items. Plus products that are fresh or frozen and therefore highly time sensitive from a picking, packing and delivery perspective. Far riskier and significantly more complex - and worrisome.
Another statistic that may contribute to North American grocers’ paralysis by analysis is that while a vast majority of consumers are satisfied with shopping online, that number takes a pretty significant dive below 50% when it comes to the availability of flexible pick-up and delivery options. One of the more challenging aspects of online grocery logistics.
Which leads us to Pick & Pack solutions
When customers approached us with their list of e-commerce requirements, it was obvious that in the grocery industry where margins are quite low, maximum efficiency on backend in-store fulfillment operations was a critical success factor.
Therefore, it was imperative to develop a tool that could be used directly at the picking end with a streamlined bi-directional data flow with the omni-channel order management and fulfillment process (Click & Collect, home delivery, etc.).
In-aisle scanning device
As traditional retailers are coming to understand, empowering employees with in-store mobile devices brings huge opportunities to boost in-store sales through more informed, more personal customer service at the point of sale. For grocers, these mobile devices can be programmed as mobile in-aisle scanning devices with an adapted software for picking and packing orders. Some of the powerful capabilities they can offer is an integration with the e-commerce platform to receive orders in real-time,integration with the in-store POS to save significant time at checkout, and once completed at the POS receive the final order amount for price reconciliation with the e-commerce platform to charge the accurate amount to the customer through the online payment provider.
In a digital age, it seems like a no brainer that an automated and orchestrated backend process like this is the only way to go. And aside from the above benefits, the end result and ultimate objective is that it can greatly reduce the huge potential error rate. By eliminating the manual process of printing an order, assigning it to a picker, and having them roam the aisles searching for items and making an easy human error like choosing dried tomatoes instead of a jar of roasted peppers “because the jars look alike”, the scanning device validates that each picked item matches the item ordered. And that the right quantity is picked. And ensures customer preferences are respected (I like my bananas slightly green; kitty litter can be different size but must be same brand; please no substitutes).
In-aisle scanning devices in the hands of employees give them the ability to do their jobs faster and better, which should also be a big motivator.
Planogram integration
Another huge motivator and time-saver is providing pickers a way to avoid needlessly wandering aisles. Searching for products is one of the more time consuming activities of fulfilling an online grocery order, and when time is of the essence, not the most efficient process.
With in-store merchandising laid out in the store planogramsoftware, it only makes sense to leverage that information - an integrated Pick & Pack mobile device can achieve exactly that. And while every banner tends to have a similar floor plan, some stores may be supermarkets, some may be smaller local markets with unique assortments (a Kosher section), so the ability to provide every employee in every individual store an optimized route is a very innovative and simple way to improve operations.
Which is why planogram integration becomes a tremendous advantage for grocery store operations managers. Imagine that when an order is received in the e-commerce platform, which is seamlessly integrated with the store planning software, that every item in that order is listed in order of the most optimized picking route. So aisles can be skipped when unnecessary, and multiple smaller orders could even be picked at the same time.
When it comes down to grocery picking route optimization, there are many factors to be taken into consideration.
- For in-store merchandising purposes, fresh produce, some refrigerated/frozen items and other higher margins products are often presented first to the shopper, near the store entrance. The purpose is obvious – smart merchandisingoptimizes margins. In an online context, that is completely irrelevant. The merchandising intelligence is all presented in customer-centric online offerings (another huge advantage of e-commerce but I digress).
- The best way to fulfill an online order takes on an entirely different logic. For example, you would want your pickers to always start with the big products first, such as dog food and cases of water, then do the grocery aisles and finish with the fresh produce, meat, dairy and frozen.
- Minimizing the footpath of pickers also means more orders are filled faster, reducing the risk of late pick-up or delivery times. A customer left waiting in line to pick up their order in-store becomes a very dissatisfied customer who no longer believes in the conveniences of your online experience, and a customer left waiting for late home delivery will quickly be turned off. Plus, if the process is still manual, chances are there will be errors in that late delivery.
Conclusion
For grocers who are contemplating the best business model for online grocery implementation and fulfillment, optimizing in-store operations with innovative technology is a terrific and more cost-effective option that means not having to consider investing in a 30M$ warehouse or distribution center real estate. Optimizing your in-store fulfillment process is going to be a challenge, but it is absolutely possible and less complicated than you would think with the right tools and technology, and guaranteed to reduce the risks of lost sales from dissatisfied customers.
Manuel.
