Do I carry your groceries home? No, move the store

Home delivery
Michele Caprini
01 Aug 2019

Home delivery services have been a feature of competition in the sector for years.

The War of Delivery

Do shopping or having lunch served at home, in the shortest time possible. A service with a growing demand, which can differentiate competitors among themselves. Be they retailers or restaurants.

Just a year ago, we wrote about Kroger and his strategic choice regarding home delivery. The American giant (the 5° worldwide in the industry, $124 billion with more than 3,000 supermarkets) had bet on delivery within two hours. Guaranteed by 1200 sales points on the ground, and 1,165 collection points.

Nearly a third of American consumers do not buy on eCommerce platforms due to high delivery costs. And Kroger’s alternative choice has been widely rewarded.

Going one more year back, in the summer of 2017 we had dealt with the acquisition of Grand Junction by Target, another great name in the American retail industry. The reason was the delivery management platform, an advanced technology that combined the retailer inventory with the many delivery companies in the area.

 

Carrefour, Glovo and others

In the last year home delivery, within the time and the modalities required, has become an even stronger factor of competition.

A few days ago the news of the agreement between Carrefour and Glovo. From October, in six cities around the world (Rome and Milan, among them), customers can receive their groceries in about half an hour, every day of the week. This will allow the French colossus to offer ultrafast deliveries. The Spanish company specialized in home delivery, instead, will benefit from a potential, enormous widening of its market.

Moreover, last May, the competitive importance of the service was emphasized by the Amazon-Deliveroo operation, a participation of $575 million.

Another scoop just today. Takeaway.com, Dutch home delivery company, brought to the table (we may say) 5 and a half billion euros to acquire the rival Just Eat. Takeaway.com, last December in its home country, had also taken over the activities of Hero, a German company with 24 different brands and a portfolio of about 250,000 restaurants.

Criticality of the model

The convergence, in various forms, of the operations between retail, food services and logistics operators has characterized the sector for years. However, the distributor or restaurant – transporter– customer chain is far from flawless.

The cost to the former is no small thing, and the margins are often down to the bone. In the first three months of 2019, Uber suffered losses of more than a billion dollars, largely due to difficulties in food deliveries, although the volume was also increasing in Europe.

In addition to this, the structural problem of the gig economy. Workers claim low wages and unfair practices; customers, on the other hand, often complain about the poor quality of service and goods on social networks. Now even subcontracting, illegality and micro-criminality are part of the problem.

For retailers and restaurants the loss of income and reputational risk due to poor service are a daily issue.

Upon everything, moreover, there is the critical point par excellence: customers’ data. Who owns them, dictates the rules of the game and makes the relationships in the supply chain unstable.

Can we do without them? Impossible. According to the most reliable observers, the online business, by 2025, could reach 20% of the total. It would be better, then, to look for new models.

 

Fleat Network

We are talking about a tech start-up based in Florida that deals with the delivery of almost all kinds of goods or services. For a fixed monthly cost, distributors and restaurants using Fleat Network can use transport units mapped on the area of competence. These units are governed by an advanced system, accessible via app.

Low-value products (e.g.: commonly used foods, home care and personal care goods, over-the-counter medicines), which run out frequently, are preloaded in the vehicles. A mobile inventory, derived from profiling the service’s customers.

In one modality, customers can schedule on a given day the delivery of groceries at home, at work, anywhere.

In a second modality, which we can define “stationary”, the distributor sends more vehicles to strategic locations to operate as pop-up stores. All this, using the Fleat Network system to communicate with customers, send digital promotions and manage orders. Without cumbersome (or damaging) third party delivery.

Are we not talking about shopping, but about lunch or dinner? It does not change a bit: if the customer does not go to the restaurant, the restaurant goes to the customer.

Overseas, meanwhile, there are those who argue that a distributor convinced that an unmotivated or sub-contracted gig worker is more useful than a“mobile storefront”, should fire the CEO.

 

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