Quick commerce and food retailers: a match made in heaven

Quick commerce has rapidly conquered cities in Europe. With the economy under pressure, questions about quick commerce’s longevity, sustainability, and profitability are asked. Walther Ploos van Amstel, Professor of City Logistics at the Amsterdam University of Applied Sciences, spoke to Commerce Trends on the topic.

Quick commerce is a niche market. In food retail, we are talking about a market share of one or two percent, perhaps five to ten percent in large cities. There will always be a category of consumers who choose this service because of its convenience. However, quick commerce companies will have to respond to the current economic instability with cheaper products. Home delivery is still money-consuming, and with rapid deliveries offering another option for consumers, traditional retailers have no choice but to respond.

If these newcomers to food retail operate smartly and efficiently, quick commerce could eventually become cheaper than doing the shopping yourself. After all, a shop is a very expensive piece of equipment that costs an estimated 20 to 25% of sales. An overpriced machine that is permanently dangling high-margin products in front of it. Those who shop online a little more consciously could be winners.

Retailers can do two things to keep costs down. Firstly, they must ensure that handling is done with maximum efficiency by using robots and packaging optimized for handling by robots.
In addition, retailers should make maximum use of data. After all, in logistics, everything revolves around data and time. If you wait for a customer to place an order finally, you will be running and standing still. It is better to create a permanent flow of orders, for example, by studying customer behavior. For example: if all capacity is currently used, you may have to stretch out the delivery time. Don’t promise delivery within 20 minutes, but within 40 or 60 minutes. Only then it is possible to deploy people efficiently. Rapid deliveries, like home deliveries, are costly if you do not excel in operations.

Food retailers and rapid deliverers are a match made in heaven, but what food retailers should not do is allow those deliverers to pick up stock in shops as they are simply not equipped for that. The best option is to free up space – between 200 to 250 square meters – for a micro-fulfillment center. Robotics can help to set up such a micro-fulfillment center efficiently, as the Chinese company Ochama has shown in its first shops in the Netherlands. Micro-fulfillment centers can also be used as click-and-collect points for rapid delivery partners.

Rapid delivery companies can benefit from purchasing advantages and the efficient distribution networks of more established food retailers, as they would never be able to get their own stock into the city so inexpensively.

Read the full interview on Commerce Trends.

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Walther Ploos van Amstel  

Passie in logistiek & supply chain management