By Gavin Harrison, UK Sales Director, Element Logic
Although it has been an emerging trend for some time, online grocery retail, or eGrocery, has truly flourished since the onset of the global pandemic in 2020. But unlike traditional grocery, where the customer puts in most of the effort during a physical store visit, eGrocery is an entirely different model.
The pandemic accelerated the surge in demand for same-day or next-day food delivery services and click-and-collect options. However, grocery stores are designed for customers, not order pickers – product positioning and store layouts aim to maximise sales rather than minimise travel per shopping trip.
eGrocery means that the retailer has to do most of the work regarding order processing, picking, and delivery. However, customers are reluctant to shoulder the actual cost of delivery and handling fees, making profitability somewhat elusive. In the traditional system of hand-picking online orders from a physical store, staff members may be simultaneously picking six orders, and customers tend to order more online than they would buy in store. By the time these are picked and delivered, and as customers are not usually charged fees, these orders will typically have an operating margin of minus 15 percent.
Therefore, the challenge for eGrocery retailers is to build a sustainable infrastructure that aligns with customer demands while increasing profit margins. The core requirements are an intuitive online platform, excellent quality products, competitive pricing, and, perhaps most crucially, fast and reliable deliveries.
So, what is the key to developing a profitable and sustainable eGrocery operation? The answer lies in automating order fulfilment and streamlining operations. Here are five key reasons why.
- Less human error means improved order accuracy
Using an Automated Storage and Retrieval System (ASRS) eliminates the picking errors typically associated with manual order picking which, in turn, means improved customer satisfaction and less time spent rectifying complaints. Warehouse order picking accuracy is also crucial in maintaining correct inventory data. By integrating with the Warehouse Control System (WCS), an ASRS speeds up the fulfilment process massively while offering complete and accurate visibility of your entire stock.
We know that tired or distracted workers are prone to making mistakes. An effective, user-friendly warehouse automation system with proper backup support will maintain high efficiency and safety by eliminating strenuous manual tasks.
- Quicker delivery meets changing customer expectations
Customer demands have shifted immensely in the last few years, especially because of the pandemic, which has accelerated demand for quick and efficient home delivery of all kinds of products.
Therefore, expanding your business to accommodate online shopping can quickly escalate to an unnervingly busy shop floor as people gather orders and prepare them for delivery. Implementing an ASRS with smart robots will reduce the stock storage footprint, store congestion, and associated labour. This results in minimal disruption for in-store customers while seamlessly serving online customers, with both groups still getting the best attention and service.
There are so many horror stories about ‘substitutions’ – I’m sure many of us remember the teacher who ordered seven calculators, and instead got seven chicken and bacon pasta bakes. In traditional systems, the customer can order something that is in stock at the time, but by the time someone comes to pick it up for their order, another picker or an in-store customer has already taken it. With an automated system, the stock in store is kept separate. Therefore, it is easier to monitor how much of each item is left, and there is a clearer sense of what is out of stock when it is ordered.
- Decreased need to spend on labour
The ever-increasing demand and growth in the Ecommerce sector – combined with major labour shortages worldwide – have put warehouses and fulfilment centres under severe pressure. The UK was particularly hard hit because of the dual impact of the pandemic and Brexit, with grocery supply chains bearing the brunt of it.
The scale of the manual labour challenge in eGrocery is also potentially much more significant than in traditional Ecommerce warehouses. This is because in online grocery, the average basket size is anywhere from 15 to 30 items, compared to just two or three items in a typical order from, say, an online clothes retailer. When all these items are picked manually, it’s very easy to see how time, cost and effort can build up to unsustainable levels.
Despite offering attractive incentives, many businesses still fail to attract enough workers to meet capacity. Conversely, automation and robotics provide a cost-effective, sustainable solution to meet soaring demand by reducing labour requirements and raising efficiency. It also reduces real estate costs, as an ASRS requires far less space than a traditional shelved warehouse.
To illustrate this point, Swedish eGrocer Matsmart had – like so many retailers elsewhere – exhausted its manual labour and space capacity in 2021. The fast-growing company invested in an automated solution that offered three times more capacity and even more growing space. Today, its 149 AutoStore robots can pick an estimated 6,000 items from 88,000 storage bins per hour.
- Increased efficiency in controlled environments and restricted space
Any warehouse automation solution used by an eGrocery business needs to be flexible and adaptable enough to perform correctly in controlled or restricted environments.
For example, temperature control is critical when storing groceries in a warehouse or storage unit. A solution like AutoStore can pick in both room temperature and chilled conditions, and the company is currently experimenting with deploying its robots in a broader range of environments in a controlled testing facility. The facility can reach temperatures of up to 60 degrees Celsius or minus 40 degrees Celsius.
Similarly, implementing a grid of intelligent order picking robotics can help maximise space. The systems are flexible and can fit in tight or unusual spaces, such as at the back of existing stores or small city centre locations. These sites can go wherever is optimal for speedy customer delivery.
- Use of highly energy-efficient robotics
The sustainability credentials of their purchases are a growing priority for conscientious customers. The visibility provided by an automated system enables store owners to know precisely where and for how long an inventory item passes through the warehouse.
Many warehouse automation systems are highly energy efficient. For example, AutoStore robots use rechargeable batteries and generate a lot of their own energy. Placed in perspective, the energy usage of ten of these robots equals that of one vacuum cleaner.
It’s clear that technology and automation will play a big part in the transformation of the grocery industry. Grocery stores that invest in warehouse automation to deliver a seamless online and delivery experience will find themselves with nearly unlimited growth opportunities. This was the case in other sectors that once relied heavily on routine manual work, and there is no reason why grocery should not follow suit.