PICNIC

BY HANS KRAAK Kraak Media Productions

ONLINE ACCELERATOR PICNIC:

LOW PRICES AND FAST

DELIVERY OF DAILY

GROCERIES February 2020, just before the Covid pandemic started on the eve of several lockdowns, the Dutch online supermarket Picnic invited a group of journalists to gather on the milk farm of the Oostdam family in the middle of the Netherlands. The media minded grocer presented its first private label fresh milk with festivity. Together with an agro technical company and farmer Oostdam, Picnic developed a small milk factory on the farm to produce own label milk. Sophisticated, because it is not only possible to produce regular milk, but also specialized milk products like A2 milk with different proteins. ‘Fresh and local is something more and more people like’, states Michiel Muller at the presentation, co-founder of Picnic. ‘People like to know where their products are coming from, we like to give them what they want.’

Since the pandemic created large demand immediately, and increased capacity always lags behind a bit’, says Muler, ‘we decided to increase the minimum order value, in order to use the vans more efficiently and therefore being able to help more customers.

The introduction of high quality private label products in the assortment of pure online supermarkets indicates the segment grows up fast, very fast. In the same year Picnic begins a purchasing alliance with the German grocer and market leader Edeka, with whom Picnic had already collaborated, leaving the smaller Dutch purchase alliance Boni/Superunie behind. The intensification of the collaboration with Edeka means more private label products will be part of the online assortment and furthers Picnic’s ambition to be a major international online player within five years.

At Picnic customers can order by app only. Delivery is free from 35€ (the minimum order value was 25€ at the start). ‘Since the pandemic created large demand immediately, and increased capacity always lags behind a bit’, says Muller, ‘we decided to increase the minimum order value, in order to use the vans more efficiently and therefore being able to help more customers.’

When Picnic started in 2015 the founders noticed that their app wasn’t only downloaded in the city of Amersfoort where they began. Also in other parts of the country people downloaded the app, although they couldn’t yet buy something with it, since Picnic was only live in Amersfoort. Obviously they wanted to be ready if the concept was rolled out in their home town later. It gave the founders the idea they could be successful. And so it turned out: with the promise of low prices and free delivery, a growing group of customers is attached to Picnic.

Fast growing abroad

Picnic is already at the top of the fastest growing companies in the Netherlands.It started there in 2015 with a handful of environmentally friendly electrical vans and a warehouse to deliver groceries in the surroundings. Within five years Picnic grew from 1 city in the Netherlands to more than 125 cities and more than 350,000 customers. Since 2018 the company expanded to Germany where, under the same name, it delivers groceries, mainly food, to more than 650,000 customers in more than 40 German cities. France was the next expansion area where Picnic started a pilot in the beginning of this year in the city of Valenciennes close to the Belgian border. It started with 10 vans and 20 runners. On September 8th Picnic officially launched in France after the successful pilot.

Turnover doubles

In 2020 the run rate turnover of Picnic was around 500 million euro. Michiel Muller expects the company will double in size in 2021 to one billion. The financial empowerment comes from investors and partners like Edeka. According to the German LebensmittelZeitung Edeka has a share of 24,5 percent of the total German grocer’s market. Further growth in the home market for Edeka is difficult as the market share is already high, the market shares are divided by big parties and discounters are fighting their way through. Participation in Picnic offers Edeka a way for further growth in Germany. The market share of Edeka in Picnic International is estimated around 10 percent, the share in the German counterpart around 35 percent. According to an Edeka insider in the Dutch trade journal Distrifood it isn’t a surprise when Edeka strives to be the new Picnic owner.

In addition, the recent announcement on 16th September of an investment around 600 million euro from the Bill and Melinda Gates Foundation and other investors in Picnic could be a game changer. It’s meant for expansion in Germany and France and for technological innovation.

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Competition online

The growth of online grocery shopping seems unstoppable, signals the Dutch Rabobank. More consumers buy online, from 35% in 2019, to 45 % in 2020, to 50% in 2021. However the trend to buy online already existed before the pandemic. Six in ten consumers in the EU, aged 16 to 75, bought goods or services online in 2017, only three in ten in 2007 (1). It’s obvious COVID-19 accelerated online buying for all categories.

As the European market is not saturated yet, different pure online players start to compete. For Picnic in Germany pressure is coming from the east. Besides the upcoming fast delivery services, like Gorillas, in the large cities, Picnic this year got competition from the online grocer Knuspr. It started a pure online supermarket in Munich in August. It delivers groceries in the city and surroundings. In Munich the assortment counts around 9000 products, in the coming months this will be expanded to 16.000 products. 30 percent of these products will be bought within the Munich region, from local and small producers. Knuspr plans to increase this percentage. Next stop in Germany will be Frankfurt and surroundings. With other cities such as Hamburg, Colonge, Dortmund and more to follow in 2022.

Knuspr is part of the online supermarket group Rohlik that was founded in 2014 in the Czech Republic. The Rohlik group also operates in Austria with pure online supermarkt Gurkerl and in Hungary where the online grocery is called Kifli. The Rohlik Group announces Italy and Romania as the next countries where the company launches pure online supermarkets, both to be operational in 2022.

Picnic is also looking to the west to Great Britain. If it steps on the British isles, Picnic will come up against the online supermarket Ocado. In operation since 2000, Ocado has own branded groceries as well as the groceries from Marks and Spencer. In contrast to Picnic the assortment of Ocado is more premium. If Great Britain is the next step Michiel Muller cannot confirm yet, but certain labels of Picnic products already are written in English.

In addition to the bigger players, more than a few start ups pop up in the European online market. Examples are Crisp, founded in 2018 in Amsterdam. Oddbox and Good Club in England. La Belle Vie in the Paris area and in the departments North and Loiret. The app only markets Vembla in Sweden and Macai in Northern Italy. They differ in products, technology and delivery terms. Fresh produce and sustainability seems what they have in common.

In Picnic’s own country, please note, in the town of Amersfoort where Picnic started, the largest supermarket from the Netherlands, Albert Heijn, this year also started to deliver groceries in the same type of vans as Picnic does. The Picnic look alike doesn’t bother to Michiel Muller, who thinks the future of the last mile will be electric anyhow. ‘They are welcome’, he adds.

References: 1. Baarsma, Barbara, and Jesse Groenewegen. “COVID-19 and the Demand for Online Grocery Shopping: Empirical Evidence from the Netherlands.” De Economist, 1-14. 7 Jul. 2021, doi:10.1007/s10645-021-09389-y https://link.springer.com/article/10.1007%2Fs10645-021-09389-y