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/ Wednesday, March 30, 2022
Automation Makes Online Grocery Shopping More Accessible TakeOff Technologies’ micro-fulfillment centers offer a solution to high eGrocery costs
O
Zoe Landi Fontana, The Weekly Journal
@Landi_Zoe
nce seen as a convenience reserved for those with enough disposable income to shave an hour or so off their weekly errands, online grocery shopping has rapidly evolved into a necessity for retailers. Slower to join the ecommerce trend, grocery price products at affordable prices. Historically, the stores had lagged behind other retail sectors two services that an eGrocery customer pays for prior to the pandemic. Yet, creating an efficient picking the order from the shelves and bringing it omnichannel method of selling groceries online home - were done for free,” Freeman explained. while maintaining a brick-and-mortar location, Thus, stores are left in a predicament of needing could increase grocers’ total share of wallet by 20to maintain low prices in an environment of 30%, according to a McKinsey & Company report increased costs. What would enable grocers to published in 2021. provide online grocery fulfillment services without Mitchell Freeman, Chief Financial Officer of drastically increased product prices and extra fees? Takeoff Technologies - an automated grocery fulfillment solution - explained the strengths and weaknesses of online grocery models in an Typical Grocery Run interview with THE WEEKLY JOURNAL. First, we should look at the numbers behind a “We’ve been seeing incredible growth in grocery typical grocery run in the U.S. over the last few years,” said Freeman. A traditional basket is made up of 50 items at $3 In 2017, the grocery industry was valued at each with grocery retailers making, on average, a around $7.2 billion, of which 5% margin on each transaction. online penetration made up So, they make around $7.50 2.7%. As a result of COVID-19, on you in the hour and a half grocery ecommerce has jumped it takes you to shop and drive to 9.5% of a now $7.3 billion back home. industry. In the next few years, With a typical manual McKinsey & Company projects As a result of picking model, where one eGrocery penetration in U.S. COVID-19, grocery person is assigned to an order, markets to reach at least 14%. ecommerce has wandering the store, and jumped to 9.5% of grabbing the correct items off The grocery industry a now $7.3 billion the shelves, a retailer in the U.S. The grocery industry, which industry. will spend anywhere from $20 makes up half of all retail, is to $30 per online order. Thus, characterized by its unique to simply maintain their original properties. It’s an industry with margins, grocery retailers must low margins and, oftentimes, charge a 30-40% increase in single-digit profits. Grocery products are perishable product prices for those shopping online. and highly personal to the individual consumer. “[This] is why they had to raise prices so much… Consumers in the grocery industry are pricehidden price increases, far fewer discounts on sensitive and are not willing to spend a ton more the online application than in the store, service for a convenience they’ve been doing themselves fee, delivery fee, tip…,” Freeman elaborated on forever. the economics behind inflated prices for online “Delivering groceries to an end consumer customers, “it’s not sustainable for the majority of requires the ability to fulfill a wider range of low America.”
In fact,
The TakeOff Method
The manual picking model suffers from all same problems that grocery retailers suffer from - low inventory visibility, high substitution, and limits in the speed at which a picker can move around the store. Micro-fulfillment, an automated solution, provides end customers and grocers with nearly perfect visibility of the inventory. Customers can make substitution choices on the check-out screen, instead of trusting the picker to find a substitution for them, or risk not receiving a similar item at all. Additionally, real-time data gathered by automated systems help with predictive analytics on inventory, performance operations, and logistics operations. To reiterate, the central problem lies in maintaining low prices in an environment of increased costs TakeOff Technologies has found the solution automated micro-fulfillment centers. The company shrank hyper-local automation down to a footprint that can fit in the back of a grocery store or small warehouse, offering the only eGrocery solution to generate profits. On average, their micro-fulfillment centers can assemble an order in less than 15 minutes. In contrast, the manual picking method takes at least an hour. Being hyperlocal - located close to where customers live and shop - reduces the costs of delivering as well. “Our eGrocery solution was created with the grocer and the shopper in mind. Grocery is an incredibly complex industry, and our products are unlike any other: they are low-value, perishable, heavy, and low-margin. Our automated solution is flexible enough to manage these complexities. We ensure the correct picking method for the correct product,” TakeOff Technologies describes on its website.
