“Where is the bottom? Faster and faster and eventually the fastest way is going to be the in-store purchase”.
These words by Raghu Mahadevan, VP of Digital customer Experience at 7-Eleven, spoken with a bittersweet smirk, summarize all too well the feelings displayed by many of the operatives who attended Home Delivery World USA 2020. Their meaning is clear: if you keep running faster and faster in the same direction you’re bound, sooner or later, to go back to the start.
And yet the Global emergency sparked by the COVID-19 pandemic has reshuffled many cards in the logistics’ deck and what looked like absolute priorities before now feel somewhat less relevant. The enormous spike in volumes forced the sector to tell a different a story: velocity still remains a goal, and always will be, but to stay afloat (and maybe prosper) in 2020 and 2021 and who-knows-how-much-longer you have to be sure to actually deliver whatever you’re transporting and do that without sacrificing customer experience or financial sustainability.
“Customer experience is the highest priority. Sustainable is the key. Profitable is not the key. (…) Delivery is a commodity; we need to preserve a certain quality of this commodity and to get that there’s a cost component. So, you have to increase efficiency and absorb increasing costs. The ‘faster and free’ bazaar went home in 2020”. Echoed Daniel Sokolovsky, CEO of AxelHire, who spoke with Mahadevan and Daniel Gebler, CTO of Picnic, at the session: Shipping speed and convenience – How are digital technologies, routed deliveries, electric vehicles and last mile software helping to revolutionize our offerings? Faster and cheaper have been longstanding buzzwords but many, and us at Milkman among them, have been looking in another direction for some time, more in the lines of finding the balance between flexibility, convience and cost.
The Pandemic was ever present and there was a lot of talk about its impact and how companies tried to cope with it but, taking out the mostly self-referential blurb that comes with this kind of package, there weren’t many true new propositions displayed.
One that caught my attention is that of Dutch online supermarket Picnic, whose fully electric mini-vans serve fixed routes around the city, always stopping in the same street at the same-time for free, and without losing a dime. Gebler called it a Bus model or a Milkman’s model, and made me smile because … well because I work for Milkman and I realized that for as much as our models differ, we have in common the attitude to try to bring fresh ideas to the market.
Picnic was not the only Grocer present at the event, of course, there were scores of them. That’s because the pandemic has catapulted their kin to the front line and under heavy shelling. Everyone needed to quickly adapt and pivot, buying habits changed almost overnight and volumes will stay high or a lot higher even post pandemic.
What emerged was a broader strategy loosely built around three main points. The first is upgraded visibility for all constituents in the supply chain, with the mandatory mission of having the end-user capable of following his order all the time, and for that the chance of partnering with outside services was clearly summoned during the session: Visibility tools and technology – incorporating new visibility tools and technology to improve performance and efficiency throughout the supply chain. Shippers were also demanding more visibility from carriers. The main goal is that of reducing customer inbound strain on the system and provide more self-service, increasing customer satisfaction.
The second, which is closely related to the first, is a renewed willingness to collaborate to solve problems. That, of course, could just be a side-effect of the increased volumes but the need of handling never-before-seen scenarios trough partnerships with innovative third parties was underlined more than once.
Last but not least, and we’re still talking grocery delivery, there was the issue of fulfilling a rogue wave of orders through long term strategy focused on an optimal cost to serve model. Jody Kalmbach, VP of Product Experience at Kroger, said: “The partnership with Ocado is really one piece, a very important one, of the overall ecosystem the we’re building. The large scale automated fulfillment centres built leveraging the Ocado technology are really about delivering a great delivery experience where you can get exactly what you ordered and great transparency about when you’re getting it, but in an optimized cost to serve. That is the balance, as we continue to serve more customer needs: how do we meet that customer experience expectation but continue to optimize the operating model? And Ocado is a great example of how we’re finding that balance. But it is one part of the ecosystem, our stores are still an incredibly part of that equation”.
Poor stores: I cannot think of anything worse than to compete with “delivering a great delivery experience where you can get exactly what you ordered and great transparency about when you’re getting it, but in an optimized cost to serve”. That’s what everyone is aiming for, isn’t it? Unless you want to go back to the store, of course.
At Home Delivery World USA 2020 Milkman was Gold Sponsor. Watch our sessions Maximum convenience or minimum cost? How to find the best balance for your brand and download the full transcript HERE.