Delivery vs. Click & Collect: Buying groceries online – and then what?

Delivery vs. Click & Collect

Having to go to the supermarket after a long day at work to buy pizza or pasta for dinner isn't exactly an appealing prospect for many. Of course, things are different now, as online grocery shopping is commonplace in many places. While England and France boast high growth rates, other European countries are still in the starting blocks. This includes Germany – for now – where online grocery shopping, despite significant increases, remains a niche phenomenon. However, this could change quickly, as many food retailers are now relying on online shop solutions to meet the growing competition from e-commerce.

Customers appreciate these efforts. According to studies, over 60 percent of consumers find it convenient to buy everyday items online. Besides a user-friendly website and competitive prices, smoothly running intralogistics processes are among the key success factors for a functioning online grocery store. But what about the delivery of the goods?

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Transporting food by truck does not only have advantages

In Germany, retailers like Rewe and Edeka primarily rely on truck transport for their goods. For customers, this has the advantage of delivering their ordered products directly to their homes, saving them a trip to the supermarket. However, it also presents them with one of the main problems in e-commerce delivery: accepting the delivery, which the recipient must be home to receive unless they have specified an alternative address. Unlike regular parcels, supermarket deliveries can't simply be left at the corner kiosk, as there's highly unlikely to be a suitable place to temporarily store temperature-sensitive items like dairy products or frozen food. To avoid this, a precise delivery date is essential for both retailers and consumers. This, in turn, creates additional logistical challenges for the sender, on top of the already incurred transport costs. Here, it's primarily the expenses for personnel (drivers) and vehicles (trucks, fuel) that complicate the retailer's calculations. Because one thing is certain: if the transport surcharge on the online order is too high, the customer will abandon the purchase. Given the low margins prevalent in the German food retail sector, this presents a dilemma for retailers. At the same time, it is also one reason why online food e-commerce has not yet taken off, and why a major player like Amazon has not yet achieved significant success with its Fresh delivery service in Germany

However, there is an alternative that at least partially relieves retailers and consumers of transport costs and delivery problems: Click & Collect – ordering online and later picking up in the store, following the model of the classic drive-in system.

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Drive-in – the alternative?

The principle of the drive-in is simple and comparable to the concept known from burger chains: Orders are placed online, picked up by car at a pre-selected station, where the (cooled) bag is simply handed over to the driver without him even having to enter the store.

These drive-through grocery stores are a system that is gaining increasing popularity. In France, for example, over 2,000 drive-through supermarkets already offer their groceries online, which customers then pick up on-site, already prepared. The US supermarket chain Walmart, significantly expanding its Click & Collect service in 2016 (initially only in the US).

The Warehouse of a drive-in supermarket It usually consists of different storage zones: dry goods, fresh produce, and frozen goods. The ordered items are then picked using order boxes. They are transported from one zone to the next either semi-automatically via conveyor belt or manually by employees using trolleys.

The completed boxes are then temporarily stored until the customer picks up the goods. Since an order usually consists of products of varying quality and shelf life, special requirements are placed on their storage. It must be ensured that refrigerated or even deep-frozen storage is available for individual items.

Depending on the ceiling height of the warehouse, the storage equipment used, some of which is climate-controlled, can be either horizontal carousel storage systems or vertical carousel racks. Shelving units can be combined with these as needed and as space allows.

The drive-in supermarket's intralogistics processes are controlled by warehouse management software. As soon as the software receives an order, the orders are routed to the various storage zones. In zones with automated storage and retrieval systems, the groceries are retrieved and received by staff at the service hatch according to the goods-to-person principle, where they are packed into the order container. To prevent picking errors or repetitions, each item is confirmed by the employees using a barcode scanner. Order processing can be further accelerated by using batch picking and/or multi-user picking tools.

Once an order is processed, the products are temporarily stored in a box/bag, with temperature-sensitive items kept in a refrigerated area or storage unit with integrated climate control. As soon as the customer arrives at the supermarket with their car, they simply scan a receipt code at one of the two parking bay scanner stations. An employee then retrieves the goods from the temporary storage area and brings them to the car. After the shopping is loaded, the customer can drive off without leaving their vehicle.

Conclusion

If the drive-in station is located on or near the customer's usual route home, the system results in virtually no time loss for the customer. And unlike delivery by driver, which is not always predictable in terms of timing, the customer can decide when to pick up the goods. Certainly, the success of such a system hinges on the widespread availability of drive-in stations, as customers would not be willing to go out of their way for this service. However, the success in France demonstrates the potential of this concept.

For the retailer, in addition to (one-time) investments in the interim storage facility and the on-site drive-through solution, labor costs for employees involved in goods handover must be factored in. However, this eliminates the costs for the logistical infrastructure required to transport the goods to the customer. Ultimately, the individual calculations of both the retailer and the customer will determine which solution they each consider more advantageous.

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