In the food e-commerce market, consumer expectations are higher than ever. Shoppers demand high-quality and fresh products, as well as maximum convenience.
Online shopping has increased price transparency, but offering personalised services through apps can also lead to decreased price sensitivity. Moreover, customer loyalty is driven through convenience.
The growth of food e-commerce means that extra fulfilment capacity must be achieved. After all, by ordering online, consumers are no longer picking their own goods from the shelf.
Retailers are instead having to do this manually or through automation, for example via in-store picking and dark stores. These are examples of manual-based operations in which central fulfilment centres (CFCs) and micro-fulfilment centres (MFCs) are the most likely alternatives to automated order fulfilment.
In addition, retailers must organise themselves in respect to labour scarcity and rising labour costs. They must decide what level of automation to invest in to enhance service levels to shoppers. Let’s take a look at the drivers for automation…
No-one knows how consumer demand will evolve. This means that retailers must be able to respond seamlessly to growth and market changes. Based on a multichannel strategy, they need ways to optimise this dynamic supply chain.
When investments are made in automated solutions, food retailers are looking for an excellent ROI with a high level of certainty. The longer a new solution takes to be implemented, the higher the uncertainty.
Although automation decreases labour dependency, some activities will remain manual. However, distribution centres (DCs) are home to continuously changing teams of operatives, which negatively impacts productivity.
Digitisation will play a significant role for retailers, who have access to a wealth of customer data. This allows them to better analyse replenishment needs and make personalised offers.
In this way, companies can take a big step towards making the shopping experience more convenient, as well as optimising their operations and supply chains. Establishing a balanced multi-channel approach is crucial, and robotics and automation can help to support this.
Several operational models have been explored to facilitate order fulfilment. The challenge for food retailers is to minimise the operational cost involved with picking an increasing number of order lines. Last-mile delivery costs must also be factored in. For example, CFCs serve large catchment areas and are designed to maximise pick efficiency. However, CFCs incur higher costs when it comes to last-mile deliveries.
MFCs facilitate local, small-scale order fulfilment, but the pick process can be less efficient compared to CFCs. On the other hand, MFCs are located closer to consumers, potentially reducing the cost of last-mile deliveries (so long as the catchment areas are densely populated).
One of the key requirements for an automation solution is that it should be future-proof. Order fulfilment must be both robust and able to scale with the growth of food e-commerce.
For retailers to be successful in the food e-commerce sector, a mix of different operational models is required. The balance will depend on an individual retailer’s strategy, service proposition and existing supply chain.
Vanderlande’s modular solutions offer inherent flexibility. We have designed them to help retailers maintain profitability, cope with fast-changing markets, increase service levels, and respond to labour issues.
Through our modular approach, we can realise projects faster than ever. This helps food retailers to implement innovative technologies and cope with market uncertainties.
Ultimately, companies that apply high levels of automation to fulfil e-commerce orders can safeguard their competitive positions and build a platform for future success.