Welcome to Chapter 3 of our 10-step guide: What to consider when starting your on-demand grocery service. In this chapter we will help you to decide the right delivery program for your store.
In the previous chapter we discussed the strategic decisions on your pricing and assortment. Finding the delivery model that best suits your clients and matches your resources is closely linked to your assortment and pricing and should therefore be included in your overall strategy. You have three delivery models to choose for your on-demand grocery: home delivery, in-store pick-up and remote collection points. In this chapter, we will first talk about each of these options separately, and finally bring up the questions you need to answer in order to choose the best option for your store.
The most important target groups for home delivery are families with small children and people with physical restrictions. For these customers, home delivery is by far the easiest option and they are willing to pay for this convenience. As the customers can stay in the comfort of their house and not have to worry about lifting or carrying, they tend to order in big bulks. Home deliveries are also well in place in city centers where few people have their own car and the local corner shops tend to have quite a limited assortment.
The best way to maximize the efficiency of your home deliveries is by deploying a fulfillment tool specifically designed for planning delivery routes in real time (read more about the Naveo Commerce fulfillment solution in Chapter 4). With the tool your drivers are able to add specific orders to a certain route and assigning drivers is as easy as dragging a file from one folder to another on your computer. It is important your customer support can follow the deliveries in real time, keeping you and your customers constantly updated.
When setting up your home deliveries, keep in mind that while customers greatly value short delivery slots, the shorter the slots, the more expensive it is to organize your delivery. Thus, combining short delivery time slots in the high density and high demand areas with longer ones for low-density areas, is worth thinking about. Also delivering to low density areas only once or twice during the week will help you to manage your profitability.
Pick-up programs are the main driver of growth in habitual online grocery shopping at the moment. Pickup has had a particular appeal with a demographic that you as a retailer should pay special attention to: the millennial moms. For many customers the ultimate convenience in grocery shopping is to get to pick the pick-up time that best suits their schedules, not having to wait for delivery around the house.
In-store collection points have the important advantage of you meeting the customer face-to-face. This gives you the chance to receive direct feedback, interact with your customers and to make sure everything is correct with the order. The orders can be adjusted and completed on the spot – a factor that is known to have a positive effect on ordering produce and perishables.
Another advantage of in-store pick-ups is that while the customer is already there, they might be provoked into some more shopping. Also, in this option you don’t need to care about restrictions involved in selling alcohol and tobacco products since you are able to check the customer’s ID. Think about adjusting your pickup time slot lengths and pricing by day-of-week and time as you would with home deliveries.
Some of your potential customers might be living far from your store. For those customers, you can choose to offer a once a week home delivery service, or longer delivery slots. Another option is to set up a remote pick-up service where all orders are delivered to a pick-up location at a specific time for an hour or two, with the driver waiting on-spot. This would save you a lot of time and cost while still adding value to the customer. The most cost efficient form of pick-up services are the ones that require no on-site personnel (we call them cold stations): simply set up a locker where all your orders are delivered and let your customers pick up their groceries at their discretion. Good locations for cold stations are in busy sites such as train stations and airports as well as in lobbies or courtyards of large apartment complexes.
In this report, we aim to debunk the myth that in-store picking must be the most expensive part of the fulfillment process and why it shouldn’t be a barrier to entry into the eGrocery space.
Our headless Ecommerce platform is helping The Co-op roll-out home delivery. Making ordering groceries online as quick and convenient as ordering a takeaway. This vision demands a lot from technology. Find out how we made this possible.