With investment in grocery e-commerce growing at an alarming rate, a massive number of delivery robots of all shapes and sizes are plotting to take over the world
Being able to order your groceries online and have it delivered to your home is not new, of course. Maybe these days, an increasing proportion of shoppers use their mobile devices rather than their desktop computers, but other than that, it’s about the same as it’s always been – or for almost two decades anyway.
But behind the scenes, or screens, a lot of things are changing.
From the moment a customer clicks “Buy” and pays through their device, almost everything is different. From the artificial intelligence-driven digital platform, through the highly automated logistics and supply chain, right up to home delivery by a robot, a huge amount of innovation is taking place.
So much innovation, in fact, that it’s difficult to keep up.
“Curbside pickup”, an increasingly popular service, currently refers to the practice of shoppers ordering online and then picking up the order while driving through a designated location, rather like buying a drive-thru McDonald’s.
But eventually, this too could be transformed into picking up your groceries from inside a driverless delivery vehicle which parks outside your house, or a robot that delivers right to your door.
They’re coming in too fast
We’ve been trying to report on all the developments on this website, noting the trials of autonomous mobile grocery vehicles and delivery robots in recent weeks. But bringing them all together in one coherent report is quite a task.
Luckily for us, Commonsense Robotics has produced a report, Crossing The Grocery E-Commerce Rubicon, which looks at the whole grocery e-commerce sector from a variety of perspectives, particularly economic.
Commonsense Robotics is a supply chain automation company, specializing in grocery e-commerce. It provides highly automated warehouse solutions which include those autonomous platforms which carry boxes – or “totes” as the industry jargon has it in some countries.
The totes can be seen to carry fresh fruit and vegetables in the company video.
Commonsense Robotics offers its solution to retailers, wholesalers and whoever has large-volume sales of groceries requiring an efficient warehouse operation to eke out as much profit from what is essentially a very low-margin business.
Groceries, despite some people’s complaints, are still cheap and grocers only make significant amounts of money when they sell large volumes.
It’s one of the reasons why grocers have in the past tended to be reluctant to invest in new technology. When, if ever, will they get a return on their investment? That was, and to a lesser extent, still is the main question.
No sign of a slowdown
“After years of skepticism in an industry that’s been long underpenetrated by e-commerce,” notes Commonsense Robotics in its report, “grocery retailers made strides in the rollout of curbside pickup and same-day grocery delivery, signaling change for an industry that once appeared to be immune to the shift to online.
“It was a dizzying year of growth and as we begin 2019, the momentum towards online grocery shows no sign of slowing down.”
Commonsense collated statistics which suggest that curbside pickup saw a “massive rollout in 2018”, and gives percentages of the stores of large grocers which offer the service:
- Walmart: 45 percent of stores
- Kroger: 58 percent
- Target: 56 percent
- Ahold Delhaize: 30 percent
- Albertsons: 22 percent
The report adds that there is “no sign of curbside pickup slowing down any time soon”, highlighting Walmart’s decision to add another 2,140 stores to the list, which would bring its percentage up to 70 percent.
And while many would probably still prefer curbside pickup, the same-day delivery option has increased by 500 percent apparently, with most of the growth seen in urban areas.
In this market, same-day home delivery, the business model emerging seems to include a company like Instacart, which partners with more than 300 grocery retailers across the US.
The company is said to be able to offer same-day grocery deliveries to 80 percent of American households, at delivery fees of under $5.
Consulting firm Pentallect estimates that third-party grocery delivery is currently a $4.5 billion industry and is poised to grow to $9 billion by 2022.
Shop at will
Grocery companies’ hesitancy about investing in e-commerce is long gone, and they are calculated to have invested more than $28 billion in the online portion of their business in the past 18 months.
A selection of investments are shown in the image below, and with 35 percent annual growth rates in grocery e-commerce, it’s a fast-growing, dynamic and competitive segment of the overall grocery industry.
One of the nascent developments in the sector is the delivery robot that can go right up to your door, saving you that trip to the store for even a curbside pickup.
According to the report, for every shopper who prefers curbside pickup, there are four who would prefer home delivery. How grocery sellers provide home deliveries cost-effectively is the big question.
Robots are yet to be fully costed, and there are still some uncertainties about the regulatory environment. But if it does prove to be cost-effective, it’s probably inevitable that we will see more small delivery robots on our pavements.
According to the report, retailers lose $5 to $15 on every online grocery order, mostly because the order has to be manually picked by a human at some point along the supply chain. And there are currently no economies of scale to be found.
Furthermore, banks are predicting that grocery retailers will lose 30 percent of profits as a result of e-commerce.
Resistance is futile
But despite these findings, the demand for grocery e-commerce is growing so fast that retailers have little or no choice but to try and make the most of the trend.
At the moment, approximately 3 percent of all grocery orders are placed online. This figure is forecast to increase to more than 10 percent in 2023, with Commonsense predicting it will be much closer to 20 percent.
Currently, grocery e-commerce is moderately estimated to be growing at around 15 percent a year. But it was 35 percent in 2018 alone.
It’s understandable, then, that grocery retailers are looking for efficiencies in every single aspect of the entire supply chain from the moment the customer pushes that button to the moment they receive their deliveries.
And robotics and automation is almost certainly the only way to find sufficient efficiencies to offset what are calculated to be the relatively higher costs of providing e-commerce services in the grocery sector.