Tackling The Challenge Of Online Grocery Shopping
Thursday, September 13th, 2018
In spite of the glowing prospects, cracking the online grocery market can be challenging. How do you start? Where should you begin? By Carsten Spiegelberg, General Manager for System & Automation with SSI SCHAEFER.
While online grocery shopping is a miniscule 1.5 percent of global grocery sales, it has some of the best growth potential. Asia is leading the way with healthy double-digit growth in most countries.
International think tank IGD expects online grocery sales in China, the largest in the world, to expand by 286 percent by 2022 and account for 11.1 percent of the total Chinese grocery market. For India, the second most populous country in the world, management consultancy RedSeer Consulting projects that the online food and grocery business will reach US$5 billion by 2020 from nearly US$1 billion in 2017, prompting industry giants to take big bets on India. In February, China’s Alibaba Group Holding and United Arab Emirates’ Abraaj Capital pumped US$300 million into BigBasket, India’s largest online grocery retailer, and in May, Walmart acquired 77 percent of India’s largest e-commerce company, Flipkart, for US$16 billion.
Shirley Zhu, Programme Director at IGD Singapore, says: “Retailers and grocery manufacturers across Asia are embracing the online channel, driven by a number of reasons, such as demographic shifts, rising internet and mobile penetration and improved logistics.”
In spite of the glowing prospects, cracking the online grocery market can be challenging. As an e-grocer once observed, “An online operation in any sector of retailing is challenging but e-commerce for grocery is arguably one of the most complex retail businesses from a fulfilment perspective, given the large number of unique items associated with a typical order and the fast delivery times demanded by consumers.”
It took Amazon years to expand into grocery after having successfully tackled books, toys, electronics, music and movies.
How do you start? Where should you begin?
Ramping Up E-Fulfilment Centres
The fulfilment centre is the right starting point. It is here that the goods are stored and the orders are picked and packed for delivery. How can you ensure that the fulfilment centre operates like clockwork to enable you to deliver purchases of varied sizes and product mixes to a multitude of locations in ever narrowing windows—within a day or sometimes within hours?
The fulfilment centres we had before the advent of e-commerce simply cannot manage the complexities of this fast-paced warehouse environment. So, what storage systems should you install to enable you to ramp up your operations?
Order picking is the most challenging process in grocery order fulfilment, as it is laborious and one of the most error-prone. Having some degree of automation for order picking is critical, irrespective of the labour cost as manual systems relying on an army of order pickers cannot possibly deliver thousands of orders in a day with spot-on accuracy. Mis-picks are costly, as expenses are incurred in shipping the item back, processing it upon receipt and returning it to stock. And you have to deal with an unhappy customer!
Improving the speed, ease and accuracy of the pick operation also has implications for the entire operation and flow, bringing about significant improvements in fulfilment centre productivity and efficiency.
Pick-by-light and voice picking are possibilities as they improve order accuracy and picking efficiency. As a semi-automated, scalable, easy-to-use paperless picking system, pick-by-light directs the order picker’s attention to the pick face by light, achieving quick product identification and helping to eliminate picking error. Voice picking provides voice commands via a wireless network, leaving the picker’s hands free while increasing picking speed and accuracy rates.
Goods-to-man systems supported by carousels, miniloads or automated guided vehicles are recommended for small and medium sized order fulfilment operations. As items are delivered to order pickers at their workstations, they minimise walking, searching and selecting. The larger the warehouse, the greater the productivity improvement. Goods-to-man work stations can push pick rates up to 1,000 lines per hour independent of the number of stock-keeping units (SKUs) and order profile, against 60 to 80 picks an hour in manual picking.
As demand for online grocery shopping accelerates and competition intensifies, it may become necessary for companies to look for systems with higher capabilities and the flexibility to also support omni-channel operations. Those with high throughput rates should explore goods-to-man picking supported by shuttle systems to increase speed, accuracy and throughput in their fulfilment centres. The use of three de-coupled systems operating on three axes facilitates modular expansion to a system that provides virtually unlimited throughput for an unlimited range of products being picked, to any number of orders independent of order profiles. Conveyors distribute the load to a selected aisle. Lifts on one end or spread along the aisles travel up and down to distribute the load to the required level while autonomous shuttles move horizontally up and down the aisle to put away, store and retrieve the products. The throughput per aisle is further enhanced by increasing the number of shuttles operating in a single aisle. Some lifts are also designed to raise and lower more than one load at a time.
The technology is continuing to evolve to raise warehouse efficiency to even higher levels. With advancement in robotic and vision technologies, we are witnessing the emergence of robots in fulfilment centres, assisting with loading, unloading, sorting, picking, transportation, storage, delivery and audits. They come in all shapes and sizes using different forms of navigation tools such as rail, wire-guided, labels, magnet tape, laser, vision, geo-guidance and others.
We can expect more, as robots have more appealing assets when compared to man—they can deliver high quality work almost error-free, perform the same tasks day after day without getting bored and work 24/7 without a break lifting heavy loads without injuring themselves.
Keeping Track Of Inventory Management
Good inventory management should also be a priority for e-grocers. Having too much inventory will tie up unnecessary capital but having insufficient inventory will result in an out-of-stock situation, lost sales and disappointed customers. Nothing is more frustrating to a customer than being told you cannot ship what has already paid for because the item is not available. The software is available to help you keep current on inventory levels for informed decision making.
Operating in an online environment is challenging, especially in today’s competitive landscape. But with growth rates found in few other sectors, managing your online grocery shopping portal well is potentially rewarding.
To learn how you can enhance your fulfilment centre’s capability, consult a competent consultant who can assist you.
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