This piece was originally published in Progressive Grocer.
The grocery delivery market is an industry that is poised for growth. We are on the verge of rapid adoption of online grocery shopping, with The Food Marketing Institute estimating that online grocery sales will reach $100 billion by 2025. By that time, online grocery sales are estimated to account for 20% of the total grocery market.
Today, estimates regarding the current size of the online grocery sales market typically fall between 2% to 4% of the $641 billion U.S. grocery industry, or $13 to $25 billion. Companies that position themselves at the forefront of the online grocery shopping and delivery market will have a higher chance of gaining favor with consumers as the market continues to mature.
Most grocers are ill prepared to properly scale their delivery operations to handle this rapid growth.
Khaled Naim, CEO, Onfleet
Whether a grocer is building out in-house delivery capabilities or outsourcing to a third party, a key piece of enabling technology can make scaling their last-mile delivery operations significantly easier: delivery management software, which offers end-to-end route planning, dispatch, communication and analytics to provide their company with a top-down view of your delivery operations while helping to streamline the most important areas of those operations.
The software typically integrates seamlessly with existing infrastructure to help facilitate a better experience for customers, companies, drivers, and all stakeholders in the ordering and delivery process. Specifically, delivery management software can help grocers:
1. ENSURE FAST, ON-TIME DELIVERY WITH ROUTE PLANNING/OPTIMIZATION
Successful route planning relies on a sophisticated analysis of customer addresses, promised delivery times, traffic, driver schedules, vehicle capacity and more.
With stiff competition pushing turnaround times down (2+ day, same day, within hours) and shorter delivery windows (1 hour versus 2 hour versus 3+ hour), legacy route sequencing tools can’t keep up.
A state-of-the-art routing system can factor in these dynamic constraints, allowing a nimble organization to experiment with delivery models and service levels that fit their unique requirements. There are several essential elements:
2. PICK/PACK & SERVICE TIME EFFICIENCY
A system that can rapidly generate complex routing will drive efficiencies in the pick and pack process and warehouse operations.
For example, orders can be combined by route and staged near vehicle docks in reverse delivery order, creating a load plan that streamlines customer interactions and reduces physical effort.
3. ROUTE CAPACITY & ROUTE EFFICIENCY
A modern routing engine can improve route capacity by more than 50% over manual and legacy route sequencing methods. This reduces labor and fuel costs while expanding customer servicing capability. Programmatically factoring in historical data yields even higher efficiencies.
4. ON-TIME DELIVERY RATES
On-time delivery is a key factor in customer retention.
An optimized route plan is only valuable if it can accurately predict delivery times and ensure deliveries are made within the promised window.
A sophisticated delivery management tool will not only provide initial estimates but also update these estimates as conditions on the ground change.
Dynamic ETAs provide drivers, dispatchers and customers with up to date, predictive information, allowing brands to take proactive steps to improve performance. Static ETAs provided from legacy route sequencers leave brands reacting to late deliveries, with little preventing a single event from negatively affecting an entire route.
5. IMPROVE DRIVER & CUSTOMER RELATIONSHIPS WITH REAL-TIME COMMUNICATION TOOLS
An essential part of a modern delivery management platform is an internal communication tool that connects dispatchers and drivers, operations and customer service, and more.
While SMS text and chat applications like Messenger, Hangouts or Slack have low barriers to entry, they lack context, adding unnecessary steps to an already complicated communication process.
But internal communication is only half of the equation — the most critical channel is with your customer. Modern consumers are accustomed to unprecedented levels of visibility into real-time delivery status. Customers expect to receive confirmation that the delivery is scheduled, when it has left for delivery, and exactly when it has arrived.
The right delivery management software will provide these events and more, including intermediate time and distance-based triggers. Easy configuration and customization allows customer service and operations teams to adapt to rapidly evolving requirements without engaging scarce development resources.
Machine learning and artificial intelligence also allow grocers to effectively look into the future with “predictive ETAs” so customers can be notified well in advance of their scheduled delivery. The most advanced delivery platforms update this prediction as real-life events change conditions on the ground, enabling a progressive and dynamic delivery estimate. Routing tools alone can’t provide this robust of an estimate as they lack visibility into what happens after the driver leaves the hub/warehouse. Only a fully integrated system with advanced machine-learning can achieve this optimal customer experience.
Finally, once a delivery is complete it is critical that feedback from customers be collected quickly and efficiently.
A robust delivery platform must include the ability to request and review customer feedback. Including this key performance metric with other delivery analytics provides a full picture of performance and allows rapid impact analysis after operational changes. Should an issue occur, an instant feedback channel allows for service teams to resolve complaints when they happen, improving their ability to build and retain customer relationships.
6. MAKE DATA-BACKED DECISIONS WITH IN-DEPTH REPORTING AND ANALYTICS
Data-backed decisions are at the heart of any successful delivery operation. A successful, expanding delivery operation requires a clear and accurate picture of what is happening on the ground.
In a world where competitors are moving at break-neck speeds, anecdotal evidence and verbal accounts aren’t good enough. Analytics should include more than completion rates. With the right data collected, operations can measure delay rates, service times, idle vs. active driver time, mileage, batching efficiency and more. Robust filtering allows for comparison between drivers, teams, regions and customer segments.
7. TECHNOLOGY HELPS LEVEL THE GROCERY DELIVERY PLAYING FIELD
The cost of inaction in the grocery delivery market is steep. It’s an industry where customers tend to stick with brands that they are comfortable with. With the market growing quickly, venture money pouring in, and big names like Amazon and Walmart poised to seize large chunks of the market share, it's critical that small and medium sized brands are able to secure a foothold in grocery delivery now, as it will only get tougher as time goes on.
By starting now to build relationships with customers in their local area and establishing themselves as reliable grocery delivery providers, the cost of inaction is much more than the sales grocers miss out on — it’s the market share and industry standing that will pass them by as customer habits change in the evolving grocery landscape.