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I was just thinking about this. You would think that some of the grocery suppliers would get wise to the fact that these customer bases need drastically differe

I was just thinking about this. You would think that some of the grocery suppliers would get wise to the fact that these customer bases need drastically different experiences. A consumer grocery shopper wants like with like (including in multiple locations. e.g. I want chili powder in the spice aisle, and with the mexican food), lots of variety, things organized by price. etc... A food order picker wants something that looks like an ikea warehouse. Pick items x,y,z from bins a,b,c in aisle 3. They could probably care less if like is with like, as long as there is an easy way to find substitutes. They want to work with a bunch of people that are 'on a mission' like they are. And not have to deal with people like me who read the marketing copy on each type of Newman's pasta sauce.

unreal6 6y ago
Something tells me that online grocery shopping may evolve into this format- for the reasons pointed out, it doesn’t make a ton of sense long term for these two formats to be bundled once there’s enough demand for both (which at this point, it seems like there is). These seems to be what Amazon Fresh is doing.
vishnugupta 6y ago
Exactly. Like segregation of B2B and B2C traffic and route them through servers that have different SLA and capabilities. I guess the current model where couriers shop at the retail store is a result of hacking up an MVP. It’s very inefficient at scale. Once the grocery stores and retailers deeply integrate with the delivery companies a more efficient workflow will emerge. Something closer to what you just described.
Closi 6y ago
Hey - It's me, your friendly supermarket supply chain guy! (I now consult on this stuff) Picking in store has a huge number of cost base efficiencies compared to using a 'dark store'. These are as follows: * Reduced property costs and property overhead. * Having 5 vans in 300 locations is better than having 300 vans in 5 locations from a transport perspective (you get much closer to the customer, or have to tranship through hubs). * Depending on locale, store workers may have more relaxed terms and conditions and unionisation than industrial warehouse workers, which 'warehouse' workers may get dependent on setup. * Every darkstore you have needs to be fully stocked. This isn't so much of an issue with long-life products, but is an issue with fresh products that need to be sold before their expiry. A darkstore has a 'minimum viable size' with these fresh products dependent on the range you want to offer. Bigger darkstore with more customers means a bigger range - but you are also further away from the customer so either you have a bigger stem distance or need to do trunking to hubs and tranship from there. So it's not about getting wise, trust me we think about these things and will model what is the most optimum way to deliver, at least in the UK :) An incredibly rough rule-of-thumb of logistics in the UK is that 1/3 of your money is spent on transport, 1/3 is spent on warehouse labour and 1/3 is spent on fixed costs (building, rent, utilities, equipment) - so your saving on labour has to be significant to pull back the fixed cost benefit of running out of an existing retail estate. This is in the UK - most supermarkets have their own in-store pickers and will deliver with vans in the back. We have one company (Occado) that has a few large DC's and will tranship to outbases with vans. Some supermarkets have these dedicated 'darkstore' facilities in super-dense areas (e.g. Tesco, Asda), but they don't work in most areas of the country and in most cases are actually more expensive to run than in-store picking operations (they are done for capacity reasons rather than cost reasons). The advantages of the centralised approach tend actually to be about service. If I can centralise to a big enough warehouse, I can offer a better range and offer things like visibility of expiry dates.

unreal6 6y ago

Something tells me that online grocery shopping may evolve into this format- for the reasons pointed out, it doesn’t make a ton of sense long term for these two formats to be bundled once there’s enough demand for both (which at this point, it seems like there is). These seems to be what Amazon Fresh is doing.

vishnugupta 6y ago

Exactly. Like segregation of B2B and B2C traffic and route them through servers that have different SLA and capabilities. I guess the current model where couriers shop at the retail store is a result of hacking up an MVP. It’s very inefficient at scale. Once the grocery stores and retailers deeply integrate with the delivery companies a more efficient workflow will emerge. Something closer to what you just described.

Closi 6y ago

Hey - It's me, your friendly supermarket supply chain guy! (I now consult on this stuff) Picking in store has a huge number of cost base efficiencies compared to using a 'dark store'. These are as follows: * Reduced property costs and property overhead. * Having 5 vans in 300 locations is better than having 300 vans in 5 locations from a transport perspective (you get much closer to the customer, or have to tranship through hubs). * Depending on locale, store workers may have more relaxed terms and conditions and unionisation than industrial warehouse workers, which 'warehouse' workers may get dependent on setup. * Every darkstore you have needs to be fully stocked. This isn't so much of an issue with long-life products, but is an issue with fresh products that need to be sold before their expiry. A darkstore has a 'minimum viable size' with these fresh products dependent on the range you want to offer. Bigger darkstore with more customers means a bigger range - but you are also further away from the customer so either you have a bigger stem distance or need to do trunking to hubs and tranship from there. So it's not about getting wise, trust me we think about these things and will model what is the most optimum way to deliver, at least in the UK :) An incredibly rough rule-of-thumb of logistics in the UK is that 1/3 of your money is spent on transport, 1/3 is spent on warehouse labour and 1/3 is spent on fixed costs (building, rent, utilities, equipment) - so your saving on labour has to be significant to pull back the fixed cost benefit of running out of an existing retail estate. This is in the UK - most supermarkets have their own in-store pickers and will deliver with vans in the back. We have one company (Occado) that has a few large DC's and will tranship to outbases with vans. Some supermarkets have these dedicated 'darkstore' facilities in super-dense areas (e.g. Tesco, Asda), but they don't work in most areas of the country and in most cases are actually more expensive to run than in-store picking operations (they are done for capacity reasons rather than cost reasons). The advantages of the centralised approach tend actually to be about service. If I can centralise to a big enough warehouse, I can offer a better range and offer things like visibility of expiry dates.