Tag: grocery delivery

OM in the News: Walmart Wants to Put Groceries Into Your Fridge

The new grocery-delivery service will initially be offered in Kansas City. Pittsburgh, and Vero Beach, Fla.

Walmart is opening a new front in home-delivery services: carting milk, eggs and other groceries and leaving them in the fridge. This fall, Walmart in 3 cities will start delivering online grocery orders directly to refrigerators in shoppers’ homes and garages. The workers will wear body cameras clipped to their chests, allowing customers to watch live streams of deliveries being made while they aren’t home. Workers will enter residences equipped with smartlocks, internet-connect devices that can be controlled remotely to unlock a door.

The service, Walmart InHome, marks the latest attempt by retailers to adjust to changing shopping habits and solve the last-mile delivery problem, especially for groceries, reports The Wall Street Journal (June 7, 2019). Walmart workers will need to be with the company for at least a year to make deliveries. Walmart also added short biographical profiles of its delivery workers to the pilot service’s consumer app, which helped humanize them. “Customers didn’t know who was coming into their homes, so we changed it,” the firm stated.

The retailer is working to grab market share in online grocery shopping to maintain its place as the country’s largest grocer. Walmart this year plans to offer online grocery pickup from over 3,000 store parking lots and 1,600 stores that offer grocery delivery, mostly by joining with crowdsourced delivery firms.

Amazon offers a similar in-home delivery service for Prime members in 50 cities, called Key by Amazon. But drivers don’t deliver fresh groceries, and they leave items just inside a door, garage or the trunk of a car, not a refrigerator.

Classroom discussion questions:

  1. Who is the target customer for this service?
  2. What operational difficulties might be encountered?

OM in the News: Walmart’s Food-Delivery Challenges

There are many hurdles Walmart and other large grocers face as they race to expand fresh-food delivery and gain an edge in one of the fastest-growing e-commerce segments, reports The Wall Street Journal (March 15, 2019). Despite Walmart’s resources and more than 1.5 million U.S. workers, it mainly relies on a patchwork of independent companies to expand its delivery services as quickly, broadly and cheaply as possible.

A Walmart employee makes her way through a store, collecting items to fill a customer’s online order.

Walmart, the country’s biggest seller of groceries, is facing pressure to push forward in delivery because Amazon, a chief competitor, is making inroads in grocery sales. (Walmart generated $200 billion in U.S. grocery sales last year, more than double Kroger’s take and 5 times as much as Amazon’s in the sector). In recent years, Walmart added a service for placing online grocery orders for parking-lot pickup at 2,100 of its 4,650 U.S. stores. About 35,000 U.S. Walmart employees called “pickers” now weave through aisles compiling online grocery orders– a slower and more costly process than fulfillment from specialized distribution centers.

Walmart is offering delivery from 800 stores, with another 800 planned this year, mostly by joining with firms like DoorDash that crowdsource drivers. Walmart pays a fee to the driving companies and charges customers $8-$10 per order to offset that cost. But filling online orders with store workers in spaces organized for shoppers can be complex and expensive. And drivers for delivery firms need an incentive to lug bulky grocery orders from their cars to customers’ doorsteps. Walmart is testing using its own store workers to make deliveries. And last year, it began arming workers with devices that tell them the fastest route through stores and the optimal order to place items into bags. Future remodels could tweak stores to better accommodate online ordering.

Classroom discussion questions:

  1. What are Walmart’s core competencies (see Chapter 2) as they relate to food delivery?
  2. What are its key success factors (KSF’s)?

OM in the News: The Grocery Robot is Here

 

A Starship robot on its way to deliver groceries

The first time you encounter a fully self-driving commercial vehicle, odds are it will be delivering your groceries rather than ferrying you to your destination. There are a number of reasons things are trending this way, including laws, physics, the nature of existing infrastructure, and the size of the addressable markets. Autonomous delivery could transform all of retail, further accelerating the shift from stores to e-commerce. “With sufficiently inexpensive autonomous delivery services, we might stop going to the grocery store, or at least stop carrying our groceries home,” writes The Wall Street Journal (Jan. 5-6,2019).

In a demo that also took place in December, autonomous delivery company Nuro showed off a robot designed to drive on the street, at a maximum speed of 25 miles per hour. Half the width of a normal car, Nuro’s R1 robot is intended to sacrifice itself in the event of a crash with a cyclist, pedestrian or other vehicle. Making vehicles that don’t go too fast also allows these companies to make use of a regulatory loophole. A federal and state standard for “low-speed vehicles” has long allowed automakers to create vehicles that lack traditional safety features, as long as they move no faster than 25 mph.

Grocery delivery is especially ripe for disruption because at present it’s prohibitively expensive for most consumers. Between 2-4% of the $641 billion worth of groceries purchased every year in the U.S. are bought online. In 2017, Daimler invested in Starship, which makes a robot about the dimensions of a medium-size dog. The company’s robots are already making deliveries of both food and packages in the outskirts of London.

Classroom discussion questions:

  1. Why might delivery robots proliferate more quickly than driverless cars?
  2. What are some  of the disadvantages of autonomous delivery?

OM in the News: Wal-Mart Cracks the Code for Online Groceries in China

An employee fills electronic orders for the 1-hour delivery platform at a Wal-Mart store in Shanghai

Amazon may have sent a chill through the U.S. supermarket business with its purchase of Whole Foods. But grocers also had better keep an eye on the world’s largest brick-and-mortar retailer—Wal-Mart Stores—for some lessons on the future of online grocery shopping. Wal-Mart has already developed a big online grocery delivery business in China, capable of transporting fresh produce from its shelves to homes within an hour.

To accomplish that feat, it’s created a network of chilled mini-warehouses, used A.I. to tailor inventories, and employed an army of crowdsourced deliverymen to rush meat, fruits, and vegetables to customers’ doorsteps. That could provide it with insight and experience to keep tech upstarts from disrupting it out of one of its core U.S. businesses.

Fresh food is considered the last frontier of Chinese e-commerce. “Wal-Mart’s efforts in China revolve around trying to tap into a smartphone, convenience-craving, population,” writes Businessweek (Dec. 4, 2017). 

At the heart of its operation are what it calls “dark stores” that stock 1,500 different products such as bananas, pork ribs, dumplings, and chicken feet. Workers grab printouts of the online orders, zip through the aisles placing items in a bag, and exit the other side, where they hit a button summoning a delivery driver. The drivers are independent contractors with cellphones and scooters. The time from picking up the order printout to hitting that button can’t exceed 10 minutes, or else the 1-hour delivery is in peril.

Shelves are stocked with products based on order patterns for the surrounding area—meaning a store in northern China may have more soup ingredients as winter comes. The company adjusts each store’s online inventory every 4 weeks, and the added information about fresh grocery demand from web orders helps boost the accuracy of Wal-Mart’s product forecasting for offline stores.

Classroom discussion questions:

  1. Is this online operation transferable to the U.S.?
  2. How does this approach differ from typical supermarket shopping?

OM in the News: The Last Mile at Peapod Can Make or Break the Supply Chain

 

Conveyor belts and sorting areas at Peapod’s warehouse in Jersey City.

“Delivering food requires military precision,” writes The New York Times  (June 25, 2017). People expect their food to arrive at specific times. Delivering perishables is much trickier than delivering T-shirts, books or pretty much anything else people can buy online. The biggest challenge is that groceries must stay cold for hours at a time. But there are other complications. Bananas and apples give off fumes that can hurt loose leaf lettuce, so they can’t be stored too close. Tomatoes lose flavor when they cool to below 55 degrees. Milk always has to be packaged upright.

All the complexity adds costs in an industry where profit margins are already thin. Numerous start-ups have failed in grocery delivery, making groceries the last frontier of online shopping. Even Amazon, which has perfected its logistics, hasn’t mastered the art of profitably delivering perishable food in metropolitan areas. But it just made a big bet, purchasing Whole Foods in a $13 billion deal that will give it access to 400 stores in major population centers — places that may have walk-up apartments, limited parking, and other urban obstacles.

Every second counts. Grocery delivery companies like Peapod have to calculate exactly how long each individual order will take, and monitor traffic patterns and accidents for any disruptions their trucks may face. At Peapod’s warehouse in Jersey City, a 400,000-sq.ft. facility that services NY and New Jersey,  425 people bustle in and out of the meat room, the produce room, a rotisserie room filled with rotating chickens. Workers load items into bright green temperature-controlled bins called “totes.” Once perishable items make it into the tote, the clock starts ticking. Peapod has 19-21 hours to get totes to customers, and everything has to stay at the right temperature that whole time. A break in the cold chain on the way to a customer means even the healthiest-looking berries can rot.

Classroom discussion questions:

  1. What are the major OM issues a firm like Peapod faces?
  2. How does Peapod differ from Amazon?