Cost‐effectiveness in the e‐grocery business

Abstract

In the grocery business online start-ups, e-grocers, have in the last few years developed new business models to challenge the traditional bricks-and-mortar supermarkets. However, many of the big players in the e-grocery business, such as Peapod and Webvan in the USA, still operate in the red. They have financed rapid growth by collecting hundreds of millions of dollars from investors. These huge investments have enabled the e-grocers to enter the grocery market but, on the other hand, ineffective operations have used up capital on operating expenses. If the e-grocers want to become serious challengers to the traditional bricks-and-mortar business, they need to cut operational costs dramatically and fast. This paper illustrates some basic principles for cutting operational costs in the e-grocery business. The focus is on picking efficiency and order assembly costs. Solutions for achieving better picking efficiency are discussed. In addition, one detailed example of how a grocery distribution centre for efficient picking could be designed is presented.

Behind the Web Store: The Organisational and Spatial Evolution of Multichannel Retailing in Toronto

“…(6) In this paper I do not claim to evaluate the logistical efficiency of e-tailing fulfilment, which has been explored in more depth elsewhere [see Murphy (2002b) and the extensive work of researchers at the Helsinki School of Economics (for example, Kamarainen et al, 2001;Punakivi and Saranen, 2001;Raijas and Tuunainen, 2001)], though the following analysis will hopefully shed some light on the general logistical foundations of the fulfilment process. (7) I had hoped to provide a more detailed view of Internet use within the Toronto metropolitan area, but data at this spatial scale are currently unavailable.…”

French consumers' perceptions of the unattended delivery model for e-grocery retailing

“…E-grocers must address new cost drivers and additional demand for operations, compared with traditional grocers, including order preparation and home delivery (Gan et al, 2007;Kämäräinen et al, 2001a;Keh and Shieh, 2001). Such requirements also entail huge investments by e-grocers (Kämäräinen et al, 2001b), which makes electronic grocery retailing extremely difficult to operate profitably (Yrjölä and Tanskanen, 2005) and has led to many failures in the market Hult, 2005, 2006). The difficulties associated with changing customers' habits and poor logistics may explain the poor profitability and failures among e-grocers in the 2000s (Dickey and Lewis, 2009), even though grocery has become one of the fastest growing categories in online sales (Keh and Shieh, 2001) and is anticipated to grow even more in the next five years (Dickey and Lewis, 2009).…”

Minimizing Warehouse Space with a Dedicated Storage Policy

“…According to the literature, 23% of logistics costs in the US, and 39% in Europe, are embodied by warehouse activities [1, 2]. Thus, with the aim of reducing this significant impact upon production companies, attention was paid to managing warehouses in a cost-effective way [3, 4, 5, 6, 7].…”