The reception box impact on home delivery efficiency in the e‐grocery business

Abstract

Home delivery of groceries is not yet a very popular service among consumers. One reason for the slow progress has been the time‐consuming and expensive ordering process. In recent years, Internet‐based solutions have solved most of the problems related to the order transaction process – making ordering simpler, cheaper and faster. However, there are still a lot of unsolved problems in the e‐grocery business. One of the biggest obstacles is inefficient home delivery. This paper examines how different solutions for goods receipt affect home‐delivery efficiency. Different alternatives for receiving the goods are presented and the service levels of these concepts are described from the consumer’s point of view. In addition, the costs for the e‐grocer are studied. The efficiency of using a reception box is demonstrated by simulating two alternative receiving concepts.

What Makes Online Grocers Work? A Case Study Analysis of Factors Contributing to Online Grocery Store Profitability

“…An advantage of this fulfillment method is that it is simple to set up with minimal costs (Hays et al 2004;Yrjola 2003). Further, it allows a company to enter the online grocery channel quickly without having to develop a new distribution system and it does not require the building of costly facilities (Hays et al 2004;Kamarainen et al 2001). Also, the distance from the store to the consumer is shorter, which may result in a shorter time between placing and receiving an order.…”

“…What separates this type of fulfillment method from that of the in-store fulfillment method is the manner in which the inventory is arranged. These fulfillment centers are organized to increase picking efficiency by arranging the inventory into zones based on the demand for the product (Kamarainen et al 2001). However, once an order is received, it is filled in a similar fashion as it would be in the in-store fulfillment method.…”

“…Further, when operating at or near capacity, this method may cause stockouts on store shelves for fast moving products. In addition, this order fulfillment method is very labor intensive and becomes costly as the volume of orders increases due to needing to have pickers and delivery personnel at each location (Kamarainen et al 2001;Hays et al 2004). …”

“…In order to delineate these various online grocery store business models, five key factors were taken into consideration. These factors included: (1) the amount of physical assets involved (Hays, Keskinocak and de Lopez 2004), (2) the method of order fulfillment, (3) the method of delivery (Copacino 1996), (4) recipient presence, and (5) the receptacle method (Kamarainen 2001;Punakivi, Yrjola, and Holmstrom 2001;Yrjola 2001) (see Table 1). …”

“…For instance, the home delivery channel has been used as a means for service differentiation for competitive gain, as a service component for competitive parity, as a barrier to competition, as a service component weapon, and as a service component profit center. It is obvious that the home delivery of groceries is not a new service concept in the grocery industry (Kamarainen 2001(Kamarainen , 2003. What has changed in recent years is the desire by some grocery retailers to again view the home delivery channel as a profit center and promote this service to a broader market through an electronic medium.…”