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Online shopping made simple
SUPPORTING THE RI SE OF GROCERY E- COM MERCE
FROM THE STORE TO THE FRONT DOOR
polymerlogistics.com
The online grocery sector is expanding at a rapid pace, with sales rising quickly
across Europe. As a result, supermarkets and other retailers are having to
address a variety of storage, distribution and delivery challenges in an attempt
to maximise efficiencies, meet customer expectations and balance costs. This
paper takes a look at the key technologies and trends underpinning the growth
in grocery e-commerce for home delivery and click-and-collect pick-up. These
advances are in areas such as reusable shopping containers which address the
key challenges while ensuring that perishable goods arrive in perfect condition.
Introduction
to grocery
e-commerce
The retail landscape in Europe has changed beyond recognition in
recent years, with the convenience of online shopping emerging as
a major competitive threat to traditional brick-and-mortar stores.
Historically, the online sector has been dominated by a handful of
global giants such as Amazon, who have cornered the market in
the supply of a wide range of non-perishable consumer goods such
as toys and games, books, clothes and electronic gadgets. More
recently, though, grocery e-commerce has come to the fore, with
most of the major supermarkets across Europe establishing an online
presence, alongside a number of smaller specialists.
Indeed, according to research by IGD, the European market for
online groceries holds significant potential over the medium-term
and is expected to expand by 66 per cent by 2023, adding $21
billion. That promise holds true in all of the biggest countries, with
the UK, Germany, France, Italy and Spain all predicted to record
strong growth rates. The challenge for retailers, then, isn’t a lack
of potential customers. In essence, it is more around expanding
grocery e-commerce in a cost-effective and efficient manner
that adds value to the bottom line and delivers the best possible
customer experience.
2 Online shopping made simple supporting the rise of grocery e-commerce, from the store to the front door polymerlogistics.com
Regional
differences
come into play
Before looking at how retailers are responding to opportunities
in grocery e-commerce, it is worth assessing some of the
underlying factors causing the surge in demand. Primarily,
it is about convenience: many consumers, particularly those
with hectic lives, want to make the most of their spare time
and find it easier and quicker to do their food shopping digitally.
Research has consistently shown that in terms of specific groups,
young people in metropolitan areas are particularly heavy users
of online grocery services. This demographic is comfortable with
using technology such as smartphones and tablets to organise
many aspects of their daily lives.
However, while there are some consistencies in terms of the types of
users of online shopping, there are some notable national variations
across Europe when it comes to both the rate of uptake and the
kinds of distribution and delivery services being provided (see
box for more details). The UK, for example, is a relatively mature
market compared to other European countries, with the channel
share of online grocery retail standing at around 7 per cent. The
majority of these services are home delivery, with major supermarkets
such as Tesco and Asda investing heavily in their delivery fleets.
France, meanwhile, also has a sizeable market for grocery
e-commerce, representing around 6 per cent of the overall share.
In other countries, though, online shopping is still in its infancy.
In Germany, only 1 per cent of food purchases are made online,
and the majority of these transactions are based on a ‘click and
collect’ basis rather than home delivery. And in southern European
countries such as Spain and Italy, where there is a strong cultural
ethos of shopping at local markets, online grocery shopping
remains comparatively small-scale.
In all cases, though, the adoption curve is upwards. More recently,
demand has been further accelerated as a result of the Coronavirus
outbreak. Because of the social distancing and lockdown measures
put in place to combat Covid-19, a much broader range of people -
many who had previously shunned home delivery or click-and-
collect pickup - are now seeing the convenience in buying goods
online and eliminating the need to walk up and down supermarket
aisles. And experts and industry leaders agree that this surge
in demand will have a lasting effect in a post-Covid 19 world,
as more people become accustomed to this new way of doing
their weekly shop. A recent study from research firm Mintel,
for example, states that after four consecutive years of modest
growth, the change of shopping behaviour resulting from
Covid-19 will see the UK’s online grocery shopping market
grow by a massive 33% in 2020.
3 Online shopping made simple supporting the rise of grocery e-commerce, from the store to the front door polymerlogistics.com
The challenges of grocery e-commerce
So, while the momentum is undoubtedly behind supermarkets stores’. The latter are large warehouse-type distribution centres
and other retailers looking to develop their grocery e-commerce which are laid out like traditional shops but are solely designed
activities, there are some common challenges that need to to fulfil online orders. These windowless facilities dispense with
be overcome. customer-focused infrastructure such as product point-of-sale or
check-outs, being designed for more streamlined route optimisation
Firstly, it can be a costly business – with substantial expenditure for teams of workers armed with electronic scanners. Dark stores
needed for everything from transportation through labour costs themselves are increasingly relying on higher levels of automation,
(for picking, packing and delivering). An investment in containers enabling supermarkets to lower the overall cost-per-pick. In
that protect groceries during the entire picking, packing and addition, online orders continue to be fulfilled by staff in traditional
delivery process is crucial. Indeed, as we will see later, container stores, with pickers often handling multiple orders at any one time.
choice can be particularly important, with careful selection not only
minimising upfront costs but also helping to drive down ongoing But product selection is merely the first stage in the online
‘cost of ownership’ by supporting efficiencies in a number of areas. grocery order fulfilment process. Irrespective of the type and
mix of operations a retailer may employ, there is one common
Retailers also face pressure to meet ever-growing consumer requirement – containers into which the items, once selected, can
expectations, risking reputational damage if standards are not be placed, transferred to delivery vehicles and then transported
met. For both home delivery and click-and-collect, customers to the consumer’s home or local collection point. Selecting the
expect to receive high-quality, fresh product, on time and in good appropriate container technology is far from a trivial decision
condition. That requires a highly sophisticated and well-organised as container choice can have a significant impact on almost
logistical setup, starting at the warehouse / store, all the way to every aspect of the online delivery process. That’s why careful
the front door or the pick-up point. consideration needs to be given to crate design and factors
such as re-usability and total cost of ownership.
These factors have led retailers to evaluate a wide variety of solutions
for e-commerce. These include everything from mini-fulfilment
centres to fully automated warehouses, as well as, so-called ‘dark
4 Online shopping made simple supporting the rise of grocery e-commerce, from the store to the front door polymerlogistics.com
The importance of
good crate design
The transportation and delivery of groceries bought online has
seen some considerable advances in recent years as supermarkets
and other retailers have worked hard to improve and grow their
offering. Among the key issues that retailers must deal with as
they manage the evolution of their online grocery businesses are the
efficiency of the picking and fulfilment process, management of the
storage of orders prior to delivery, and the physical delivery itself.
Selecting a suitable crate technology is vital in addressing all of
these issues. Such a consideration should be based on several
criteria, including durability and re-usability, along with design
characteristics that optimise process efficiency and minimise
storage overheads. The integration of technologies that support
traceability and monitoring are also increasingly important factors.
Designed explicitly with home shopping and click-and-collect
pick-up in mind, reusable crates eliminate much of the household
cardboard associated with e-commerce. The latest crates also
provide better protection against product damage, while improved
ergonomics have made them easier to handle in transit, resulting
in improved operational efficiencies. Many of these crates are
also foldable, nestable and stackable, ensuring the optimum
use of storage and transport space whether empty or full.
In addition, some of the more recent generations of crates also
offer the option to add IoT (Internet of Things) connectivity for
asset tracking, which can mitigate the inefficiencies and costs
associated with crate loss. Sensors can also be incorporated into
the crates to monitor ambient conditions when goods are in transit
and maximise product freshness.
Most of the big retailers work with transport packaging and
logistics providers to develop bespoke designs that suit their
specific requirements. These home shopping crates are then
typically acquired through the placing of substantial orders,
which often amount to hundreds of thousands of units,
or can be rented on a fixed-term basis.
5 Online shopping made simple supporting the rise of grocery e-commerce, from the store to the front door polymerlogistics.com
Reusable crates in greater detail
So, let’s take a look at the characteristics of the latest reusable have a significant impact on order fulfilment optimisation. Carrier
crates, identifying some of the specific design considerations bags can be hooked inside the crate, keeping them open, and
that make them fit-for-purpose. therefore allowing for easier and faster goods picking by the
customer fulfilment team. Handholds on all four sides of the
For online shopping, the market is primarily dominated by foldable crate can also assist with more convenient handling.
or nestable crates. These have to be lightweight, yet extremely
durable, as they can be used for many trips in a single day, Meanwhile, in terms of product protection, the use of a solid base
stacked in vans and shuttling from store to house or pick-up ensures that any liquid spilt from, say, a pint of milk can be contained,
point. The design of such crates is often the result of a carefully preventing spillage to the crates below and the subsequent spoil
considered research and development process, with engineers of the order. This is increasingly important as the use of carrier
using software-driven techniques such as finite element analysis bags are being phased out in many countries for environmental
to identify and execute the smallest refinements. When taken as reasons, with groceries being placed directly into crates instead.
the sum of their parts, these seemingly minor design features Uncontained spillage can, therefore, have a major impact on
can deliver considerable performance advantages. cleaning requirements – both of the crates and the interior of the
delivery vehicle. Also, crates are often designed with perforated
For example, in terms of ergonomics and functionality, simple walls to reduce weight and when empty can be conveniently
enhancements such as featuring bag hooks on the top rim can nested to reduce storage space.
6 Online shopping made simple supporting the rise of grocery e-commerce, from the store to the front door polymerlogistics.com
The use of IoT in grocery e-commerce
Another exciting development is the application of Internet of have time to climb flights of stairs to deliver and unload grocery
Things-based tracking systems to e-commerce crates, which orders, and often leave the crates behind.
can dramatically and immediately reduce losses and improve
operational efficiency. The adoption of this technology mirrors The use of IoT helps with such attrition in two primary ways. Firstly,
the trend to digitalisation seen in the wider logistics sector, the system allows for the tracing of all delivered crates, particularly
where the availability of smaller, cheaper and more reliable the ones left on premises by the driver, enabling collection at a
sensors has led to the connection of a more extensive range of later point in time. Also, such technology can drive behavioural
assets. These sensors, embedded on equipment such as pallets, change around the use of home shopping crates, establishing
roll-cages and crates, provide a stream of data that can be sent them as reusable and sustainable assets, rather than disposable
over low-power, wide-area cellular and non-cellular technologies boxes to be thrown away. In the future, delivery drivers could be
such as LoRaWAN and Narrowband IoT to the cloud, where it can incentivised to ensure they keep track of stocks, returning them
be analysed to deliver real-time information factors such as asset for use for other customer orders.
location, surrounding temperature and humidity.
Moreover, IoT isn’t restricted to helping to reduce attrition, as there
As the cost of such technology has decreased, suppliers have is the potential to use this type of technology for the monitoring of
started to use IoT as a means of tracking the location of shopping food condition. Sensors attached to home shopping crates can
crates. At present, attrition is a significant problem in the grocery be used to ensure that perishable goods remain within specified
e-commerce sector, with some of the major supermarkets losing temperature/humidity parameters while in transit, ensuring that
as many as 1,500 crates a day. This adds up, over time, and can they reach customers in optimum condition. This is an increasingly
have a marked impact on the profitability of operations. It is a important consideration for many consumers, who are interested
particular problem in major cities such as London, which have a in the ‘farm-to-fork’ journey of their food as part of broader
high percentage of flats among the housing stock. Drivers do not sustainability concerns.
7 Online shopping made simple supporting the rise of grocery e-commerce, from the store to the front door polymerlogistics.com
Plotting crate innovation going forward
It is clear, then, that there has been some notable innovation taking Future crate designs are also going to have to take account of
place in the home delivery sector. Those advances - from ergonomics the increased use of automated warehousing being pioneered by
and functionality, through to digitalisation – will continue to evolve organisations such as Ocado. These facilities use intelligent robots
as supermarkets focus on cutting costs and boosting customer for picking and placing to reduce labour intensity and increase
service. So, where next for grocery e-commerce? What sorts of new speed and efficiency at the order fulfilment stage. Here, reusable,
technologies and trends might emerge as the market for home standardized crates that are strong enough to protect what’s inside
shopping continues to expand across most parts of Europe? and are compatible with – and can potentially communicate with –
the warehouse systems are essential to efficient operation.
Firstly, there is the potential for additional data capture as a means
of increasing customer personalisation, driven by an extension of Sustainability will also become an even greater consideration.
the digitalisation process that is already taking place. At present, as While the shift to returnable packaging solutions such as plastic
previously discussed, IoT-based technologies are primarily being crates helps eliminate the cardboard associated with online grocery
used to track the location of assets and monitor the conditions of shopping, consumers still want to know that the thermoplastic
groceries during transport. However, in the near future, they could polypropylene used to make crates can be disposed of in an
be deployed to more closely link crates with the preferences of environmentally sensitive manner. That means crate producers
individual customers and their shopping habits. For example, once and suppliers will be expected to work together to establish
a crate is picked, a more data-driven customised experience might effective recycling programmes. For example, schemes where
provide a print-out of recipe suggestions inserted into the shopping old crates are bought back from retailers and ground up so that
basket, with the aim of building long-term brand loyalty. the base materials can be re-used in future crate production.
It is also worth noting that a crate can have an impact beyond
the operational. By definition, the act of online shopping takes the
user away from the in-store experience and associated exposure
to the supplier’s brand. For a company looking to ensure its brand
and its values remain front and centre with its online customers,
the look, feel and usability of the website is key, but so too is how
the products are delivered. This is especially true if those products
are being brought into an individual’s home. Appearance, finish,
quality, logos and graphics can all tie into a consumer’s brand
aspirations, which means that customised and branded crates
have a role to play in the overall customer experience and how
the customer ultimately perceives the retailer. This is one of the
reasons behind the growth in the use of more natural ‘wood-look’
crate designs, not least from niche online businesses entering the
grocery e-commerce sector and supplying, for example, organic
produce boxes from local suppliers.
8 Online shopping made simple supporting the rise of grocery e-commerce, from the store to the front door polymerlogistics.com
Grocery Why partnership
e-commerce as provides the
a force for good answers
We have seen, then, that grocery e-commerce is a hotbed of The growing popularity of grocery e-commerce, and the highly
innovation and the market remains buoyant across Europe. The transient nature of the market, presents some real opportunities.
same positivity exists in the wider world of online shopping, with In particular, supermarkets and other retailers are looking to
the latest research from the World Economic Forum suggesting form long-term partnerships with supply chain logistic providers
that demand for last-mile delivery is expected to grow by a who can help deliver technical innovation that results in added
staggering 78% by 2030, with online stores, e-grocers and food business value.
delivery services all competing to offer faster home deliveries.
This trend is being fuelled by growing urbanization, says the At Polymer Logistics we have worked with many of the leading
Forum, with 60% of people expected to be living in cities by supermarkets across Europe to design and manufacture bespoke
2030. The risk, though, is that this rapid expansion could have reusable shopping containers that meet both strict performance
a negative impact on the environment, putting more vehicles specifications and detailed branding specifications. These crates
on the road and producing higher emissions. have been proven to help retailers improve order fulfilment
operations at the same time as providing better product
Looking to the future, there is hope that technology will be protection, improved ergonomics and the elimination of
able to mitigate the environmental impact of online shopping, or cardboard associated with e-commerce.
even help to significantly reduce emissions compared to today’s
levels, particularly as fewer consumers choose to drive to stores. Success in this sector is helped by the fact that Polymer Logistics
The World Economic Forum report - The Future of the Last Mile offers a full service that includes in-house R&D and manufacturing
Eco-System - points to 24 specific technology-focused fixes that capabilities. This supports the ability to partner with customers
could reduce the impact of e-commerce. These range from the in the retail sector to bring new ideas to market in a shorter
use of automated robots and hydrogen-electric vans, through to timeframe. In-house manufacturing also means the company
dynamic re-routing of delivery vehicles and customer collection can provide supermarkets and other online retailers with more
from lockers. The point is that providers of online shopping services – flexible and reliable control over the stock of reusable crates,
whether supplying groceries or non-perishable consumer goods – which is a crucial consideration as online shopping grows.
are going to have to innovate on a continuous basis if they are to
remain relevant in what will be a highly competitive global market.
9 Online shopping made simple - supporting the rise of grocery e-commerce, from the store to the front door polymerlogistics.com
ONLINE GROCERY MARKET STATISTICS FOR THE TOP FOUR MARKETS IN EUROPE. SOURCE: IGD
$22.1 bn
$17.2 bn
$14.6 bn
$11.6 bn
$3.8 bn
$2.0 bn
$1.3 bn
$0.9 bn
8.7% 8.2% 23.2% 17.9%
2018 2023 CARG 2018 2023 CARG 2018 2023 CARG 2018 2023 CARG
UK FRANCE GERMANY SPAIN
A snapshot of the online
grocery market across Europe
UK S PA I N
The most mature European market for grocery e-commerce, Although it has a much smaller online grocery sector than
with major supermarkets such as Tesco, Aldi and Morrisons the UK, France and Germany, Spain could actually record
offering a home delivery service in what has become a very the biggest percentage growth of any European country over
popular route to market. Online-only retailers such as Ocado the next five years. McKinsey suggests that 49% of Spanish
also have a strong presence in the market. Research by Mintel consumers would be happy to shop online, if the service were
suggests that the 25-34 age bracket is the most enthusiastic available in their area. Historically there has been a cultural
when it comes to having groceries delivered, with almost resistance to online delivery, with local markets a popular
two-thirds having done some shopping online. source of fresh goods such as fruit and vegetables.
FRANCE I TA LY
The second largest European market for grocery e-commerce, The fast-moving consumer goods sector remains very fragmented
and one that is characterised by strong latent demand. According in Italy, with several hundred medium-sized retailers servicing
to McKinsey, one-third of consumers who have never bought the market. This has resulted in a lack of scale which has hindered
groceries from the internet say they would “probably” or “certainly” the online grocery sector. However, in recent months supermarket
think of doing so within the next six months if the service delivered groups such as Unicomm (Emisfero), Flor do Cafè and Nonna
to their street. The concept of ‘buy online, pick up in store’ is Isa have all established online grocery services, indicating a
popular in France, with many retailers having invested heavily positive trend. According to the magazine My Fruit, the market
in a network of pick up points. for online fresh and packaged foods in Italy rose by 130% in
the first four months of 2020. Traditionally, click and collect has
GERMANY proved popular in Italy, with many citizens preferring to pick up
Much slower to embrace online grocery compared to France and groceries as part of their commute.
the UK, with many Germans preferring to look, touch and feel
perishable goods before they buy. Many of big supermarkets
have a high density of city-centre stores and as a result have
been reluctant to invest in the storage, logistics and delivery
infrastructure required to enter the online sector in a big way.
The figures are moving in the right direction, though, with recent
research suggesting Germans are beginning to recognise the
convenience offered by home delivery.
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