How grocers can wrestle with a future that came too early

The game is the same but the field you play on has changed dramatically, and you still have to bring money in, because selling doesn’t alway rhyme with profit.

Grocery delivery is not for the faint of heart. So: you sell grocery, and everything is going pretty well, and then 2020 happens. In a few weeks, a big chunk of your business will have to move online. It may be that you’re Walmart and you already have e-commerce or that you’re a small or medium player who never really thought about it. In either case, you are not prepared to face the magnitude of what you have to deliver. The Year gets older, but the emergency does not go away. It becomes a “new normal,” as everyone likes to call it. Except there’s nothing ordinary in it.

Before COVID, in the US, depending on how you counted, you might say there were 2 to 3% of all grocery sales that happened online. At the peak of COVID, there might have been 35% of all grocery sales that happened online. It’s kind of normalized down now in the teens,”: says Jason Goldberg, Chief Commerce Strategy Officer at Publicis Groupe. “So maybe we call it 15% today, but that’s a level of digital penetration in the grocery sector that a lot of people forecasted might have happened by 2025 or even 2030.”

It’s now the start of 2021, and most of the mom-and-pop stores have been swept away by the rogue wave of online orders. The giants still float, like islands in a sort of post-apocalyptic water world: Walmart, Amazon, Kroger, Albertsons in the U.S.; Tesco, Ocado, Waitrose in the U.K.; Esselunga and EasyCoop in Italy.

The game is the same, but the field you play on has changed dramatically, and you still have to bring money in because selling doesn’t always rhyme with profit. Plug and play solutions as Intacart, which rely mostly on gig-economy workers, have seen their businesses spike as much as 500%. But all that glitters is not necessarily gold.

According to The Wall Street Journal: “Nilam Ganenthiran, Instacart’s president, says that the company’s services help grocers grow without spending years of work and capital investment to build infrastructure. (…) But many supermarkets say they aren’t making money through Instacart, largely because the delivery company typically charges them a commission of more than 10% of each order. Some of Instacart’s retailer partners say the service holds too much control over customer interactions and expect it to take an increasing share of the money that food makers spend on marketing”.

In the long run, grocers will have to find a profitable model that best suits a more balanced preference between in-store and online shopping. In this model’s pursuit, grocers will have to address many challenges, from creating a better shopping experience in different buying mediums to the optimal last-mile fulfilment and grocery delivery setup. Marco Di Falco, Co-Founder & Chief Operating Officer at Digitail s.r.l. (EasyCoop), the online shopping service of Coop Alleanza 3.0 (which is the largest cooperative of Italian consumers and one of the first Grocers to use Milkman’s last-mile platform), has no doubts about the way to follow:

Thinking about the growth goals for our online business and the quality promise of our brand drove us towards the dark-store model that carries the best long-term economic potential.” (…) “Not long after launching the service we decided to change our tagline from – ‘Easy Convenient at Home’ – to – ‘EasyCoop EasyLife’ – as we wanted to convey a more direct message about the broader value that our service was meant to unlock for our customers. And a crucial element of such value, a crucial piece of what EasyLife stands for, is that it precisely allows customers to personalize the delivery slot and balance convenience and cost for every order.”

Even with vaccines rolling out in most of the World, the pandemic will still rule most 2021. It will leave us with a profoundly changed social and retail landscape, in which balance and not speed will tell winners from losers. There is a balance between online and offline and between promise and reality, brand integrity, sustainability, and market aggression. This is no firefight: it’s the war to dominate a future that knocked too early on our doors.

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