"Ultrafast" delivery platform Getir recently acquired fellow q-commerce player Gorillas, signaling greater consolidation in the instant-needs sector.
It’s no surprise that use of grocery e-commerce boomed during the pandemic years, when shoppers ventured out only on an as-needed basis, but now that COVID-inspired restrictions have eased, many consumers still expect the greater choice and flexibility that purchasing groceries online can offer them — even if they do most of their shopping in brick-and-mortar stores.
That being the case, grocers are under pressure to provide e-commerce programs, but the profitability of such initiatives continues to be a concern. How, then, can food retailers maintain and grow their online businesses in accordance with consumer needs while managing costs?
“To reach profitability, a certain level of scale is necessary,” replies Langston Dugger, U.S. director of operations at Getir, the Istanbul-based “ultrafast” delivery platform that made headlines late last year when it acquired fellow q-commerce player Gorillas. “In the near future, you are likely to see more product selection, more fine-tuning of delivery modes and more innovation when it comes to technology.”
Indeed, emerging tech solutions have the potential to streamline e-commerce operations like never before.
“Innovation will continue to drive new efficiencies, enabling retailers to offer faster and cheaper propositions with more competitive unit economics,” notes Jonathan Morav, head of product strategy at Tel Aviv-based scalable commerce software company Fabric. “The U.S. is expected to see [a] 19.5% [compound annual growth rate] in same-day delivery between 2020 and 2027. In order to do this efficiently with cost-effective unit economics, brands, retailers and logistics service providers need to get closer to their customers with smaller-footprint warehouses that use micro-fulfillment center automation ensuring high throughput per square foot.”
According to Rina Hurst, chief business officer at Birmingham, Ala.-based grocery delivery company Shipt: “First and foremost, e-commerce will continue to mature and advance technologically, which will offer more growth opportunities for grocers. We’re already seen this taking shape in the way that third-party delivery services leverage scale across a market to keep costs for partners low, and how these services flex their business models to prepare for peaks in retail demand.”
Ariella Azogui, co-founder of New York-based delivery solutions provider Dutch-X, cites investments in such areas as micro-fulfillment centers, autonomous vehicles with precise delivery slots, tech-enabled logistics optimization, and data, analytics and IT infrastructure as key to profitable e-commerce growth, as well as teaming up with third parties and deploying different delivery models to stand apart from the competition.
“Retailers that take decisive action and make strategic investments today will be well positioned to carve out a profitable position for the future,” counsels Azogui. “Efficiency, speed, demand aggregation and possible collaboration of players in the industry will drive volume, which will drive profitability.”