If it seems like grocers are scrambling now to monetize online ordering and delivery, that’s because they’re in a very tough spot. Grocers are really struggling – in an $800 billion business, most are barely profitable and only about 3% of sales come from online orders. While there’s definitely interest from consumers in online grocery shopping, retained adoption is hovering at a measly 5% because no grocer is delivering a perfect operational experience and bringing fresh food inexpensively to customers’ doorsteps.
The fact is, figuring out all of the mechanics of grocery ordering and delivery is still extremely difficult, and the technology has just not come far enough yet from the major tech players in this space, like Amazon and Instacart.
Robots to the Rescue?
If we look back, when online grocery ordering really started to catch on, it was back in 2016, and Instacart became one of the go-to tech vendors grocers used to automate the whole process. But the economy of picking and delivering is challenging and quite expensive for grocers, so those costs got passed onto the consumer. For mid-market grocery shoppers, it’s just not feasible or affordable to go the online grocery route for weekly shopping, and while they’re quite interested in trying it, they just can’t afford to do it regularly.
Grocers can’t simply rip out Instacart and similar solutions and replace them with their own technology, pickers and drivers. For one, those jobs are union ones for grocers and aren’t simple or inexpensive for grocers to negotiate.
So grocers started exploring robotics to improve efficiency and control costs. Beyond the robots recently introduced to stores for taking inventory and cleaning up messes, grocers have started looking to automation to fill online orders and speed up delivery. While this could potentially improve just the pick efficiency, grocers can only really begin to make money on this when they start getting around 4,000 online orders a week connected to the automated location, which could be challenging.
Additionally, robots can’t pick 100% of all SKUs; grocers will still need manual picking for items like produce. Finally, robotics still does not address one of the biggest challenges grocers have in the ecommerce economic equation: delivery. So the reality is that robotics is really just a stopgap, or a partial solution to fixing the real economic issues of grocery ecommerce.