Delivering Groceries and The Last Yard Problem
Online grocery shopping is one of the fastest-growing categories in ecommerce, but delivering food is not as simple as pretty much anything else you might order online. How can grocery stores deliver perishable goods to consumers intact and maintaining the correct temperature – at scale and at a reasonable cost? The, ahem, *key* to success may be surprisingly simple.
First you’re stuck in traffic, then you’re struggling to find a parking spot, then you’re walking what feels like a solid 5K at the big box store looking for something to cook and eat, then it’s back to your car and into mind-numbingly slow traffic again. Or, you might have to pay ridiculously high prices to shop at the only supermarket that’s on your way home from work, and then you’ll be lugging your groceries in the bus, train and/or metro. Sounds familiar? It might, if you are leading the standard life of a metropolitan dweller with a 9-to-5 job and a tight schedule in and out of the workplace. Ugh, enough of this dystopian picture already!
What if you could, for example, leave work a bit later – or earlier, whichever you prefer – to skip traffic altogether, go straight to your house or apartment and find your grocery shopping already waiting inside your fridge? All that extra free time can now be used for your hobbies, hanging out with friends and loved ones, or you know, just taking it easy to recharge your batteries. That would be amazing, wouldn’t it? Well, it would, and luckily there are people like Tuomo Tarvainen, who works as a Business Manager at Posti, and who is all about creating new ways to enable consumers to have a much better experience with, for example, grocery shopping.
“What we are trying to do, is to basically bring a bit of that Uber Eats ease into consumers’ lives, but instead of ready-made meals we are looking for ways to deliver groceries from the shops all the way to your fridge,” says Tarvainen as he explains the novel service concept pilot where Posti is working together with a large Finnish grocery retailer, the University of Tampere and a smart lock startup to find ways to efficiently deliver groceries from shops to homes – enabling consumers to altogether skip personally going to the grocery store personally. For example, Walmart has recently launched something similar in the US, and they are calling it InHome grocery delivery.
Online Grocery Shopping is Booming
Even though the concept seems quite new, the potential behind it is substantial. According to Business Insiders’ Online Grocery Shopping Report 2020 as of 2019 only 10% of American consumers are regular online grocery shoppers but this figure is projected to grow at a rapid pace in the upcoming years – the forecast in market size is estimated to grow from 2019’s $36 billion to a whopping $117 billion. “We here at Posti can see that the online grocery shopping growth rate is at about 40–50% annually right now, so we feel strongly that this is the right time to be involved in developing the best processes in efficiently delivering groceries straight to consumers” says Tarvainen, adding that one of the most critical issues in making online grocery shopping possible is the experience that customers have when shopping for food online. “No one really wants to sit around the house and wait for 1–4 hours for their delivery to show up but on the other hand it is quite expensive to offer really accurate delivery time windows,” Tarvainen elaborates. According to Tarvainen, a large portion of consumers would prefer to have more precise delivery times (e.g. 30 minutes up to 2 hours) and faster deliveries (within 3 to 5 hours from placing an order), but facilitating such a delivery system is still a challenge and a half. So, one way to solve the problem is to have the deliveries brought to consumers even when they might not be home – this way consumers do not basically have to wait around the house at all.
However, there is one teeny-tiny obstacle on the way to getting our groceries delivered all-the-way home. And that obstacle is called a ‘lock’. You know, the thing that keeps your home safe and the burglars at bay? Yes, that one. How can we let the delivery person in if we are not sitting at home waiting for them?
“Currently we are testing out smart locks that enable our delivery personnel to step into the customers home and stock the groceries in their fridge. We have also equipped our personnel with bodycams and the pilot customers’ apartments with movement sensors to see how the whole process from door-to-fridge works. It’s not even a ‘Last Mile’, but a ‘Last Yard’ problem we are solving” says Tarvainen as he explains the intricacies of testing out new logistics concepts that may sound straightforward but are actually quite complex to produce on a larger scale.
Better In-Home Services Equal More Free Time
In the future, Tarvainen expects, the in-home experience may not just help consumers to shop for groceries with more ease (while gaining access to more free time and cheaper products), but also evolve into combined services: “The bigger picture here is to find ways to combine multiple streams of objects going in and out of consumers’ homes. For example, while our delivery personnel bring you groceries and stock up your fridge, they can also bring any other packages you may be expecting. On top of that, going out we could also grab your outgoing packages and save you another trip while we’re at it.”
Indeed, the Last Yard Problem is a real one, but the fast growth in online grocery shopping may just be the key that will in the end help find the right ways to start delivering goods straight to consumers’ homes while keeping down logistics costs and saving everyone’s time in the long run. No more unnecessary trips to the big-box stores, and no more sitting around the house waiting for the delivery truck to show up – just to open the door.
While solving for The Last Yard sounds quite easy, it is in fact quite tricky. Are you one of those people who enjoy solving tricky puzzles and challenges? If so, you may be just the right kind of colleague we would love to see working with us at Posti! Check out our open positions here.
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