Takeoff Technologies, a provider of in store fulfilment solutions to leading grocers including Tesco has produced a feature on the US grocery market market. In their report (available below) they outline why the omnichannel model (where online orders are sourced from supermarkets) is the future of online grocery retail rather than a distribution warehouse or 'shed' model.
Takeoff analysed the US market and showed that whilst Amazon had 2,000 distribution sheds across the country, this pales in comparison to the nearly 40,000 grocery stores, providing significant distribution advantages. These stores are conveniently located in the centre or edge of major cities and towns, with large catchment areas. These stores act as both last mile distribution centres as well as facilitating in store shopping for customers.
Whilst the in store pick model is efficient in terms of delivery times and therefore cost, it is less efficient than a dedicated, automated distribution centre in terms of packing orders. Step forward Micro-fulfilment Centres (MFC); essentially automated distribution technology, usually housed in a 10,000 sq ft area in the back of a supermarket. Takeoff install MFC into grocery real estate, enabling operators to reduce both delivery cost and picking cost. Takeoff share SUPR's view that grocers that leverage and invest in their existing store network will be the winners in online grocery.
Read the full analysis here