After the disappearance of the labor-intense and specialized grocery-jobs, the Milkman is on its return in the Netherlands. Waking up the grocery giants such as Jumbo and Albert Heijn: a super-efficient online supermarket focusing on home deliveries emerged, Picnic. Making life for busy people much more convenient, this online retail distributor delivers your products at your home for free! And it becomes even better, since they manage to guarantee the lowest prices, leaving the establishment at their wit’s end with their unattainable business model.

How does it work?

Although online groceries are not completely new, this company makes it into their core business. After you have ordered your products and selected your most favorable delivery timeslot, Picnic does what they are doing best: delivering your groceries as quick as possible for the lowest price. Furthermore there is no need for waiting, since Picnic’s “Runners” are trackable via the real-time app on your mobile device. Even better, with an estimated arrival time up to 10 minutes accurate.

This makes it into a highly relevant opportunity for hardworking people with tight schedules, but also for the infirm and elderly (Keh & Shieh, 2001). Furthermore, Picnic is created together with the customer. Having the opportunity to reengineer the app or influence the available assortment, Picnic centralizes their customers to guarantee an optimal service level.

What is their unique formula?

However sceptics question the business model, Picnic has no doubts. Due to the savings as a result of skipping the physical supermarkets, these related costs are evaded. This leaves room for higher profit margins per product and a substantial budget for its distribution network. But how do they make their deliveries so efficient? The foundation lies in an extremely efficient supply chain. After shipping the products from their centralized warehouse-center to crossdocking locations at strategically positioned hubs, Picnic’s self-developed route planning system cracks the last mile to the customers.

Leaving from the environmental friendly hubs without energy-wasting cooling systems, electrical mini-trucks filled with grocery-boxes deliver the products at customers’ homes. By eliminating product oversupply and gas pollution via alternative fuels, Picnic wants to be as green as possible since that is what the modern customer wants.

Future ambitions

Although Picnic still focuses on a small part of the Netherlands, their potential goes far across the border of the country. Not only in places with a high population density but also in distant rural areas. Though, so far it is more complementary for households, especially throughout the week on top of their weekend-groceries. Nevertheless, Picnic is shaking up the traditional market and addresses some relevant issues in modern life. Which is, putting it mildly, remarkable in a country where most people live less than a kilometer away from a supermarket. So, do people really need dozens of locations with all those choices of different products, wasting all this food?

Thinking in a progressive manner with a customer becoming more aware about the environment and the positive influences of this business model (Ramus & Nielsen, 2005), Picnic has a huge potential. And although the online retail for groceries is not yet on fire, there will be a breakpoint. So will Picnic be the David that beats the Goliaths in their industry with its business model?

References:

http://www.distrifood.nl/formules/nieuws/2016/12/picnic-volgend-jaar-10-tot-15-steden-erbij-101104025                                     https://fd.nl/ondernemen/1165206/picnic-wil-in-hoger-tempo-naar-nieuwe-steden-toe  http://www.cnbc.com/2016/12/01/innovation-is-greening-retail-and-wholesale-pt2.html                                                                         https://www.nrc.nl/nieuws/2016/08/30/een-hoog-wagentje-als-handelsmerk-4060425-a1518656                                                                  Keh, H. T., & Shieh, E. (2001). Online grocery retailing: success factors and potential pitfalls. Business Horizons, 73-83.     Ramus, K., & Nielsen, N. A. (2005). Online grocery retailing: what do consumers think? Internet Research, 15(3), 335 – 352.