BY DAVID MALONEY, CHIEF EDITOR
SYSTEMS INTEGRATION
Strategy
MOST OF US DON’T LIKE
to shop for groceries. We do
it because we need to eat, but we’d
much rather spend our time doing other
things.
The consistent ordering patterns of grocery
shopping—people tend to buy similar products each time
they go—would appear to make the segment ripe for
e-commerce. Yet e-grocery has never really caught on. A
few operators in large markets have been marginally successful. But for the most part, profit margins have been too
thin to make online grocery fulfillment viable.
That’s largely because grocery stores are one of the few
businesses in which consumers provide most of the labor.
Not only do shoppers assemble their orders themselves,
but in many cases, they also process their own payments in
self-checkout lines.
This model is hard for e-grocers to compete with because
they have to pay people to pick and pack orders. Although
some consumers have been willing to pay extra for the convenience of having their orders assembled for pickup, no
one has been able to provide an e-grocery service at a cost
that’s competitive with the traditional grocery store model.
At least until now.
POISED FOR TAKEOFF
Enter Takeoff Technologies. Takeoff is a Boston-area startup that believes it has hit upon the elusive e-grocery solution, with a model that works for both the consumer and
the retailer. It will put its concept to the test later this year
when it opens a first-of-its-kind operation in conjunction
with an unidentified grocery retailer near Boston.
Takeoff’s model calls for the development of micro-fulfillment centers that use robotic shuttle technology to
assemble customer orders, making fulfillment quick and
relatively cheap. The micro-fulfillment centers would be
located in high-traffic urban locations, making customer
pickups convenient and reducing last-mile delivery costs
for those wanting door-to-door service. (The cost of delivery from a warehouse to the customer’s doorstep is something that has plagued e-grocers in the past.) Online orders
would be available for pickup within 30 minutes of order
placement, which means a customer could order groceries
online before leaving the office and pick them up on the
way home. As added enticements, customers would have
the option of curbside pickup and would pay no extra fees.
At the heart of the Takeoff model is the Knapp OSR
Shuttle, an automated storage system used to house and
deliver products quickly to workers at the micro-fulfillment sites. Automating most of the picking duties creates
the economies needed to make the e-grocery model viable,
according to the companies. The system is able to fill orders
with five times less labor per item sold than traditional grocery operations can. And it does it with over 99.9 percent
accuracy, according to figures from Knapp and Takeoff.
Among other benefits, the micro-fulfillment centers
are designed to make ultra-efficient use of space. Alfredo
Millan, who heads engineering for Takeoff, reports that the
Thought for food
A new model for
grocery distribution
has the potential to
alter the way we shop
for the things we eat.
