The last mile is always biggest challenge for retailers and especially grocers. This talk talks to the different distribution models available and if a dark store fulfillment is a solution to scaling grocer home delivery.

1. Localized fulfillment centers, lower
picking costs and long-term
scalability

2. A bit of history…..A bit of history…..

3. 1913 2018
So what has changed?

4. In a word….

7. E-commerce Grocery is growing
§ The UK is a much more mature market for
E-commerce Grocery
§ 58% growth till 2021
§ US market is substantially larger than the UK
§ Even with 142% growth the US market will
be less than the UK in 2021
§ US market potential is massive
Source: IGD

11. In store picking dominates in the US
§ Challenges for picking in store for online grocery
§ Picking Accuracy
§ Out of Stocks
§ Store Crowding
§ Substitution process
§ Requires a dedicated storage space for picked orders
§ Active/Passive cooling

12. In-store
Picking
Dark Store
Semi-automated
Fully automated
system
4500 +

14. How does a customer get their groceries?
§ Mostly fulfilled by in store picking
§ Click and Collect
§ Customer does the last mile
§ Pickup from a Remote Location
§ Customer does the last mile
§ Home Delivery
§ Retailer does the last mile

15. The last mile challenge for Grocers
§ According to CBRE the last mile is really 6-
9 miles on average
§ Fulfillment and Last mile cost retailers
some 18% of sales
§ Over half of which is last mile
§ The challenge is how to get closer to the
customer while being efficient in fulfillment
costs

16. Grocery Supply Chain Models in a Digital Age

17. Central Supply Chain Model
Pure Play Online Grocers – Ocado in the UK
Producer Supplier Delivery Transport Consumer
Fulfillment
Center
Source: ocadogroup.com
Hub and spoke model
Making this work in the US is more
difficult due to the distances

18. Decentralized Supply Chain Model
Brick and Mortar retailer
Online / Automated Pick
Center
Online / In-store Picking
Producer Supplier Delivery DC Transport Store Consumer
E-commerce
Fulfillment
Center
National and Regional DCs (NDCs/RDCs)

19. Decentralized Supply Chain Model
Producer Supplier Delivery DC Transport Store Customer
E-commerce
Fulfillment
Center
Regional
E-commerce
Fulfillment
Center
Regional
E-commerce
Fulfillment
Center
Maintain Order Volumes ->

21. Ambient PTG Ambient GTP Chilled Frozen
Typical E-Com Fulfillment Center

22. Advantages of being Decentralized
§ Overcomes challenges of in-store picking
§ Pick rates
§ Substitutions
§ Out of Stocks
§ More options for supplying customer orders
§ At local stores
§ At local pickup points
§ Home delivery
§ Gets you closer to the customer and reduces delivery time and costs

23. The Future of Last Mile
§ In-house delivery
§ 3rd party delivery
§ Crowd sourced delivery
§ Automated delivery