Recently, we’ve grown accustomed to having more products delivered to us at home. From what we eat, to the goods we buy from small, specialised businesses, to the furniture in our homes. We buy them online and expect their delivery shortly after that.
Food is no exception. Once confined to your favourite takeaway, the range of food delivery services is broadening out to replace what once would have involved a trip to grocery or convenience stores.
And to broaden out this area, grocers are turning to ‘fulfilment centres’ staffed by robots more than just warehouses to store food. These are distribution centres where highly-automated bots can pick, pack and ship grocery orders faster than humans.
Global grocery sales are around £8trn. Just over 5 per cent of those sales are currently online. Food is the most significant part of household budgets, so the ability to deliver quality at an affordable price is critical in the shift away from physical stores.
Here Ocado has the edge. It began as an online food retailer in the UK but is now selling its high-tech warehouse technology to other grocers worldwide, helping them to both keep track of millions of inventory items and to fulfil their customers’ orders.
Transport and logistics are critical here. With scale, food delivery companies with the right capabilities can serve us faster and more efficiently.
In China, Meituan has both the distribution infrastructure and high order numbers, making it cost-effective to move beyond prepared food into grocery and convenience offerings. Rappi, a Colombian on-demand delivery start-up, hopes to replicate Meituan’s success in Latin America.
Another company using its scale to sell goods online is the home furniture retailer Wayfair. Its niche in home and efficient operations give it an edge over the large online platforms.
Not every business will have the scale to embrace online retail on its own, and that’s where companies, such as Shopify, can give small businesses the tools they need to build a website, sell products online, distribute goods and services and process invoices.
Similarly, Zalando helps fashion retails to sell their products online. Consumers are able to choose from a large selection of brands on its platform, with the brands benefiting from bigger pools of consumers and lower logistics costs.
As consumers, we are rarely exposed to the effort that goes into ensuring that purchasing and receiving goods is a smooth and pleasant process. The companies held in Scottish Mortgage are working hard at transforming commerce to make it more efficient, affordable, and enjoyable for the consumer. And isn’t that what retail therapy should be all about?
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