While ecommerce was initially thought to be a boon during the coronavirus crisis, with stores and malls in lockdown, execution is proving to be anything but as a growing chorus of drivers and facility associates complain about the danger of exposure. Workers at Amazon, Instacart and Whole Foods staged protest walkouts.
While most of retail is in the doldrums due to coronavirus, grocers are seeing explosive growth, and e-grocery has been accelerating rapidly due to shutdowns. Scott DeGraeve, COO and co-founder of Locai Solutions, and Doug Baker, VP, industry relations at FMI, discuss what they’re seeing across the sector, and how it will change.
Grocers may be ringing up major sales from the crush of store and online panic buying due to the growing coronavirus threat, but the market will be painful after the situation abates as demand falls and supplies are overstocked, a Barclays analyst said in a research note.
Amazon has temporarily suspended fulfillment of non-essential items through FBA through April 5, due to high coronavirus-related demand. Meanwhile, retail and DTC brands are closing their doors, while UPS assures customers their deliveries are safe, and major e-grocery delivery app downloads are setting records daily.
Midwest grocery chain Hy-Vee is moving fulfillment of online orders from a network of four fulfillment centers back to its retail stores. The facilities, in Eagan, MN, Des Moines, IA, Omaha, NE and Kansas City, MO, will be closed later this month. The network and logistics made same-day fulfillment difficult, executives said.
Panic buying continues to cause empty grocery shelves due to the coronavirus panic, with heavier clusters in affected states as grocery retailers are starting to ration supplies. Same-day delivery providers Instacart and Postmates have expanded a “leave it at my door” option as more spooked shoppers opt for no physical contact.
Micro fulfillment centers are all the rage in e-grocery – small, highly automated systems that use robotics to fulfill online orders in 1 to 2 minutes. Neil Stern of McMillonDoolittle talks all things MFC in this latest MCM CommerceChat podcast. He’ll also lead an MFC session at Ecommerce Operations Summit (4/14-16, Orlando).
Amazon’s hunger for a bigger bite of the $839B grocery market was evident in the opening of the first checkout-less Amazon Go Grocery store in Seattle. The 10,400-square-foot space, roughly 5x the size of an Amazon Go store, stocks 5,000 items. Tech startups AiFi and Grabango are reportedly working on systems for competitors.
Evolv Ventures, the investment arm of CPG giant Kraft Heinz, has joined a $110 million funding round in automation and robotics firm Fabric with an undisclosed investment, keeping an eye on ways to tap into Fabric’s expertise and capabilities in ecommerce and applying it to the B2B world.
Amazon is reportedly using a micro-fulfillment center solution from Dematic at its first grocery store not named Whole Foods outside Los Angeles, sending a loud signal to the rest of the market that an MFC capability is critical to success and maintaining market share in the red-hot e-grocery sector.