Identifying the Success Factors in E-Grocery Home Delivery

ry sucess © 2001 Emerald. Reprinted with permission from International Journal of Retail and Distribution Management 29, No. 4, pages 156-163.

Identifying the success factors in e-grocery home delivery

Mikko Punakivi and Juha Saranen

Introduction

One of the most significant obstacles for the growth of e-commerce in general and the egrocery business in particular is the lack of a suitable logistical home delivery infrastructure. By this we mean a logistical system including control of the information flow and physical logistics. The present delivery systems, such as postal or courier services, are not suitable when considering the needs in the grocery business. Some examples of the issues that the e-grocery home delivery operation must deal with are different preservation temperature requirements, tight order-to-delivery lead times and delivery time windows as well as potentially huge future volumes. The decision-makers of the largest grocery retailing companies in Finland share the opinion that e-grocery may take over around 15 to 20 per cent of the Finnish grocery market by 2010 (Heiskanen, 2000; Nurmi, 2000). These figures are similar to the estimations of European retailers (Powell, 2000) in the grocery industry. However, there is no shared opinion on operations model of e-grocery or the home delivery service concept (Tinnila and Jarvela, ¨ ¨ 2000). The logistical services created for egrocery have been started by means of trial and error. For example, in Finland there are approximately 20 e-grocery shops, most of them operating next to a traditional supermarket where picking is both costly and inefficient (Kamarainen et al. 2000a). The ¨ ¨ ¨ actual home delivery transportation is usually an additional service provided using third party service providers. The home delivery service providers are using several different delivery concepts and service levels defined by e-grocers. By service levels we mean, for example, the delivery time window offered for...