As more food retailers enter into the online shopping arena, perhaps the biggest challenge they will face is delivering orders to consumers' homes.
Consumers who order groceries online want them delivered no later than the next day, usually within a fairly narrow time window. How does a retailer efficiently plan those deliveries so that they expend the least amount of fuel, labor and time?
For Grocery Gateway, which delivers online orders to about 15,000 customers in the Toronto area, the answer has been to employ routing software from Descartes, Waterloo, Ontario. (Descartes acquired the application when it purchased Cube Route, Toronto, a year ago.)
The Web-based system enables Grocery Gateway, the online division of Longo Brothers Fruit Markets, Mississauga, Ontario, to make up to 800 deliveries per day using 30 delivery vehicles during its peak winter season, according to Stephen Tallevi, general manager of Grocery Gateway. Consumers are charged $9.95 for a home delivery; businesses are charged $14.95.
Grocery Gateway, which offers 8,000 stockkeeping units, guarantees delivery within a 90-minute time window — a guarantee it now meets 97% of the time, said Tallevi. The routing software improved the on-time delivery performance by 14% after it was installed last year, while increasing the number of deliveries per paid hour by 12.4%.
Grocery Gateway fulfills orders out of five of Longo's 15 stores during evening hours for delivery the following day. The Descartes system maps out each day's deliveries, incorporating Grocery Gateway's delivery parameters, such as allowing “leeway for emergencies en route,” said Tallevi.
The system also allows a driver to signal completion of a delivery by pressing two buttons on a GPS-enabled mobile phone. The GPS feature enables Grocery Gateway to contact shoppers to indicate that a delivery may be delayed. It also allows the service to send out a second van to pick up orders from a disabled or delayed van.
Grocery Gateway employs the system on a software-as-a-service basis, paying for a certain volume of deliveries made. Tallevi did not disclose the cost, but said the service has earned a return from savings in gas, labor and delivery-van leasing costs, which are based on distance traveled by the vehicles.