Picnic boss Michiel Müller said online deliveries would be “significantly” boosted by AI.
Advances in artificial intelligence are set to spark a “massive” boom in online grocery delivery, according to the head of Picnic, a Dutch app-only supermarket that is rapidly expanding into Germany and France.
Picnic has revolutionised the Dutch supermarket industry with its free delivery service within 20 minutes, made possible by extracting efficiencies from vast amounts of data.
The company is already using AI for a wide range of tasks, CEO Michiel Muller, 59, explained at the company's 43,000-square-metre distribution centre in Utrecht, central Netherlands.
“For example, we predict how many bananas we will sell in three weeks' time, we predict what will happen when the weather is good or bad, and we do the whole route planning,” he told AFP.
As technology improves and data sets expand, predictions will become more accurate, further reducing food waste and providing even more precise time frames to customers, he predicted.
“Let's remember that 60 years ago there were no supermarkets, there were just small stores, so there is always a movement towards new technology and new ways of delivering goods.”
“Supermarkets will remain, that's for sure. Stores will remain, but the online part will grow significantly,” he said.
Picnic has developed its own in-house software to fine-tune every element of the delivery process, from handling and packing inventory in the warehouse to the notoriously complex “last mile” of delivering goods.
The warehouse has 14 kilometers of conveyor belts.
Delivery times are calculated with great precision, with 300 data analysts and 300 software engineers at Picnic headquarters crunching reams of information.
“We know exactly how long it will take to walk around the vehicle, and if it's dark outside, we add six seconds to the delivery time,” Mueller said.
Unlike a physical supermarket, all ordering is done through the app, so the business knows exactly what needs to be ordered and delivered, and how long it will take.
The company estimates that this will result in seven times less food waste than a regular supermarket.
“There is not a single baguette ordered that is not delivered,” said Gregoire Borgolts, Picnic's head of operations in France.
Drivers of the company's ubiquitous white picnic vans are evaluated after every trip based on their driving, including whether they are going too fast around corners.
Each delivery is meticulously tracked.
The level of automation
The huge investment required in bespoke software and the company's distribution centers, which are equipped with 14 kilometers (9 miles) of conveyor belts, made it difficult to turn a profit.
Sales are expected to increase from €10 million in 2016 to €1.25 billion in 2023, while employee numbers will jump from 100 to 17,000 during the same period.
But Mueller said the company lost “around 200 million euros” last year due to its expansion in Germany, including opening airports in Berlin, Hamburg and Hanover.
The company finally made a gross profit in its home market this year for the first time since it was founded in 2015. “It took us eight years to become profitable in the Netherlands,” he said.
Earlier this year, the company raised €355 million from investors including the Bill & Melinda Gates Foundation and German retail giant Edeka to fund its expansion into Germany and France.
When it comes to profits, it all comes down to technology, Mueller said.
The company is expanding into Germany and France.
“Essentially, the level of automation determines the level of profitability,” he said.
“Today, about 30 percent of jobs in the Netherlands are automated. In a few years this will increase to 100 percent,” he said, adding that Germany and France were likely to follow suit soon after.
So far, Picnic has mainly operated in the northern French city of Lille and the outskirts of Paris, where central Paris is “a big opportunity but also where the traffic is the worst,” Mr Borgholz said.
“We are going to Paris, but we have to find the right time.”
Muller has ambitions to expand the company even further: “Well, there are 183 countries in the world,” he jokes when asked where Picnic will expand next.
But for now, he said the company would look further afield after consolidating its activities in Germany and France, and did not rule out expanding outside Europe.
© 2024 AFP
Source: Dutch app supermarket boss eyes tech boom in online delivery (June 23, 2024) Retrieved June 23, 2024 from https://techxplore.com/news/2024-06-dutch-app-supermarket-boss-eyes.html
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