DekaMarkt reaches customers at home with well thought-out last-mile strategy

DekaMarkt currently has 79 stores and recently announced that it had reached agreement on the acquisition of 19 Deen stores, after which DekaMarkt will have almost 100 stores in the Netherlands. DekaMarkt's fast growing delivery service is managed from the Digital Fulfilment Center in Velsen-Noord.

Outsourcing not an option

DekaMarkt does the home delivery of groceries with its own vans and its own staff. "Outsourcing the fulfillment process and the last mile is not an option for DekaMarkt," states Thijs. "The online food retail supply chain is relatively complex. Items have to be stored, picked and transported at different temperatures, there is a limited shelf life for items and it must be possible to collect the packaging at the door and deduct it from the amount owed; this is simply a bridge too far for logistics service providers.

This will change, food is a market with enormous potential, but for the time being food retailers like us have to organize the fulfilment process, including the last mile, themselves. The advantage is that we have complete control over the process and the moment of delivery to the customer. That very moment is a very important touch point that has a major influence on the satisfaction and loyalty of our customers.”

Online retail in a split

Fueled by the corona crisis, the market for online groceries has virtually exploded and food retailers such as DekaMarkt have to pull out all the stops to steer this shift in logistics flows in the right direction. “The main challenge is to make it a future-proof business model,” says Thijs candidly. “Instead of customers coming to the store and doing their shopping themselves, we now do this for them; we collect the groceries, pack them and bring them home. There is a considerable cost involved, but the willingness among consumers to pay for this is nil. In addition, the market expects us to deliver faster and faster and to expand our range further. This is a split that we and other food retailers are in. I am convinced that there are solutions, but they are still relatively far away in time for several reasons.”

Picking from stores not scalable

Thijs and his colleagues have taken several steps in recent years to make the fulfillment process more efficient and thereby reduce costs. First of all, the pick and pack process was professionalized and housed in a new central distribution center. "In the beginning we were still picking online orders from the stores, using Centric's software. But at a certain point this became too disruptive for the regular shopping process. Picking orders from existing stores is also insufficiently scalable. Currently, all online orders are collected in the new Digital Fulfilment Center and packed in delivery crates and refrigerated/freezer boxes. From there, our delivery drivers take them directly to our customers or they go by truck to one of our hubs, to be delivered from there by our delivery drivers..”

Automation required

Significant efficiency gains have already been made, but according to Thijs, much more needs to be done to make the fulfillment process and the last mile truly future-proof. "The pick and pack process at DekaMarkt, and also at all other online food retailers in the Netherlands, is still largely carried out manually and is therefore very costly. To make it cost-effective, you need to further automate and mechanize, and scale is essential for that. We also still have steps to take in the last mile and among other things we need to further increase the efficiency of our delivery vans. For example, we see opportunities to further reduce the driving time between deliveries. We are going to implement a dynamic time slot system for this, which will encourage consumers to choose the delivery times that, in combination with other orders already placed, are the most optimal at that time.”