By Rogier van Rooij
It will save you money, it will save you time, and it will save the environment. The Dutch startup Picnic is about to go into business, and it has the potential to really disrupt the grocery market.
Picnic is a concept that has been under development for the past three years by a team of 30 specialists. Backed by four investors, it tried to come up with a new business that would be able to gain a position in a market dominated by giant companies in the grocery market. After having conducted a survey that made clear that a whopping 80% of consumers would like to have their groceries delivered to them, Picnic initiators wondered why the share of actually delivered groceries is still very low.
Michiel Muller, a Picnic cofounder who was involved in establishing some other successful companies, said in a broadcast of current affairs program “EénVandaag” that they found two obstacles. One is that consumers are in general unwilling to pay for delivery costs. The second obstacle is that consumers don’t want to have to wait at home for a couple of hours for their groceries to arrive, as a result of inaccurate and inconvenient delivery times.
Picnic seems to have gotten rid of those obstacles. Customers can choose when they want to receive their order, and the company promises that the actual delivery will take place within half an hour of the agreed time. Concerning price, Picnic aims at doing more than just eliminating delivery costs. It says it will be cheaper than all other supermarkets that are currently active in the area. No matter which product, for every item they sell, the company guarantees the lowest price.
So, how is this possible? Picnic is organized in a completely different way from conventional supermarkets. Where these competitors have to invest in physical stores and maintain them, Picnic’s main concern might be keeping their app up and running — because that’s where the Picnic’s customers “go.” They don’t go to the store; they just open their Picnic app on their smartphones. This is also the reason why delivery tends to come with additional costs for many other supermarkets — they have to operate both the conventional and the delivery system, while Picnic just focuses on the latter.
An additional benefit of the new formula might be waste reduction. Conventional supermarkets have to buy their goods in advance. Suppliers deliver a quantity to the them based on expectations about how much will be sold, but in reality, these expectations often turn out to be a bit too optimistic, resulting in a substantial annual waste of (primarily fresh) food. Picnic doesn’t need to order in advance. It knows for each day exactly how much of each product is demanded, and simply orders that quantity from the suppliers. This is not only great for the environment; it also reduces the costs of operating this kind of business, making it even more competitive compared to the conventional supermarkets. So, no waste (or close to no waste) on Picnic’s side.
However, this might also shift the waste problem to the suppliers, which will be confronted with less predictable demand. Therefore, I am not sure yet whether the amount of waste in the whole product chain will be substantially lowered as well.
The great thing is that the company decided to use electric vehicles for all deliveries. Picnic seems to be operating commercial utility vans from the company Mega, which states its EVs have a range of roughly 110 kilometers. That’s not too much, but considering the fact that Picnic operates only in densely populated areas at the moment, the range should be enough to distribute the limited load of the car over all of the customers.
Groceries are put in crates, which perfectly suit the modified cargo space of the Mega EVs.
Currently, Picnic is running a pilot project that involves 150 households, all within the city of Amersfoort, the Netherlands. Sometime this month, the startup will open up its services to all inhabitants of the city. If this turns out to be a success, the company will expand further.
Analysts are divided about the future of Picnic. There is skepticism because the startup will have to compete against enormous established grocery companies, which already have experience with delivery services. Moreover, the market for online grocery shopping is relatively small and the average grocery shopper is unaccustomed to the way Picnic will serve them. But there is also optimism. Picnic seems to have a lot of knowledge and some features consumers might really fall in love with. Books, clothes, and consumer electronics are just a few examples of things that are already for a large share bought online. Groceries might be the next big thing that will shift to the digital domain, and in doing so, might well reduce the overall environmental impact of the industry.