Click & collect will account for every second online grocery order in the EU by 2017 but there are plenty of other fulfilment options that can maximise profit for European retailers, according to new research.

The study by analyst group Research Farm, entitled Online Grocery Retailing in the EU 2014, highlights four different strategic options available to retailers.

  • Collaboration around distribution centres. As hypermarkets and shopping centres increasingly become pick-up points for shopping, Research Farm suggests that they could evolve into warehouse hubs to bundle orders from various retailers to deliver in a single trip into major conurbations. Multichannel players such as Ahold, Casino and Tesco were highlighted as retailers with the potential to provide this service.
  • Logistics interleaving. Most online grocery delivery vans are returning to their warehouses empty, which Research Farm describes as "shipping air". The analyst group moots the idea that these vehicles could pick up non-food returns, goods from suppliers bound for the distribution centre or use the spare capacity through collaboration with other sectors.
  • Third-party logistics providers could group single trips into closed loops. Box schemes work on a smaller scale in Italy, Spain and Scandinavia, where organic farmers markets move online. Research Farm asks whether this collaborative effort can be transferred to a bigger stage.
  • Bring food service deliveries and online grocery together. Various takeaway delivery services demonstrate how home delivery of relatively low-priced, low-margin, perishable products can be made profitable. Research Farm argues that a retailer could partner up with a company like Domino's Pizza and bundle trips to the same street and take a delivery van off the road.

Adding to this idea, director at Research Farm Daniel Lucht commented: "In the UK, Tesco and Giraffe could form an ideal partnership. Tesco could start a trial to deliver Giraffe takeaway meals with the online grocery delivery fleet.

"There should be a significant shopper segment for which such a service, to receive all food needs from a single touch point in a single transaction, would be an enticing option."

Research Farm's report said that online grocery home delivery has typically been about route optimisation, better load factors and utilisation, high average order values and managing time slots, with the end goal of keeping costs down and becoming profitable.

With that in mind, what do you think about the above suggestions? Feel free to share you ideas below, or via Twitter @EssRetail.

http://www.researchfarm.co.uk/