eGrocery – why automated grocery warehouses are the future of online food retail

The past few years have seen an acceleration in demand for on-the-day or next day food delivery services. This has boosted the already emerging eGrocery sector. However, there are some significant differences between the traditional grocery store and eGrocery that make it an entirely different proposition.

eGrocery retailers must attend to the order picking themselves, which can come to a large number of items as most customers order more online than they would buy in-store. Also, picking time eats into profits; selecting and processing typically has an operating margin of minus 15%.

Therefore, the challenge for any eGrocery operation that wants to maximize profitability is to be able to deliver a highly efficient service. This means building out solid infrastructure for delivery: an easy-to-use online ordering platform, an efficient order picking and packing system and a rapid delivery service.

Below are five ways in which automated grocery warehouses can help eGrocery firms achieve these.

1. Reduce human error for greater order accuracy

Mistakes will be made if floor workers are tired or distracted. To avoid this and to safeguard workers against potential injuries, online grocery warehouses should be designed to eliminate as many laborious manual tasks as possible.

A fully automated grocery warehouse, which uses an Automated Storage and Retrival System (ASRS) in combination with a digital Warehouse Control System (WCS), can make this happen.

Picking error rates are reduced greatly by the ASRS, which in turn means fewer customer complaints and returns to deal with, higher approval ratings and more repeat orders for the eGrocery operation. In addition, an automated grocery warehouse’s consistently accurate order picking ability is a fantastic benefit for businesses who wish to maintain scrupulously accurate inventory data.

2. Accelerate delivery to meet changing customer expectations

The pandemic has brought seismic changes in demand and customer expectations – fast home delivery of a wide variety of products is now considered a matter of course, not an exceptional service. However, expansion into online business can quickly become chaotic.

Therefore, making use of a robotics based ASRS, such as AutoStore, greatly reduces the overall footprint of online grocery warehouse activity. The result is that a far greater number of orders can be processed at one time, allowing the business to scale operations.

Automation also makes it much easier to store goods separately. A common problem with traditional manual systems is that an order can be placed for an item that is in stock at the time, only for it to be missing when the time comes to pick it. The segmented storage of a robotic grocery warehouse means staff have a clearer picture of overall inventory levels and can, therefore, better determine what items are out of stock.

3. Optimize labor costs

The explosion in eCommerce activity has particularly strong implications for eGrocery. The average online basket size is 15 – 30 items and if all these are handpicked, the energy, time and labor costs add up massively. Given the staff shortages most markets are experiencing, an automated grocery warehouse is a powerful way to plug the gaps. They also save space, which means lower real estate or floor rent costs.

The Swedish surplus food firm, , gives us a real-life example of how it works. This leading eGrocer invested in an AutoStore solution after hitting peak capacity in 2021.

With 149 AutoStore robots, Matsmart enjoyed impressive results: namely a threefold boost on previous capacity, with 6,000 picked items per hour.

4. Increase operations in controlled and restricted environments

When storing groceries, certain goods need to be kept at different temperatures. As the operating temperature for AutoStore ranges from 0°C to 35°C, it is advantageous for an eGrocery operation because it can cope with, and indeed perform perfectly, in dramatic climatic changes.

In addition, a robotic grid based ASRS like AutoStore allows all available warehouse space to be used productively, no matter how small or unusually shaped. It means that a grid of intelligent order picking robots can be put to work, either in the back of an existing store or in city-based micro fulfillment centers. This is a great benefit, as maintaining them amidst high population densities can speed up the final delivery stage – “last mile delivery” – to customers’ homes and workplaces.

5. Improve energy efficiency

More and more customers want the products they buy to be sustainable and a growing number of  providers have responded to this. For example, AutoStore uses batteries in its robots that are both rechargeable and capable of producing energy on their own. Impressively, the energy used by ten robots is equal to that of just one vacuum cleaner.

Furthermore, since data-driven warehouse automation allows for greater visibility, store owners find it easier to see how long items have spent passing through the facility.

Early adopters will reap the benefits first and for longer

The eGrocery sector still lags behind other online retail markets, but those who adopt warehouse automation first will enjoy considerable advantages longest.

Put simply, automated grocery warehouses have brought tremendous returns and competitive advantage to others in eCommerce and there is nothing to suggest they will not work for eGrocery operations too.