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contactless pickup economics
Just got back from doing my monthly shopping. Still impressed by the automated pickup boxes and curbside delivery, which made everything so much more efficient (for the customer at least).
Does anyone know if this stuff is actually cost effective for companies? It must suck up a tremendous number of man-hours compared to just sticking stuff on a shelf, which they still have to do anyway; some poor guy spent a good 15 minutes rolling carts of stuff out to my truck and even helping me load. It never took off before wuflu, but was that just inertia or because it didn't make financial sense?
Some well-managed companies like Costco didn't do it at all, but that might reflect their "lure people into the store with loss leaders" business strategy more than any direct cost-benefit analysis. Others like Home Depot went all-in on no-limits free shipping which must be costing them a fortune; I recently bought several breakers and conduit fittings, and each showed up separately in individual Christmas present-size boxes.
Was there just a bunch of panicked malinvestment in 2020 on the assumption that "the future is contactless, Do Something or Amazon will eat you"?
I don't know if it's economical, but I find the whole thing (delivery and pickup) to be frustrating and unappealing.
The first time I tried delivery for groceries, they didn't deliver several of the items I ordered and (a much worse sin in my books) they replaced several of my items with similar ones. This angered me: I didn't want those ones, I wanted the ones I ordered! I don't like that brand! I don't like trying new things! I don't like paying for items I did not select!
I learned that you have to manually un-select the option to replace items with similar ones if the ones I ordered aren't available. The next few times I did delivery I made sure to turn that off, and inevitably on every order 1-4 items would be missing because they weren't available. Which made it impossible to plan meals, since I couldn't be sure I'd have all the ingredients. I'd much rather go to the store, pick out the ones I want, and adapt to shortages while I'm there and can change meal plans.
I recognize that my feelings on this are a bit "Old Man Yells at Cloud", but I liked things better the old way! When people had fewer options!
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I remember stores offering curbside pick-up for roughly $5 prior to the pandemic (in Canada). I think Loblaws and Walmart were rolling it out. They took out some handicap parking spots and replaced them with pickup spots, lol.
I'd imagine the cost of an employee picking items is going to be less than that for most orders. The costs of bagging/checking out are already baked in. So I don't think it's uneconomical.
If a chain were to be completely curbside pickup, it would be extremely economical, though. We're talking a much smaller footprint, tiny parking lot. So the costs to set up and maintain the business will be a lot smaller. You can optimize the layout for picking. You get to do first in, first out. You'd be saving a lot on spoilage. You'd be saving a lot from theft.
Right now, in a regular store, it probably takes 5 minutes for a worker to fill a simple order, especially if you have products at opposite ends of the store. Many stores are laid out in a fashion to get the customer to have to go through it, and spend longer, hoping they'll buy more stuff. Items are placed in certain areas to influence what you grab (name brands and new products at eye level).
With a store optimized for picking, you'd have multiple people filling a single order, just different parts of it (frozen/refrigerated/bulk/produce/dry goods/etc). Popular items would be grouped together. You could get the picking time to a total half a minute for a simple order. A half dozen employees should be able to run a high traffic outlet with little issue. The labour cost (in Canada, with a ~$15/hr wage) would be $90/hr, then all the other costs (payroll taxes, benefits, insurance and such). You're looking at a max of $150/hr in labour to have a capacity to fill roughly 500 orders each hour (though it largely depends on the average order size; if all orders are small, you'll be able to do over 700 per hour; if all orders had hundreds of items, you're looking at <100). So maybe an average of 30 cents per order, in labour costs. And you could probably get that down even more with some automation, conveyors, etc. But it's going to get more and more expensive, at least upfront, to get the per order picking time down much further.
Worst case scenario would be taking each employee 1 minute to fill their part of an order, for a total of 6 man-minutes per hour. You're getting 60 orders done an hour. You're coming in at $2.50/order. This is likely close to the cost grocery stores are paying right now for offering curbside pick-up.
Your labour costs in other areas would remain the same or drop. For stocking shelves, you'd just be stocking the picking area. No time wasted on product presentation, rotating product, price labeling, price checking, etc. Nobody in the checkout line holding up other customers. Don't have to worry about a lack of cashiers becoming a bottleneck. No need to train cashiers. Every employee can be trained to pick, and if things get exceptionally busy, you can pull people from one job and toss them on another. If it's Christmas and everyone is buying a turkey, you can throw an extra person in the fridge.
Your labour costs should easily be less than the average grocery store, while having the capacity to serve more people per hour, and those customers not being frustrated by crowds, lines, things being out of stock (since hopefully the system would prevent out-of-stock items from being ordered). You'll save a ton of money on utilities, as you're not battling with keeping food cold and customers warm. You'll save a ton on the cost of the property, as you won't need substantial parking (half your lot will probably be employee parking), and you can have a drive-thru to help get customers through faster (with a couple employees that just load vehicles up? This could be the more expensive part, but likely less than cashiers). Smaller building (easily less than half the size).
With those Amazon cashless store, you're really only eliminating the cashier. And that's coming at the high cost of the system required to monitor a customer's shopping. If some tech has to step foot in that store once a week, that's likely wiping out the savings from not having a cashier. And the stores I've seen (from photos/videos online) are pretty small, more akin to a convenience store, with a small selection of products. High volume isn't going to happen.
With a store that only does curbside, assuming they have enough volume, it may be possible to do free delivery and still be competitive with other stores. Especially if it's scheduled rather than on-demand. It seems most delivery gig jobs are doing 1 delivery per trip, which is horribly inefficient. But I think the delivery side comes with far more headaches; people not answering their door and claiming an order never came, drivers having to deal with long driveways, gates, and other shit that increases their time. Apartment buildings, too, with needing to get buzzed in and take an order up. An order delivered to the top floor of a building would easily wipe out any profit. The points where employees interact with customers are almost always a bottleneck, and reducing those as much as possible will save a ton of money.
We need to bring back milk doors. It would decrease delivery times significantly, making it cheaper for customers and businesses.
New business idea; Mr Venture Capitalist, what we'll do is use billions of your money to begin offering free installation of 'drop boxes' in high and middle income communities. In exchange, we control access to this box (we'll sell it as a safety feature, so people can't shove unwanted shit in there, or steal stuff). We'll make deals with various companies (UberEats, Amazon, FedEx etc) to pay us to access these boxes for delivery. When something is put in it, the homeowner is notified on their phone. Hell, we'll even put some cameras on it so they can see. For companies like Amazon/FedEx, they wouldn't have to charge less for delivery, as the selling point is that the customer's package is safely delivered and can't be stolen; FedEx and Amazon will save money on the time spent delivering (especially FedEx from having far less 'delivery attempts') but also on 'lost/stolen/damaged' packages that they might have to fork out for. For companies like UberEats, they may be able to pass some of the savings to their customers, increasing the frequency of ordering.
And there's big savings in not having their customer service deal with as many complaints (especially from scammers). We can simply share video with Uber/FedEx/Amazon when a claim of lost/stolen/damaged delivery is made.
The next step would be to get into lower/working class neighbourhoods. These won't be as profitable, so we'll need to conjure up a media campaign claiming that it is discriminatory that there aren't boxes like ours in
low incomeBIPOC communities. Then we angle for the government to give us subsidies/grants to fund the roll out of these tolow-incomeBIPOC communities. We won't include all the fancy tech that the middle/upper class gets, though. This is because we're moving away from providing value for other businesses, since our 'drop boxes' are now becoming the norm. They can't not use it.We're also going to need to do some regulatory capture. We'll push for regulations on our boxes, that just happen to conform with the exact specifications of our boxes. This will make any up-and-coming competitors have to toss out all their shit and start over. We'll also push for increased liability for box providers, and then have a department that will focus solely on finding cases where our competitors have failed to comply with regulations, so they get hit with fines or lawsuits. Feed some stories to the lesser press about babies being killed in 'unsecure' boxes of our competitors or something.
Anyways, once regulatory capture is complete, we're going to need to turn our boxes into a permanent piggy bank. What we'll do is convince the government that our 'drop boxes' are actually a 'public utility', and that every company should have access to them. We'll now just collect a fee that goes to 'maintaining' the box network, while 'retailers' (which are companies we'll start on the side, primarily in upper and middle class areas) sell access to the network. This will further destroy any competition we may have had.
Then we convince Elon Musk to buy the business for $694.20/share. Then get our press buddies to say how that's fascism. Our buddies in government will then nationalize our boxes, paying us a premium to keep it out of the hands of literal Nazis.
This increased efficiency of delivery will allow our curbside grocery outlets to offer free delivery. We'll be able to take this customer facing businesses (and as I said before, interactions with customers are a bottleneck) and turn it into a business that has absolutely no customer interaction (other than our social media team, who will mostly just make fun of customers for being stupid, which will somehow make the average customer feel smarter and want to use our business).
Oh right, and one detail I forgot; our proprietary 'drop boxes' will be the ideal size the fit 'grocery boxes' we use at our store to put groceries in. We'll own the company making these boxes, out of some 'bio-friendly' material, and we'll get politicians to pass a low making these particular boxes the standard for delivery (or boxes that are certain fractions of the size), forcing all companies to buy these boxes for delivery, except in the cases of oversized packaged (which we'll push the government to punitively tax the living shit out of, to encourage more companies to think inside the box). We'll also collect fees for picking up these boxes, cleaning them, maintaining them, replacing them. Maybe a deposit program. Or we can convince people to put recyclables in them, then convince the government to give
I feel like I just witnessed the origin story of a supervillain.
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