Advances in artificial intelligence are poised to lead to a “massive” boom in online grocery deliveries, according to the head of Picnic, a Dutch app-only supermarket that is rapidly expanding into Germany and France.
Picnic has disrupted the Dutch supermarket landscape with its offer of free delivery within 20 minutes — made possible by squeezing efficiency out of massive amounts of data.
The company already uses artificial intelligence for a wide range of operations, CEO Michiel Muller, 59, explained at the company’s 43,000 square meter distribution hub in Utrecht, central Holland.
“For example, to predict how many bananas we will sell in three weeks. Or what happens when the weather is good or bad. Or to do the whole planning of our route,” he told AFP.
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As technology improves and data sets grow, forecasts will become more accurate, further reducing food waste and offering even more accurate time slots for customers, he predicted.
“Don’t forget supermarkets didn’t exist 60 years ago. You only had smaller stores. So there’s always a movement around new technology and new ways of delivering goods.”
“The supermarket will remain. That’s for sure. The stores will remain. But the online part will grow massively,” he said.
Picnic has developed its own in-house software to fine-tune every element of the delivery process, from processing and packing stock in the warehouse to the famous “last mile” of goods delivery.
Delivery times are calculated with extreme precision, with bundles of information gathered by 300 data analysts and 300 software engineers at Picnic headquarters.
“We know exactly how long it takes to walk around the vehicle, and when it’s dark outside, we add six seconds to the delivery time,” Muller said.
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Unlike a physical supermarket, every order is placed in the app, so the company knows exactly what it needs to order, deliver and how long it will take.
The company estimates that this results in seven times less food waste than in regular supermarkets.
“There is not a single baguette that is ordered and not delivered,” said Grégoire Borgholz, head of Picnic’s operations in France.
The company’s drivers in the ubiquitous white Picnic vans are scored after each trip based on their driving, even if they’ve gone too fast around corners.
“Level of Automation”
The huge investment required in bespoke software, as well as the company’s distribution hubs with 14km (nine miles) of conveyor belts, meant profits were hard to come by.
Sales have grown from €10 million in 2016 to €1.25 billion in 2023, with staff levels jumping from 100 employees to 17,000 over the same period.
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But Muller said the company suffered losses of “around 200 million euros” last year due to expansion in Germany — opening slots in Berlin, Hamburg and Hannover.
For the first time since its inception in 2015, it finally made a gross profit this year in its home market. “It took eight years to be profitable in the Netherlands,” he said.
Earlier this year, the company raised 355 million euros from investors to fund its push into Germany and France, notably from the Bill & Melinda Gates Foundation and German retail giant Edeka.
In terms of profits, it all depends on the technology again, Muller said.
“Basically, the level of automation determines our level of profitability,” he said.
“Today, we are about 30% automated in the Netherlands. We will grow to 100% in a few years,” with Germany and France following shortly behind.
So far, Picnic operates mainly in the northern French city of Lille and the wider suburbs of Paris. The center of Paris is a “great opportunity, but it also has some of the worst traffic jams,” Borgoltz said.
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“We will go to Paris but we have to find the right time.”
Muller has ambitions to expand the company further. “Well, there are 183 countries in the world,” he jokes when asked where Picnic will expand to next.
But for now, he said the company would consolidate its operations in Germany and France before looking further afield – without ruling out a push outside Europe.
Source: AFP