Online grocery shopping: the challenges of chilled goods distribution

Since 2020 the food retail sector has seen a real upheaval fuelled mainly by two things: changing consumer habits and changes in delivery methods.

The increase in online shopping has been a real game changer, as the figures show:  in 2021 supermarket online shopping, all goods included, accounted for 11.7 billion euros of sales in France. Click & Collect alone accounted for €10.6 bn, and the country has a total of 6,467 drive-in collection points, all supermarkets included.

Nevertheless, we note that the choice of chilled goods offered is struggling to develop and today still lags behind. In fact on average in 2021, a Click & Collect service offered 412 chilled items compared to 305 in 2016. Out of a total average offer of 6,137 items in France in 2021.

Compare that to the average non-online shopping basket, which consists of 60% dry goods, 30% chilled goods and 10% frozen items.

In e-commerce, chilled goods fall into the following categories:

• Fruit and vegetables;
• Cooked meats and deli;
• Cheese counter;
• Butchery;
• Fish and seafood;
• Bread and pastries.

So why are we seeing such a reluctance to expand the chilled goods offered on online shopping platforms?

Below we try to throw some light on the different issues involved in selling chilled goods online.

Nous allons donc tenter de faire la lumière sur les différents enjeux de la distribution des produits frais dans le e-commerce avec cette etude.

Commercial challenges

The purchasing experience value

Customers like to be able to assess the colour and size of fresh goods and their visual quality, which inexorably declines over time.  Seeing, touching and smelling a product, being in contact with is part and parcel of the purchase experience and customer journey. When shopping from home, through a screen, the sensory aspect of this experience is lost. The screen therefore becomes an obstacle to the customer’s satisfaction and involvement.

The exact opposite of what happens with cumbersome, heavy goods such as washing powder and packs of bottles of water, where buying in store in an inconvenience. Being able to order them online saves the consumer a “chore“.

The hour worked value

According to specialist retailing publishers Dauvers “this refers to the value of goods expressed in euros and prepared in one hour by an employee”. It is a notion that is used to determine the profitability of a given type of order picking. For example click & collect where the items are picked in a warehouse or from the store. “The higher the hour worked value, the lower the cost of picking” and the more profitable the picking method concerned.

The aim is therefore to increase the value of the goods handled by the order picker whilst also increasing the number of items handled. Therefore the most appropriate and profitable course of action is to work on the product mix. Multi-packs are therefore favoured, which explains why it can sometimes be difficult to order small quantities/volumes of a product online.

This therefore raises a real problem when it comes to chilled goods, which cannot be stored for as long as dry goods.  As they are subject to use-by dates, chilled goods have to have the shortest possible journey and sale time, and be protected from temperature variations.

 Stocks are therefore limited to minimise wastage.

Selling multi-packs of chilled goods, therefore means:

• increasing stocks and the risks of wastage;
• and, as a result, making them less profitable.

This partly explains the relatively small number of chilled items sold online by the big supermarket chains.

Seasonality in different sectors

The food retail year is punctuated by different annual events: Christmas, Easter, summer, etc. These different periods of the year see peaks in orders for certain types of products, in particular chilled and frozen goods. Procurement quantities therefore fluctuate. This has a direct impact on the choice of picking process for chilled goods and on the picking infrastructure.

Structural challenges

Setting up the infrastructure

Handling chilled goods requires the creation of an ecosystem that ensures the cold chain is not broken. Temperature-sensitive goods are stored in warehouses and moved in lorries, both of which must therefore be equipped with solutions enabling the cold chain to be maintained in temperature-controlled environments.

An unbroken cold chain means that a product refrigerated at the earliest possible stage remains continuously cold and therefore safe.  This prerequisite was outlined by Monvoisin in his Refrigeration Tripod – see extract below :

Energy optimisation is therefore called for. The choice of where to position a refrigeration unit in a warehouse can therefore be a strategic issue. The same goes for the volume of the infrastructure.  This will be determined by the quantity of orders expected and known consumer habits. For the crux of the matter remains structural profitability: refrigerating a cold store that is empty 200 days out of 365 is perhaps not the most profitable approach.  So, just as we can have hybrid order picking, is it also possible to have hybrid cold storage ?

Choosing the order picking process

Today there are two different ways of preparing online shopping orders: picking in a warehouse or in store. There are also hybrid solutions.

Avenues to explore – To achieve greater flexibility and agility whilst taking into account the transit times of temperature-sensitive goods, it is a good idea to turn to transportable insulated solutions and the associated cold sources, which are more flexible to use and represent a much lower investment.  Insulated containers can be used to transport both chilled and frozen foodstuffs, and provide an adaptable solution to the problem of varying volumes.

Food safety challenges

Distribution of chilled goods

The distribution journey of a chilled food item is often divided into numerous steps, some involving the division of packaging units. Each of these steps involves the risk of a temperature excursion.

And if temperature-sensitive foodstuffs are allowed to reach non-compliant temperatures, they are liable to be subject to the development of toxic microorganisms.

Controlling the temperature, maintaining traceability and taking care when moving stock are therefore essential to ensure the food safety of the goods sold.

It is important to emphasise that fruit and vegetables are not subject to binding regulations on the temperature of perishable goods. The only recommendations on storage and transport conditions are those issued by the producers.  As with chocolate products, keeping them cool simply extends their shelf life and preserves their taste and appearance.

To conclude, low stock levels, UBD management and short delivery times can be serious obstacles to supplying chilled goods, and this has tended to limit the development of the range of products offered online.

The online grocery shopping sector has plenty of time over the coming years to reflect on the technological, structural and organisational solutions that will allow it to diversify its offering and enable chilled goods to gain more visibility. The fragility of these types of products and the regulations that govern their distribution require agility, creativity and determination on the part of the retailers.