Mercadona launches their new logistic system for online shopping

A few weeks ago the Spanish supermarket chain leader launched their new e-commerce website, which is more visual and intuitive, along with a new mobile app. The website is in a trial period; therefore it is only available in Valencia at the moment. One new aspect is that online orders will no longer be processed in stores; they will be managed in a new warehouse concept that Mercadona calls “Colmena”, specifically designed for online sales. In doing so, they manage to make the process more efficient because everything is centralized in the same place which facilitates the organization of delivery routes. As a result, they are able to make the process more effective by centralizing everything in one place and facilitating the organization of delivery routes. The fact is that from a store the delivery is less profitable, as Juan Roig said, “delivering from the store we lose loads of dough.”

 

For the first time, the grocery industry is moving forward with one of its major issues: the low profitability of online sales. As the future of the sector will come through this sales channel and will be gradually gaining ground to in-store shopping over the next few years, this becomes an essential solution. Mercadona has identified that the best way to capitalize on online sales is through last mile optimization: this new logistics and distribution system is the chain’s biggest challenge for the future as they aim to quadruple the efficiency of the delivery system.

 

As well as the centralization of orders in a logistics center, the Valencian supermarket has taken two measures that we at Nektria see positively. The first is setting the minimum online order amount at €50, and something they have been doing already: charging the same shipping cost of €7.21 for all orders regardless of their total amount. From an economic, labor, and environmental point of view, these two actions make the distribution more achievable and sustainable, taking into account their high cost and need to mobilize resources and people. The delivery is costly and setting a price on every delivery is fundamental if they want to at least have figures that breakeven. In the near future we hope that they will decide to interact with their online shoppers through varying the delivery prices in order to shift the demand where it fits best, consequently optimizing the delivery.

 

Another very interesting point is the use of one-hour time-slots, an action with pros and cons. The pros are on behalf of their customers because they reduce the waiting times for them. However, this is more expensive and the routes are more complicated to optimize and execute. Despite this, Mercadona chooses such short time-slots because they have so many purchases in Valencia that it is easier for them to classify the orders and execute the routes correctly.

For the time being, we find the design of their grid may be too basic in practice. For example, they do not include certain information in their checkout such as if the building has an elevator, something we think is necessary to know when planning for the delivery. However, we are convinced that they will be constantly evolving.

 

At Nektria we believe that Mercadona’s commitment to logistics is quite accurate overall. Their decisions are creating a solid base for applying more advanced technologies and optimization strategies in order to enable the extra productivity that is still needed. We will closely follow the development of their new logistics system during the testing period and its subsequent implementation in other Spanish cities.