Food e-commerce business models, with a few rare exceptions, do not achieve profitability. Especially those based on home delivery in urban areas.

At the same time, cities that are legitimately looking for ecology are suddenly modifying road flows by limiting the main accesses and prioritising journeys by public transport, on foot and by bicycle.

However, urban customers are turning more and more to digital purchases and the growth of food e-commerce, which was already strong, driven by the Drive, exploded during the Covid crisis.

It is therefore necessary to find solutions that can meet the expectations of consumers, while ensuring the profitability of merchants and the cities’ objective to limit traffic and all types of nuisances caused by deliveries.

1. The rise of food e-commerce

For the first time, FMCG e-commerce experienced a tremendous acceleration: +42% in 2020. Data for 2021 confirm this trend with growth of +7%. 2022 will show the same trend.

But the complexity of logistics operations in urban areas remains a limit to the sustainability of this growth.

The Covid period has caused the development of new E-commerce activities such as Quick Commerce… but at what cost? These models have organised colossal fund raisings on the financial markets and have created completely unoptimised operating models based on the promise of food delivery in less than 15 minutes. It leads to a reaction from mayors and local elected officials to block this model with new regulation (watch out for collateral damages…).

Can we create a virtuous model to deliver a wafer of butter and a pack of water in less than 15 minutes when this reduced time is the opposite of the massification and consolidation of flows?

The Drive model cannot fully develop in urban areas for several reasons. Firstly, for lack of space, locations but also because it less and less meets the preferences of urban consumers who use their motor vehicles less and less frequently.

Home delivery can be a solution, but the difficulty is double, with the profitability of the model and the nuisance it entails. The rapid increase in the volume of deliveries, with a 36% increase in the number of vehicles in city centres by 2030, will lead to more air pollution, greenhouse gas emissions and traffic congestion. Home delivery must therefore demonstrate its ability to evolve and transform towards development of a sustainable and carbon-free model.

The economic model is complex and hardly profitable and uberization is often used when the right operational cost model is not found, because it transfers the optimisation that they have not managed to achieve, to the delivery person who is paid by the task.

We know the harmful impacts of this type of strategy, and it will be necessary to return to more serious models with an end customer who pays for the delivery and a delivery which is carried out by professionals in a protective social framework. Similarly, the automation of operational processes throughout the supply chain and up to customer delivery must allow a high level of service, the creation of new professions with high technical skills, just as it must allow the necessary profitability of delivery.

2. Urban consumers want quality and sustainable service

The report of a marketing study conducted by COGISION in April 2021 presents an in-depth analysis of consumer behaviours, attitudes and experiences with regard to online food purchases.

This study shows on 600 Parisian consumers questioned that:

• 90% want an accessible shopping solution that simplifies the act of purchase and makes life easier
• 89% want to save time on the act of purchase
• 75% have a particular interest in carbon-free and nuisance-free logistics
• 72% are looking for more attractive price offers
• 65% are looking for a wider range of offers (number of SKUs available)
• 64% are looking for more frequent and bigger promotional offers

Alongside these elements, the urban consumer is first and foremost a citizen who takes a particular interest in the quality of his living environment.

In a city where the emphasis is on the development of soft mobility and the search for a peaceful city, the exponential growth of e-commerce leads to urban nuisances that cannot remain unsolved.

3. Massification and consolidation of flows, the promise of sustainable logistics

A sustainable urban logistics solution for food e-commerce must be based on two fundamental principles: the massification or pooling of multi-actor flows and the consolidation of delivery flows to a collection point.

This massification is an essential point because while each merchant player only uses their own network and their own dedicated means, there the means are shared, and the trucks are optimised on the “first mile”.

The other essential element of sustainable logistics is consolidation at a delivery point because it avoids the means and costs of delivering the last mile. It is the customer who picks up the order by foot or by bike.

Moreover, users are increasingly looking for local pick-up point solutions and pickup points are increasingly used by households for online purchases. Walking is the leading mode of travel in Paris and the inner suburbs (52%, +9%), followed by private car (37%) and travel by public transport (12%).

In comparison between the home delivery model and the pick-up point model, the positive impact on the environment is clear.

For cities, the network of collection points allows:

• Consolidation of flows at a single delivery point and multi-actor pooling which considerably limits the movement of private vehicles and delivery vehicles in major cities, particularly during loading/unloading.
• The optimisation of routes which induces a higher filling rate of delivery vehicles and the centralisation of storage on the outskirts of towns, avoiding the multiplication of resources.
• The limitation of unauthorised parking and the blocking of streets by home delivery trucks reducing nuisance for residents.
• Limiting the use of a private car.

The digital revolution also means giving local businesses a tool to develop their offer. Here again, the collection point must play a driving role and can be used by the latter as a delivery point after the opening hours of their store and even to extend their catchment area.

The network of withdrawal points, given all its benefits, could already be considered a network of public interest.

4. The personalised pick-up point is the future of e-commerce

The modern customer has become undefined. Depending on their situation, their aspirations, the time of year, they must be able to choose between offline shopping solutions, home delivery solutions or pick-up points.

The last metres of delivery are the most expensive. The home delivery can find its place, especially when it knows how to adapt to social and environmental requirements, but it will have its limits to respond to the growth of E-commerce.

The difficulties of getting around in cities require a proactive review of delivery methods, first by decarbonising them but also by rationalising them.

Volta Trucks – partenariat Delipop pour une livraison décarbonée

With automated collection point solutions, a customer has a quick and easy access to a better offer, with a wider range of products mixing the order of their retailers and their favourite local merchants. The customer becomes active again in the act of e-commerce purchase by coming to collect his or her order by foot or by bike.

The city centre is once again becoming the place of life in which all inhabitants can experience a simplified click & collect from their daily life path (leaving school, the metro, the gym, coming back from the office). It is the concept of the 15-Minute city which advocates urban hyper proximity as a lever for improving the quality of life and reducing carbon transport.

The merchant can offer an operational solution that ensures the profitability of his E-commerce model and above all a solution that combines digital and the physical point. It is the digitisation of the act of purchase on the web that induces better loyalty.

Urban logistics has become an essential dimension in the city. It must innovate, be respectful of new urban desires such as proximity, the environment and social well-being.

Sources :

Study Logicity Office: https://logicites.fr/

https://www.sustainability-report.delipop.com/wp-content/uploads/2022/07/Delipop-rapport-FR.pdf

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