Picnic is an online supermarket without physical stores. In 2012, founders Joris Beckers, Frederik Nieuwenhuys, Bas Verheijen and Michiel Muller, together with a team of 30, developed a radically new food distribution model.
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The company uses fixed delivery routes and times. Customers choose which delivery time suits them best and can accurately see what time the runner is at the door. Because the cost of this new distribution method is low, delivery is free.
Only 18 months after launch, the Dutch grocery delivery startup secured a large Series B funding round to roll out its service to the whole of the Netherlands. The €100m round came from four Dutch family funds, and dwarfs the Series B financing of Uber ($27m) and Snapchat ($80m).
Research shows that in two years’ time, the technology company will have gained nearly 9% market share. Picnic recently announced its intention to launch in all major Dutch cities. More than 50,000 households have already shopped through the Picnic online supermarket.
Projections are that the startup will create job opportunities for more than 2,000 new employees this year. In the longer term, this number is expected to rise to 10,000.
Revolutionising the food supply chain
Picnic is not a traditional supermarket. “We are primarily a tech company that operates as a food logistics supply chain,” said Picnic chief technology officer Daniel Gebler. The concept could be used for different markets, but the focus for the time being is on revolutionising the food supply chain.
The company has around 80 people in the central team, of whom 30 are engineers working on the app, supply chain and data systems. On top of that, there are more than 500 people in operations who pick the orders in the warehouse or deliver to the customers with electric vehicles.
The company is currently in the middle of a shift from mobile first to artificial intelligence (AI) first. “The focus on mobile remains the same,” said Gebler. “However, we augment the hard-coded business rules with our self-learning AI engine. AI-powered business rules are now the standard, and fixed hard-coded rules remain only for special cases. This is a fundamental transition that will accelerate further our continuous improvement efforts and ensure lasting customer success.”
The company does not benchmark itself to competitors, but only to its customer satisfaction. “We have a very flat organisation, with a single boss: our customers,” he said. “They define the priorities of all innovations, engineering and operations. We know what’s happening in the market, but we are particularly concerned about whether we meet the wishes and expectations of our customers.”
From data to insight
The online supermarket uses its analytics data to continuously optimise its service. Data is not only collected from the app, but also from the warehouses and electric vehicles.
“All data is collected and processed in real time,” said Gebler. “For instance, in the warehouse this allows us to identify in real time where we need additional order pickers or where we may have a bottleneck in the flow of goods. This form of real-time decision making is the key to effective and efficient operations when hundreds of people work together.”
GPS data from the electric vehicles is also collected and used in the app. Now customers know to the minute when the runner will deliver the groceries. Furthermore, they can follow them in real time on their route. “That’s very useful, because customers know exactly whether they have time left to pick up their children or walk the dog,” he said.
In addition to customer satisfaction, innovation is paramount at Picnic. “Alongside numerous incremental improvements, we also take many moonshots,” said Gebler. “These are bold bets that customers have not asked for, but which we believe may become important in the future. For example, we are testing Amazon Alexa and Echo.”
This home automation tool will allow customers to order groceries by using a voice-based interface. “When they run low on a food while cooking, they will be able to simply ask the Picnic voice app to add this product to their basket.”
There is a shift from mobile to voice-based interfaces. “Nobody knows how big voice interfaces will become,” said Gebler. “When the shift from mobile to voice gets traction, we will be ready.”
Customer satisfaction and operational excellence
How does Picnic make sure it stays ahead in the market? “Everything we do now will be commoditised and industry standard in a few years’ time,” he said. “Hence, we need to keep innovating every day to stay ahead. Everything in the company is arranged accordingly.
“We see that the rest of the industry is more in a tracking mode, but we cannot predict how it develops. That is why we do not look at our competitors and we do not benchmark ourselves against them. Our focus is purely on customer satisfaction and operational excellence,” said Gebler.