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Today, we can get everything from cleaning products to clothes and furniture shipped right to our door. In recent years, these capabilities have expanded to foods and beverages, but they’ve faced a more difficult transition than other commodities for one key reason: temperature control.
The Business Case for Cooling
Fresh foods require constant and precise cooling in order to maintain their quality. This has limited food and beverage delivery to non-perishable goods that can safely sit on a customer’s doorstep for hours on end or forced delivery services to employ layers of troublesome and environmentally-harmful packaging in order to preserve them – and even then, there is no guarantee that the food stays within a safe temperature range.
Despite its challenges, food and beverage is the fastest-growing segment of the U.S. ecommerce industry, with the popularity of this category spurring intense competition among the major retail players, such as Amazon, Walmart, and Target. But they’re still missing the mark when it comes to reliable and safe delivery of fresh goods.
Fresh and perishable foods accounted for nearly half (49%) of all dollar sales growth in the grocery category in the last year, presenting a compelling ROI for ecommerce players … if they can do it well. Early efforts to support fresh food delivery, such as meal kits, have simultaneously sparked buzz and consumer concerns about quality, especially during the sweltering summer months.
To better understand how shoppers today feel about these services, we polled 1,000+ U.S. consumers on their experiences and comfort level with fresh food delivery. Our findings revealed that 41% of American consumers have encountered issues with their perishable items arriving safely or are concerned about their freshness. When sensitive goods like meats and cheeses are on the line, a significant number of consumers lack faith in these services. Today, only 37% of consumers feel confident in a delivery service’s ability to keep perishable foods at the right temperatures – reinforcing the need for new approaches that can assure the quality of fresh goods during the last mile.
Retailers are Getting Creative – But Is it Sustainable?
Concerns over freshness have stymied the industry. As evidence of this, our survey found that only 22% of consumers are planning to purchase food and beverages during the upcoming Amazon Prime Day. This is in stark contrast to market buzz which predicts that grocery will have a major role to play in Amazon Prime Day 2019, with Whole Foods and Prime Now ramping up deals, and indicates that perishables may once again be excluded from a major U.S. shopping event.
Thus far, retailers’ responses to perishable delivery challenges have been questionable, with several looking to direct-to-your-refrigerator delivery. This strategy, which is being experimented with by Amazon and now Walmart, ensures that foods don’t spoil on your doorstep, but it also presents a whole host of other worries related to security. As one opinion piece rightfully surfaces, this delivery model can pose substantial liability issues and will necessitate rigorous background checks to ensure consumers are protected against theft. Conversely, pet owners could find themselves liable for injuries inflicted upon a delivery person by their dog or cat – or even restricted from using the service altogether.
We Can’t Sidestep the Doorstep
It’s clear that consumers are hungry for more grocery delivery options, but retailers have to earn their trust. It’s a tall order, but one well worth the industry’s time to tackle. The business case for effective fresh food delivery is undeniable, and the ability for brands to offer a wider range of foods for delivery will aid in facilitating a tried and true buying behavior: the impulse buy.
Our survey found that a whopping 67% of consumers purchase groceries on impulse, both online and in-store. Many shoppers reported making impulsive food and beverage purchases as much as 5 times per month. This all goes to show that grocery delivery presents a considerable and largely untapped revenue stream for today’s brands. But are today’s retailers thinking long-term?
Direct-to-your-refrigerator is a novel concept, but it has its limitations and is already facing roadblocks that suggest it may struggle to get off the ground. Drone delivery is another exciting avenue, but it’s a young technology that needs time to mature. And even when it does, retailers have some work to do to build up trust in perishable cooling during the last mile. While more than 60% of respondents would order dry goods through a drone delivery service, just over a quarter (26%) were willing to order fresh produce or meats by this means.
Although retailers haven’t gotten doorstep delivery for fresh groceries right just yet, they should not bypass it, as it’s still the most inclusive and accessible model we have today. Fortunately, new technologies are coming to market every day to improve the last mile and solid-state refrigeration and freezing technology continues to be one of the most promising.
Through “Design with Phononic,” we are thrilled to be working with several retail partners, including Pepsi Bottling Ventures and Unilever, to help them solve their cooling pain points. Solid-state technology has emerged as a truly sustainable solution, both in-store and across the cold chain. Our ability to bring cooling to bear through a semiconductor chip – eliminating the cumbersome compressor and its use of toxic refrigerants – is making it possible to not only reinvent the way legacy systems like refrigerators work, but also bring cooling to new areas like delivery totes, drones, and shipping containers. Another exciting application is in-vehicle refrigeration, which will enable sharing economy drivers – such as those delivering for UberEats or Shipt – to ensure groceries are delivered at the peak of freshness.
It’s time to sate the world’s appetite for sustainable, efficient, and fresh grocery delivery. Learn more about how we can work together to overcome this thermal challenge here.