What German retail can learn from the Dutch

Screenshot: picnic.de

Free delivery, firm delivery dates, minimum order value, rural instead of urban areas. The Dutch e-food providers of Picnic are starting differently than all others and are now trying to conquer the German market on the principle of the milk truck (the older ones remember). In their homeland, Picnic is already successful. Not only thanks to their completely different logistics concept are they already working profitably in their actual areas of operation.

In Germany, in contrast to their competitors Amazon Fresh, Rewe and Bringmeister, who rely on flexible delivery times for customers, Picnic operates with firm delivery slots, similar to a timetable of a busline (or the milk truck in rural areas). This is the last part of an ingenious supply chain, based on a so-called hub-and-spoke system. The Dutch staff is picking goods in large fulfillment-centers, transports them per truck to smaller hubs near cities, from where they distribute them via manoeuvrable electric cars. Picnic’s staff drivers are then delivering to households following a consistent route. By that, Picnic guarantees a delivery time slot of 20 minutes. The position of the van can be tracked at any time via a mobile app. According to the Dutch, customers prefer fixed, reliable delivery dates in a short time slot, before flexible delivery dates, which are often associated with time slots of several hours.

Contrary to the e-food providers already operating in Germany, Picnic starts with a completely different concept. As successfully implemented in the Netherlands in meanwhile 37 cities, they are following a step-by-step approach. At the same time, big cities, with all their problems in the final mile, are left out. In Germany, Picnic starts with the route from Kaarst via Neuss and Oberkassel to Meerbusch. Conquering the area road by road, quarter by quarter, step by step. In the founding year of 2015, this worked well in the domestic pioneer region of Amersfort.

The e-food providers claim having reached 105,000 customer in 37 cities and regions, with whom they reportedly achieved a sales volume of approx. € 105 million in 2017. Picnic offers more than 10,000 articles via their app. Edeka Rhein-Ruhr was acquired as main supplier and bought a 20% stake of Picnic’s online business in March 2018. This joint venture including the former Tengelmann warehouse in Viersen is serving as basis for the expansion of the Dutch online retailer to Germany. Wherever possible, fresh produce is supplied by regional suppliers. In their pricing, the Dutch are benchmarking with their brick-and-mortar competitors, comparing prices via a special software every night. Even a comparison with discounters such as Lidl is not spared.

Can e-food work as a profitable business in Germany as well? Will the nonfood assortment be inluded? Hard to believe. Local heros like Lidl and Kaufland, after a euphoric start, have already put their delivery services on hold. So what are the Dutch entrepreneurs doing better? With all the confidence that they have gained from experiences in their home country and Edeka as a strong partner, they are now targeting their much larger neighbour market. They are convinced of working profitably within six months, which is obviously realistic in the Netherlands, where, when entering a new region, break even is achieved within half a year.

As a child, I grew up on the countryside. Listening to Picnic and Edeka’s plans, I had to remember the bell-sound from my childhood announcing arrival of the milk truck. Today, the bell is replaced by a mobile app. I am curious to see if this Dutch concept will also be succesful in Germany. Probably it is not a coincidence that with Edeka as a new partner they are starting their testrun in a geographical area, where Rewe is traditionally strong.