Across the United States, European countries and Great Britain, the COVID-19 coronavirus shelter in residence mandates has caused many consumers to seek out the services of online grocery and food delivery services providers. This was especially important for populations over 60 years of age, given the initial information that the virus was especially deadly for that population group, as well patients with pre-existing health issues.
However, most all of these provider’s online systems and fulfillment resources now appear overwhelmed leaving a lot of disappointment and frustration for consumers.
An opportunity to shine and establish a new loyal following of shoppers has been temporarily lost and the residual memories could hamper future growth prospects for many months to come.
Virus Outbreak in China
When the initial COVID-19 epicenter occurred in the city of Wuhan, China, and spread quickly throughout Hubei Province and other parts of China, citizens were quickly mandated to a physical lockdown. Large populations were suddenly tasked with the reality of finding ways to secure daily quantities of food, medicines and other essentials. Long-held shopping habits that consisted of daily trips to local food outlets were suddenly ether cutoff or laden with added risk of catching the virus from community spread.
As Supply Chain Matters and other media outlets have noted, one of the positive outcomes from Wuhan and other metropolitan areas of China was the growing presence of online providers such as Alibaba, JD.com and other providers who had already branched out to online grocery as well as combination brick and mortar and online food and grocery Omni-channel retailing.
Similarly, the country’s large collection of courier-based services providers marshalled to expand online generated food delivery needs. Local neighborhoods and municipal governments reportedly helped to coordinate designated neighborhood delivery and notification zones for densely populated urban centers, avoiding frequent entry into buildings.
The Washington Post featured a syndicated Associated Press report last week that reported in-part that China’s ubiquitous smartphone and mobile device laden food services apps helped millions to find methods to secure direct to residence food deliveries. Online providers directly recruited hundreds of laid off restaurant workers for temporary staffing as online order volumes surged. In many cases, online providers became a lifeline. Pre-COVID-19 online use and volume growth likely prepared online providers for the surge, but they reportedly had to scramble and improvise to keep pace with volumes.
Here in the United States, online grocery and food services providers similarly moved to hire both new permanent and supplemental surge fulfillment services workforce.
Amazon launched a recruiting effort to hire an additional 100,000 employees, falling short of that goal thus far. For Amazon, the stress test of COVID-19 was not just limited to food and grocery demand, but to all deemed essential products. The result has been temporary abandon of Amazon Prime guaranteed one-day or same delivery for food, and most semblance of predicted delivery for a large variety of many other items ordered online. Delivery information is now communicated as a range of probable dates that can span 1-2 weeks in some cases.
Compounding Amazon’s challenges are now daily reports of fulfillment center workers testing positive for the virus, with many other workers growing increasingly concerned about the safety and sanitary conditions in their respective facilities. The online provider has not helped its corporate reputation by firing workers deemed to have violated employee policies by speaking out publicly.
Other U.S. online food providers such as Walmart, Target, PeaPod, Instacart, DoorDash and others were literally swamped with sudden demand, as much as double or triple daily volumes. Each has initiated efforts to hire thousands of added workers, and in Walmart’s case, an additional 100,000 workers. Salary levels have been boosted to recognize essential work, but demand still outstrips available operational and systems capabilities.
An associated challenge was that food related supply chains experienced panic buying that literally drained replenishment networks. Many grocery and food retailers, either national or local remain with empty shelves and limited inventories weeks into residence sheltering mandates, especially for cleaning and disinfecting supplies not to mention psychological staples such as toilet paper, soaps and hand sanitizer.
Thus, virtual shoppers, competing for the same shelf, require more time to complete pick and pack fulfillment cycles, and each day, inbound online order volumes overwhelm available resources, resulting in the online message that: “all delivery slots are unavailable, come back later.” News reports feature frustrated consumers staying up until all hours of the night hoping to gain one available slot for their online shopping cart, only to be disappointed again.
We tried our own experiment and had a similar result among four different well-known online providers when this Editor gave-up. There were no available slots for either parking lot pickup or direct delivery.
In Great Britain, online-only supermarket provider Ocado has drawn a loyal following of consumers that have depended on the timeliness and reliability of online services. Ocado’s technology further supports online capabilities of Morrisons.
Reports indicate similar interruptions in service levels as additional consumers overwhelmed Ocado’s capabilities. While the online retailer relies on sophisticated automated robots to fulfill orders, the surge in demand has overwhelmed existing volume and delivery capacity.
As Supply Chain Matters has noted in prior commentaries, while Ocado’s automation is indeed sophisticated, with other grocery retailers such as U.S. based Kroeger chain adopting a multi-year deployment strategy, the adding of additional automated warehouses requires as much as $50 million per facility and take upwards of a year or more for each facility to be constructed and tested.
British online consumers turning to Asda, Tesco and Sainsbury have similarly encountered over committed processes with delayed fulfillment.
Similar instances and disappointment exist across Europe and especially the virus impacted countries of France, Italy and Spain.
As with the majority of ongoing developments related to the COVID-19 global pandemic, industry supply chains are succumbing both on the customer demand and supply aspects of respective fulfillment networks.
An event of this scope is indeed unprecedented, and the most sophisticated advanced technologies cannot overcome the notions of extreme demand and supply imbalances that compound themselves.
None the less, this was an opportunity for online fulfillment providers to rise above the tsunami tide, but weak links have been exposed and capacity has been overwhelmed.
The open question is the learning that will come in the coming months, and in the memory or forgiveness of online consumers.
To put clear context, we should never overlook the tireless work sacrifices that have been exhibited by thousands of customer fulfillment focused workers both online and in-store focused. Their efforts and dedication have been directed at trying to make an incredibly challenging situation work the best that it can. They are taking personal and family risks to do so and should indeed be considered front line essential workers in times such as these.
The post COVID-19 learning is the readdressing of online fulfillment business practices, processes and supporting systems with the goal of being able to respond to a global pandemic or national emergency with added agility and network responsiveness. Customer communication and prioritization is another area to be addressed, as will be added areas of automation.
Another learning is likely the importance of the continuity of brick and mortar food and grocery facilities as the lifeline of populations, and of the prioritization of healthcare and food supply chains in times of national or global emergency.
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