{"id":138245,"date":"2022-03-28T14:45:05","date_gmt":"2022-03-28T12:45:05","guid":{"rendered":"https:\/\/www.erasmusmagazine.nl\/en\/?p=138245"},"modified":"2025-12-19T11:26:13","modified_gmt":"2025-12-19T10:26:13","slug":"despite-the-steep-growth-in-online-grocery-shopping-no-one-is-making-money-yet","status":"publish","type":"post","link":"https:\/\/www.erasmusmagazine.nl\/en\/2022\/03\/28\/despite-the-steep-growth-in-online-grocery-shopping-no-one-is-making-money-yet\/","title":{"rendered":"‘Despite the steep growth in online grocery shopping, no-one is making money yet’"},"content":{"rendered":"
\"\"

\n\t\n\n<\/svg>\n<\/span>\n\tImage by:<\/span>\n\n\t\t\t\n\t\t\t\t\t\t\tLevien Willemse<\/a>\t\t\t\t\t<\/span>\n\t<\/p>\n<\/figcaption><\/figure>

Congratulations on your doctoral degree! How did you celebrate?<\/strong><\/p>\n

\u201cWe went out for dinner with the committee members and friends at 91 Spices, an Indian restaurant near Blaak. Unfortunately, my parents couldn\u2019t be there. I\u2019d already delayed my defence to March, but the situation with the pandemic makes it difficult to travel to and from India. Thankfully, they were able to watch online. They got together with my in-laws, and they all watched together on a TV, as if it was a movie.\u201d<\/p>\n

Did they all cry?<\/strong><\/p>\n

Laughing: \u201cOf course! They were looking forward to it more than I was. In fact, my father was in a bit of a panic that I wouldn\u2019t finish, because I\u2019d already started working before defending my thesis. He\u2019s really ambitious about me getting a PhD. Luckily, I was able to answer all the questions, so they were very proud.\u201d<\/p>\n\n\t

\n\t\t
\n\t\t\t
\n\t
\n\t\t\u2018Despite the steep growth in online grocery, no-one is making money yet\u2019\n\t<\/blockquote>\n\n\t<\/figure>\n\t\t<\/div>\n\t<\/div>\n

Talking about family: if you\u2019re at an uncle\u2019s birthday party, how do you explain to him what your research is about?<\/strong><\/p>\n

\u201cIn my research, I looked at the opportunities and challenges related to online grocery shopping. More specifically, I focused on the business model by which you order groceries online, say from Albert Heijn (the industry partner for his thesis, eds.), and collect them from the store on your way home. That\u2019s more convenient than waiting in at home, and it\u2019s much more cost effective for the supermarket. My research studied the interactions between the online and offline channels of Albert Heijn. In an ideal world, everything would come from one big warehouse and be delivered by one big truck. But both are delivered from different warehouses, by different trucks, to the same store. That\u2019s because the online and offline channels often develop both operationally and system-wise in their own silos. I looked at making the operations for grocery retailers like Albert Heijn more efficient.<\/p>\n

\u201cThe second part of my research looked at the profitability of online grocery delivery platforms. Despite the steep growth in online grocery, no-one is making money yet. Picnic in the Netherlands is the only one claiming to be unit profitable. In some high-density cities, like Seoul, the delivery platforms are marginally profitable because the delivery costs are low. You can do more deliveries in the same area, relatively quickly. But when there are more stores, the dynamic changes. I therefore looked at the ideal combination of store and population density.\u201d<\/p>\n

What did you find out?<\/strong><\/p>\n

\u201cIf you have about six stores on a square kilometre in an area with seven thousand inhabitants, like in Seoul, delivering groceries can be profitable. In Rotterdam, it\u2019s slightly negative, despite it being one of the cities in Europe with the highest density. The current platforms focus on gaining a share in the market. But in the Netherlands, only 7 to 8 percent of the groceries are done online, so it\u2019s a small slice of the market, that is dominated by Picnic, Albert Heijn and Jumbo.<\/p>\n

\u201cAs for leveraging the synergy in operations between online and offline, I found that if you use a big store as a mini-hub, where you transfer the items ordered online to the next stores, where they are picked up by the \u2018offline\u2019 truck, your logistic costs will drop drastically.\u201d<\/p>\n

How did you end up doing your PhD in Rotterdam?<\/strong><\/p>\n

\u201cI was working in Singapore and looking for practice-based research in Europe. The Netherlands was a good option because everyone speaks English here and the research in my field of logistics is highly regarded. Part of my work was with Ahold in Geldermalsen, which was a two and a half hour commute, and if I missed the bus, I also had to walk for 45 minutes. For a guy from India and Singapore, that was an adjustment.<\/p>\n

\u201cI didn\u2019t know anyone when I arrived here, but there\u2019s a nice international atmosphere in this city and at my department: the technology and operations management, part of RSM. I made some lifelong friends there. My PhD experience at Erasmus was super enjoyable, I loved every bit of it.\u201d<\/p>\n

Really? No complaints?<\/strong><\/p>\n

\u201cWell, and this has nothing to do with Erasmus, but in general I found that in academia, it takes a long time to have the researched ideas implemented in practice. I want to be at the forefront, where things are happening. So after finishing my dissertation, I worked at CoolBlue as head of the route planning department and now I\u2019m a consultant at Accenture.\u201d<\/p>\n

So no plans to leave?<\/strong><\/p>\n

\u201cNo! I hadn\u2019t expected that at first. But I\u2019ve lived in Rotterdam for six and a half years and this city has really grown on me.\u201d<\/p>\n\n\t

\n\t\t\n\t\t
\n\n\t\t\t\t\t\t\t

Read more<\/h2>\n\t\t\t\n\t\t\t