Parking facilities

How Raley’s is trying to make e-commerce profitable

LAS VEGAS — Delivering products to customers online profitably is a challenge for California-based Raley’s, Zachary Wilson, the grocery company’s e-commerce manager, said Wednesday. Grocery session.

But the company relies on a variety of efforts — what Wilson called an “e-commerce flywheel” — to aim for e-commerce profitability, and it urged other regional and independent grocers to also focus on strengthening their omnichannel strategies.

Raley’s has been working to develop its own line of speed and fulfillment services, Wilson said. Some of its facilities may fulfill orders faster, but faster service doesn’t always equal profitability, Wilson noted.

Shoppers often face “sticker shock” with fees in third-party marketplaces, Wilson said, noting that Raley’s uses its own e-commerce offering to offer lower fees to online customers, albeit with time. longer wait. This longer lead time allowed Raley to focus on more efficient execution through steps such as optimizing last-mile delivery, Wilson said.

During the pandemic, Raley’s implemented different manual fulfillment concepts, including a dark store and a split store concept where 10,000 square feet of an oversized location was converted to e-commerce fulfillment for the most popular SKUs. sold, Wilson said.

The split store concept has allowed the grocery company to reduce turnaround times from around 30 minutes to around 20 minutes for a 40-item basket: being able to provide a more cost effective solution without passing on costs on the consumer,” Wilson said.

Raley’s has a lot of stores that are oversized based on SKU count, and reducing the store footprint for order picking makes the customer experience more intimate and removes the traffic clogging the aisles, Wilson said. He didn’t say if Raley’s still uses the split store model at any of its stores.

Zachary Wilson, head of e-commerce at The Raley’s Companies, (right) speaks during a Groceryshop session on September 21, 2022 in Las Vegas.

Catherine Douglas Moran / Grocery Dive

The biggest challenge to e-commerce profitability is building volume, Wilson repeated throughout the session. by Raley has not yet reached the volume needed to implement automation of its e-commerce fulfillment – ​​a capability it is striving to achieve.

“When we looked at this split store concept, we designed it with the understanding that we were able to expand and automate the same building,” Wilson said. “And then we look at each of our regions to see how we can potentially set it up to be scalable when the time is right, because we’ve seen that you can drive the manual execution process and slow down with some of these concepts. .”

Raley’s has his eye on star fulfillment — a model that Kroger and Ocado are developing across the United States — and Wilson noted that it’s a model that could potentially work in the Phoenix area for Bashas’, l Arizona-based grocery store Raley’s bought late last year.

“As we look to launch our e-commerce offerings there and take it a little bit further than what we have today with marketplaces, this could be a concept we open with right away rather than going through the traditional in-store fulfillment process,” says Wilson.

Other ways Raley’s has worked to improve e-commerce include Radius Networks’ use of Flybuy’s geofencing technology to improve pickup wait times for customers in parking lots in select locations, and consolidating fast-moving items at the front and back ends of store aisles for ease of fulfillment.

It’s something more than loyalty The program also provides Raley’s advanced analytics to help him better understand buying behavior, Wilson said.

Wilson ended the session by urging grocers not to shy away from engaging with omnichannel customers in the coming months as headwinds continue and instead focus on their three- to five-year plans.

“With the inflationary pressures that exist in the economy and some of the other economic challenges that are going to come up, going to the consumer and making sure they engage them and do what you need to do to keep them as multi-channel shopper, this unified commerce shopper will be imperative to continue growing your business,” Wilson said.

John Smith

The author John Smith