On average, grocers have a profit margin of between 1 and 3%, which is drastically below that of other industries. This means that each process—from in-store operations to supply chain logistics—must be efficient and optimized.
Online ordering and fulfillment, in particular, has become a hidden gem for driving customer satisfaction and optimizing profit margins.
Jenny Pearson, Director of E-commerce at Lunds & Byerlys (L&B), said, "What a customer would expect in store in terms of service, we feel like we want to emulate online." But bridging the gap between the in-store and online experience is easier said than done
In order to simplify complex post-purchase experiences, Lunds & Byerlys chose to focus on the last mile. Here’s how.
Ambitious goals, limited fulfillment
Lunds & Byerlys hold their customers’ experience in the highest regard. “While we're shipping an online order, we're very much in communication with the customer, making sure that they get exactly what they had hoped for,” explained Jenny.
Once L&B began to offer same-day delivery to their customers, it became difficult to meet these expectations, never mind exceed them. When Jenny joined the L&B team, they handled same-day delivery services with their own fleet. At the time, Jenny remembers, “It was about 19 trucks and approximately 30 drivers, and we were delivering out of six stores, trying to hit all of the Minneapolis-St. Paul metro area, which was a lot.”
While their goals were ambitious, they quickly hit a bottleneck regarding how many deliveries they could handle.
“If you couldn't get a slot, then you had to just wait,” said Jenny. “For a customer, that might mean that the soonest you could get your groceries delivered would be two or three days out. It certainly wasn't the same day.”
This also meant constantly worrying about fulfillment rates. From limited delivery capacity to inconsistent driver availability to the sheer unpredictability of traffic and weather, getting groceries from store to door weighed on the team’s mind.
In Jenny’s words, they were "constantly worried about trucks and drivers...the weekends would come and go, holidays would come and go, and you're worried about the trucks out on the road and what might happen."
"It felt like the pool of drivers [we had] wasn't what we needed to make sure we had stability within our delivery program and consistency so that a customer could really count on that delivery getting to them when they had wanted it or anticipated it," Jenny explained.
When managing their fleet became too complicated, Jenny and the Lunds & Byerlys team knew it was time to change.
From one Delivery Service Provider to many
The L&B team decided to shift from their own fleet to using Shipt as their delivery service provider (DSP). This was an immediate improvement for the organization, as they no longer had to manage their own trucks and drivers. While service from the drivers and DSP was great, Lunds & Byerlys ran into another issue: getting drivers to accept orders.
Despite most of their stores being located in and around the St. Paul area where Shipt (and parent company Target) are located, it would often take a while for a driver to claim the order. The result was that many same-day orders were not fulfilled within their promised service times, and many orders slipped to the next day.
It was time for another change. "We decided we just needed to take all of our eggs out of the basket and kind of spread them around a little bit," Jenny said—which is why they started searching for a digital fulfillment platform. That’s when they learned about Delivery Solutions, a solution that was already integrated with their order fulfillment platform, ShopperKit.
“We found out quickly that the switch would be very easy to do, to just flip the switch to Delivery Solutions. And it was a pretty seamless transition,” Jenny said. “And on top of that, Shipt was kind of getting out of the grocery [space].” Now, partnering with multiple delivery service providers means the Lunds & Byerlys team can rest easy knowing they always have drivers available to fulfill orders.
But it's not just about quantity—quality matters too.
Jenny highlighted how "drivers in some areas for some companies aren't as good as those same companies' drivers in other areas. So we can prioritize them differently, depending on what store they're coming out of." By using Delivery Solutions, Jenny’s team can make sure their preferred drivers are prioritized so customers get the quality experience they’ve come to expect from Lunds & Byerlys.
Freeing up Time for their E-Commerce Team
The other driving factor in switching to Delivery Solutions was the possibility of saving time for valued team members.
Before optimizing their last-mile delivery experience, Jenny told us, "The E in e-commerce was less of a focus because [the] team's attention was so much on this shipping and logistics.”
By outsourcing delivery operations and orchestrating the process through the Delivery Solutions platform, the team has more time for strategic work. "My team within Corporate spends a lot less time thinking about delivery,” said Jenny. “They don't think about maintaining the trucks. They don't think about drivers. They just get to do other work, which has been excellent."
As she was reflecting on the prior situation, Jenny noted that the idea of managing the fleet themselves in retrospect was “silly”. Jenny explained, “When you think about it from an area of expertise, [ours is] not the logistics around delivering groceries. Our area of expertise was in groceries and shopping and the quality of our products.”
By offloading delivery logistics, the e-commerce team was able to refocus on their own area of expertise—and reach their goal of emulating their in-store experience online.
Integrating Delivery Solutions into L&B workflows does more than remove the need to manage their fleet—it provides more functionality than they had before. With Delivery Solutions’ capabilities, Jenny can see where all the drivers and customers are. Then, if there are issues, her team can spot and fix them.
“What's great about Delivery Solutions is we can see information, like ‘We gave you this address. You didn't even go to that address. You went over here. This is what needs to be fixed,’ explained Jenny. “We can kind of understand where drivers get in trouble and have issues and work to solve some of that.”
Providing Next-level Customer Service, Faster
The evolution of same-day delivery at Lunds & Byerlys’ team has been rapid. Just a few years ago, there were a limited number of spots they could offer in only six stores. Once the team moved to Shipt same-day was possible in 21 stores, but there was apprehension on whether an order would be fulfilled on time.
Now, they are finally orchestrating orders and delighting customers through Delivery Solutions.
“Now [that they] know that the order is going to get picked up?” Jenny said, “All 21 stores get to play, which everyone loves because it's more sales for their given store.”
Their number of orders for same-day delivery alone has grown by an average of 12% each year since they’ve gone from an owned fleet to orchestrating various DSPs.
L&B continues to evolve its last-mile program, with a new platform set to launch this year. One of the key features they’ll unlock is the ability to provide white-glove service (e.g., putting groceries away in cabinets for elderly customers or individuals with disabilities).
“Extending to that extra level of service for those customers who need it, that's really what we're excited about in terms of our capabilities on the delivery side. Our new platform gives us a whole bunch of other awesome things too, but from a delivery standpoint, we're excited about that.”
When your customer journey is smooth, your business thrives. See how Delivery Solutions can make this a reality. Book a demo.
Topics from this blog: Case Studies