Show HN: Ernie's, Click & Collect Groceries
erniesgrocery.com
erniesgrocery.com
- You need physical stores. These take a lot of money and expertise to set up and run. And to expand/scale in any meaningful way will take a LOT of money. Plus of course you've got the added expense of having to actually do the shopping on behalf of your customers (ie walk round your inventory and fill the basket). Kind of the opposite to the Ikea model. As Ryan Air have conclusively proved, people will put up with ANYTHING if it's cheap(er).
- Your stores are going to have to be as big as a supermarket to really be of use to people.
And on the competition side:
- What's the advantage over just ordering my goods online from a supermarket? I don't even need to go to the store then, they just get delivered to my front door. Or do supermarkets not do this in the US? IN the UK at any rate you can choose very specific delivery times as well.
And on the marketing side:
- 40 minutes in a grocery store? You can easily spend this much time online filling up your basket. Personally I've never felt that online ordering has saved me much time. The USP of online shopping is not time saving, it's "when" saving - I can do it during a quiet time at work for example. But with Ernies I still gotta go pick it up...
- 73 hours per year? Doesn't sound like much to me. And walking round the store is healthier than sitting in front of your PC :)
"You need physical stores": Sort of. We need physical warehouses. The core of the Ernie's business model is that these locations will be much cheaper to operate than the traditional grocery storefront, therefore increasing net margins. They will take expertise to operate; luckily, this expertise is well-established and readily available.
"Your stores are going to have to be as big as a supermarket": Not necessarily. Our SKU count will have to be big enough to be compelling. But Trader Joe's has proven that a very low SKU count can still be compelling if the value proposition is there. Trader Joe's value prop is low prices. Ernie's is convenience. On top of that, we're cramming our SKUs into a warehouse layout. Our real estate footprint will be much, much smaller than a supermarket.
"What's the advantage over just ordering my goods online... ?": The advantage is in the operations model. Home delivery will always be a much more expensive grocery offering. This results in some combination of fees and/or higher prices. Ernie's is not price premium offering. No fees. It's cheaper for us to sell the same can of beans to you than it is for Safeway. Much less than a home delivery offering.
"40 minutes in a grocery store? / 73 hours per year?": We'll just have to agree to disagree on these points. Those folks that hate wandering around the grocery (or have small children, or are physically challenged, or have better things to do with their time) are who we are marketing to. I, for one, look forward to getting 3 days of my life back every year. :)
Either way - it's a big project. Good luck!
Something like Ernie's would be ideal. It'd even be worthwhile for collecting a few day to day items. I'm surprised Tesco hasn't done this already.
We do really good food, 1-hour delivery windows, and same day deliveries for no extra if you order before noon.
You are right that you could spend 40 minutes filling up your online basket, but what if you could save your basket and re-order it the next time you "go shopping." Thus you fill up your basket with the items you already buy every time you go the grocery store, then you never have to fill it up again...Could be a big time saver.
And 73 hours per year to me I think in terms of what else could I be doing with that time? My going rate is $80 per hour so that's $5840 I could be making instead of grocery shopping. And sure it's more fit to walk around the store, but perhaps I'd rather go to the gym and actually do a real work out?
So maybe there is a market for this across the pond. But then you've got the risk that the US supermarkets get their act together (and really it would amazing if they didn't).
Ultimately, they were bought out by one of the local chains (Longos), who reduced their inventory even further and raised the delivery fee higher, so I haven't shopped with them in years.
The biggest problem with grocery delivery in North America is going to be distance. Toronto is about 43km east-west by about 21km north-south, and the GTA is probably 100km east-west and 50km north-south. It's really hard to cover those distances in a time-effective manner, and refrigeration trucks are expensive to buy/lease and maintain; the 401 running through Toronto is one of the busiest highways in the world. You'd need to have the ability for a truck to be able to pull into any of your chain's stores and restock, and there you might run into problems because (a) not all stores are company stores (they may be franchisees; I'm not sure how common this is with grocery stores) and (b) the stores, even if not franchises, tend to do a lot of market segmentation meaning that you may not have all the same products because the neighbourhood has different needs.
Actually, there is something that I have been saving time with and if Ernie's does this, it would be wonderful.
Amazon started creating the ability to have subscriptions for food items. Basically, stuff that I will go through every month and would have to fight my way through CostCo or Sams to get otherwise. For stuff with comparable prices, I may as well just have it shipped in free under Prime instead.
My grocery list is 90% the same every week/two weeks so if I had a saved template to reorder from, that saves me the half hour of pacing the store to get the same exact stuff for the same price, I'd be all for it.
Not necessarily. You could make more efficient use of space if you don't have to arrange the store to be customer-friendly.
"I don't even need to go to the store then, they just get delivered to my front door. Or do supermarkets not do this in the US?" Most places, no. Where they do, it's more expensive.
"Personally I've never felt that online ordering has saved me much time."
It certainly could if it were done well. Don't you normally buy a lot of the same things? A good interface would remember that and help you reorder favorite items quickly. Also, groups of items - "all the stuff I need to make recipe X." The store could even upsell by suggesting a recipe and selling you all the items you need to make it, then including a printout of it.
Think how quickly you could shop if you could specify the meals you want to make this week instead of looking for each item individually.
I didn't mean physically particularly, I was thinking more about the range of inventory required. Let's imagine 80% of people want 20% the same stuff. So yeah you could optimise by stocking just that 20%. But I bet you people will move back to ordering from the supermarket where they can get 98% or 100% of what they want. It's just easier than ordering from two places, items don't get duped or missed and of course it's quicker.
The consumer value proposition is covered in the video linked above. The business value prop boils down to this: double-digit net margins. Seriously.
I can be reached at scott@erniesgrocery.com
Excellent interface. I have to be able to browse your selection as easily as I can browse in a store. This means I can find things I didn't intend to find. (That's good for you and me, both.)
Fast service at the curb. There's no point in saving the time inside the store if I just waste it sitting in the parking lot.
Reliable time estimates. (Actually, this dove-tails with the last one, doesn't it?)
Selection. I know you said you have selection, but I've yet to find 2 stores that had the same selection. I'm not terribly set on brands, but it does matter sometimes.
Stock. As in, things had better be in stock. Nothing makes me angrier than when the store is out of something I need. Yes, not even long lines.
Deli/Bakery/etc. When you've just dealt with a shopping trip, you don't feel like cooking that night. Bringing home something delicious and/or hot is a must.
And you should seriously consider delivery, and not just curb-side. I know it's a logistical nightmare, but it eliminates 2 of the things above quite neatly.
I also love the possibilities for the store itself. Because the customer never enters the store, all the standard storefront stuff is eliminated. You can use portable tablet registers to let the customer pay, and standard shopping carts are eliminated. You can use whatever is most efficient, or even invent something to make it better. And you can start off with people plucking things from shelves, but it may become economical to have robots doing that. (I believe Amazon does that, but they're pretty big and centralized.)
In short, do it right and you'll make me (and a lot of other people) really happy.
"Excellent interface"
We have built a streamlined interface that is uniquely designed to handle grocery shopping. We believe that there is a fundamental difference in shopping for groceries online and the way we shop for other consumer merchandise (such as clothes or books). Being fast, intuitive and discoverable are the overarching goals.
"you should seriously consider delivery"
At a later date, perhaps. "Logistical nightmare" is absolutely right. When/if we do delivery, I want to treat it as an outsourced add-on priced at/near cost (which will still mean a hefty delivery charge in low population density areas).
"I also love the possibilities for the store itself"
Absolutely. In addition to your suggestions, consider the long-term opportunities related to merchandise packaging and private label goods. Customers are no longer walking the aisles making buying decisions based on physical packaging. The right packaging/private label strategy (think Trader Joe's on steroids) could eventually lead to some amazing gross margins.
One thing that could make things speedier would be something like an RFID tag in my car that gets scanned as I enter the parking lot, so you'd know what customers were about to pick up their groceries. (You'd have to carefully consider the privacy implications for people being tracked elsewhere, though.)
A normal non-refrigerated warehouse can pick items (grab from the shelf) well in advance of the "pick up" time for carriers, so orders are ready to go when the truck arrives.
In Ernie's model, it becomes a challenge having items ready when customers arrive, yet minimize the amount of time perishables are out of refrigeration.
This could be addressed a few ways : 1. Asking the customer roughly when they expect to pick up their orders 2. Staging orders in refrigerated and non-refrigerated sections for quick final assembly at pick-up 3. A mechanism like you've described to give some advanced warning to the warehouse.
Very interesting stuff indeed -- I'm envisioning some wicked cool cross and upselling opportunities with punchfork.com's API.
And this opens all kinds of possibilities for shopping lists: I could have templates for my shopping list ("here's my usual stuff") or groups of items ("all the stuff I need to make this recipe"). I could have a smartphone app and scan the barcode of an empty package, automatically adding that item to my list.
Shoppers are accustomed to doing their own quality control when shopping for fresh items. In a real grocery store it takes real effort to choose the best meat and produce from what's available, and that decision might just be to not purchase something. Do you intend to provide this as part of your service? If so, what controls will you have in place to guarantee quality?
(also, anyone who doesn't relish picking veggies that have been handled, sneezed on and who knows what else by the hundreds of other shoppers that came through the supermarket before you)
But I think you have it backwards...
The real problem is not the time spent in the supermarket, it's getting there and back. You're addressing the wrong issue.
Many people want their groceries delivered for all kind of reasons:
- They have small children they don't want to take with them.
- Weather.
- Traffic.
- Health issues, elderly, shut-ins, etc.
- They don't have a car.
- They work and can only go the same time as everyone else who works.
- to examine and choose their own produce
- to examine and choose their own meat
- to examine and choose specials (which can be done well on-line)
- to handle and compare similar items
- to consult with the butcher/deli manager/etc.
If you are seeking large amounts of investment, why don't you just attack the real problem: getting out of the supermarket without waiting in line. All the necessary technology is already available. I just want to fill my cart and go home.
Please don't become another Webvan. Take that money and leverage current technology to eliminiate check-out lines in existing supermarkets forever. That's what people really want.
We don't need more infrastructure. We need better use of technology in existing infrastructure.
Bar codes dragged us that industry into the 20th century. RFID can drag it into the 21st.
In Memphis, TN (and much of the US), most people drive to and from work. There's just no alternative for commuting, and I think Ernie's has a great opportunity to allow these people to fit a "stop at the grocery store" into their daily commute.
I'll admit that I often need to do a grocery run on the way home, and it almost always takes an extra 30-60 minutes. I'd love the opportunity to do that shopping online before I leave the office, and just stop to pick up my order on the way home. I can imagine this cutting my "grocery stop" time in half.
Full Disclosure: I know the founder, and I had a chance to "beta test" the idea. I drove a couple of miles out of the way and still got home 30 minutes earlier that I would have, had I stopped at my local grocer.
The reason I use Grocery Gateway (our local online grocery store w/ delivery) is because I live in a city and don't need a car. So I get all of my non-produce stuff delivered.
It's $8 for delivery vs a $15 taxi + the time it would take for me to get there and back.
Toronto is not a food desert by any means, with lots of fresh fruit and vegetable vendors on nearly every major street (where I live, there's three in close proximity; where I used to live, there were five or six).
That said, I think the concept described here is very useful for a particular class of shopping: that which one would do on the way home from work. Yesterday, I had to pick some stuff up from one of our local stores on the way home (Planet Organic); my wife made the shopping list. If she had been able to make the shopping list directly with Planet Organic and I would have been able to just go pick it up without spending an additional ~25 minutes wandering around the (small) store, I would have been home about 40 minutes earlier than I was.
One of the problems of modern grocery shopping is you're typically doing the shopping for at least a week at a time; Ernie's may allow your customers to shop for food more frequently in smaller batches, getting fresher produce every time. I'd push that concept forward.
Your "quick stop on the way home from work" is our number one use case. I'm very happy it appeals to you.
Regarding food deserts, Ernie's is a great way of addressing this issue and we are pitching a major regional supermarket chain about it.
But there are countless times where I've needed to do some serious grocery shopping, and I plainly just don't feel like going to the store. I've avoided the grocery store for weeks, because I just don't enjoy being there. And I'd rather spend that time doing other things. Which, is my problem, yeah, but if someone is offering a solution...
Not everyone, though -- some people genuinely enjoy the grocery shopping experience. For them, the supermarkets will always be there.
I contend that, outside of a few high-population density areas, grocery delivery will never be a mass-market solution in the United States. It's simply too expensive. While others in the industry continue to beat their heads against that wall, I propose a very simple alternative:
Ernie's reduces the chore of grocery shopping dramatically, while at the same time operating at a fraction of the cost of a traditional grocery.
I'm not trying to compete with a hypothetical grocery store, I'm competing with the supermarket down the street from me (the one so many people complain about).
My real problems are:
1. Finding stuff in a store. I hate walking 10 aisles for 20 minutes to find that $2 bowl of noodles.
2. Asking store workers for product locations. Takes time & hassle.
3. Buying unnecessary stuff i.e. falling victim to marketing and product placement.
I do not mind driving to the store AT ALL, as it is usually one stop out of many. Often it is on my way back from work or school.
If you ever come to the Bay Area, I guarantee I will use your service if your prices are within 10% of Safeway or Lucky's.
Good Luck!
Edit: And as a plus - they could use Amazon like recommendation as customers are "shopping" instead of getting coupons after you finish your shopping - like they do in normal retail stores.
The concept of only having a limited set of distribution/pickup points makes a ton of sense, much cheaper than home delivery. You are effectively offloading 2/3 of the delivery cost to the customer themselves.
Things I think this could miss out on: - Impulse shopping - higher margin items added - psychological benefits of grocery experience (ooh that'd be tasty, let me buy that).
fascinating marketplace to be in IMO. I'd pay not to have to wait 10 minutes in the deli counter for some sliced turkey.
"Why not treat yourself? Instead of Own Brand Generic Turkey Slices why not try Bernard Matthews' delicious Wafer-Thin Turkey Slices, with meat from free-range turkeys, for only 20c?" "Having a BBQ? You bought barbeque sauce - what about some premium BBQ sausages and a chef's hat to grill in style?"
You want to see a grumpy clerk? Go to Switzerland and forget to put the little sticker on your bags of produce. Damn.
Sure these sites were different than what you are trying to accomplish (Online --> Deliver to your door vs Online-->Pickup at local store), but they still have similar problems. Groceries operate at razor-thin margins, and being a warehouse of food will only take you so far (just ask WebVan). How do you know if your "Ernies" associate will pick a ripe apple vs a bruised one? How can Ernies be "friendly" if all the interaction is ordering online/pickup at the store?
The biggest question for me is, what is to stop the competition from implementing this if it sees initial success? Order online --> Pick up at store already exists for many types of businesses, if Meijer or Publix or Acme Grocery co sees success, they'll probably add this to their options, at a much easier cost than you will (as they will already have retail stores). What competitive advantage can you use that can fight against this?
Groceries operate at razor-thin net margins. Ernie's will operate at double-digit net margins.
If you take a look at the books for any supermarket chain, you will see that the vast majority of gross profits gets eaten up by running those large storefronts. Webvan (and other home delivery attempts) simply replaced the large storefront cost with a large logistics cost.
Ernie's eliminates those costs, all while reducing the chore of shopping for the consumer. It's a win-win.
It works pretty well and we use it a few times a month. The problem we have is that shopping online is like ordering at a closed stack library - browsing the aisles in person lets you see deals for similar items.
Edit: it will probably help a lot that you've already got a portion committed, btw.
http://www.colesonline.com.au/wcsstore/ConsumerDirectStorefr...
And soon there will be Ernie's in the U.S.A.
Make sure you're in an area that's largely populated by families, and make sure your prices are already good.
That being said I think you could build a really interesting interface. Also tremendous overhead savings, no cashiers, baggers, carts, storefront. Basically just a refrigerated warehouse and limited staff.
Awesome.
What does this give me over Ocado (or their many many many competitors - I mean, Asda deliver?!), who I order from, and then they deliver? This sounds like it just adds an extra step of my having to show up, rather than just agreeing that I'll be sat at home in my PJs watching Jeremy Kyle at the right time...
"What does this give me over Ocado (or their many many many competitors - I mean, Asda deliver?!)"
We have NOTHING like Ocado (or Waitrose, frankly) here in the US. I so wish we did. Grocery delivery is rare in general here too.
The UK is already a very mature, maybe even saturated, market for online shopping so something like Ernies would probably never appeal. It's one of the few examples where UK and rest of Europe is way way ahead of the US.
I could write a book on grocery retail in the US vs UK but a lot of it comes down to the fact that grocery stores don't make the same margins that they do in the UK.
Ocado works because Waitrose has some of the highest margins on their food because they sell premium high-quality brands and don't compete on price. Then there is a delivery fee on top of that. There are enough people in the UK, despite economic issues, that pay for premium groceries at Waitrose and want it delivered by Ocado (perhaps because they don't have a car).
Groceries in the US are way way cheaper, perhaps as much as 50% and the margins are lower. To give you a comparison, the premium grocery chain Whole Foods (which I think we now have a few in London) compares to Sainsburys on price yet the quality is better. A grocery store with price point of Waitrose or Marks & Spencer wouldn't survive in the US because Americans won't spend that kind of money on groceries.
Safeway here in San Francisco will offer home-delivery, but I think it's not something they do in their stores outside of cities, and the quality of the food is awful.
But delivery has never been popular in American because car ownership is more common then in the UK - which is probably why Ernies are choosing not to tackle it.
Anyone reading this and not familiar with Ocado should check it out - you'll be amazed at the prices but the quality and service is exceptional.
Supermarkets remain as the "normal" grocery solution, but leave a lot to be desired in terms of convenience, customer service and quality. We aim to fill that gap.
That means fresher food then what is available on Waitrose's shelves. For people who are not primarily cost-sensitive (ie Ocado/Waitrose shoppers) that's a significant advantage.
In fact I don't see any advantage with a store-fulfilled solution - the overheads are greater because the good had to be delivered from the distribution center to the store and put on the shelves, and there is a risk that the store picker will give me food with the shortest sell-by date to encourage stock rotation (Sainsburys do that all the time).
I can see in your instance that you are trying to offer fulfillment from independent retailers and so I guess your USP is that they are offering more unique food I can't get elsewhere - but I think that's a tough sell to make it worth my while to buy from you when most of my needs can be met from Waitrose via Ocado.
http://www.samsclub.com/sams/pagedetails/content.jsp?pageNam...
Good luck to you and I hope it succeeds!