On March 9, 2020, Italy was the first in Europe to enter a whole-country lockdown to try and prevent the spread of the novel coronavirus. Further to the official measures being set out by Prime Minister Giuseppe Conte, I remember speaking to family and friends there and asking whether they would be able to do online shopping for groceries on major supermarkets’ website, as I do not recall online grocery shopping being a common way of getting groceries in Italy. The answer was, “yes, of course, that will be easy”. However, this did not turn out to be the case.
According to 2018 reports focusing on the Italian large-scale distribution, total revenues of major Italian food retail chains represented 97% of the Italian total groceries market and reached a value of €83bn in 2018. A breakdown of these revenues, however, reveals that the e-commerce portion of it was only €476m, constituting around 0.57% of the total.
In line with this, it quickly becomes clear that potentiating the e-fulfilment side has not been a priority for Italian supermarkets over the years. And it became painfully clear, when during the pandemic requests for online deliveries spiked at unprecedented levels. As an example, on the first week of lockdown, Coop Lombardy – a supermarket chain with a presence in the homonymous Italian region heavily affected by the virus – recorded online shopping up 90% year-on-year and an average of 900 online orders made daily by users.
However, what in China was in some cases a 30-minute wait to have shopping delivered at home by the likes of the Alibaba’s Hema service or its competitors, would take 10 working days or more with Esselunga, another major Italian supermarket. But even this less-than-ideal timescale would only be achievable provided people were fast to grab online deliveries slots freeing up, in some cases, late at night. In some other instances, such as with Coop and Carrefour, also present in Italy, consumers reportedly had payments refused after having scrupulously filled in their e-trolley.
The main problem with Esselunga and other big supermarkets in Italy was that, over the years, they had refused to outsource their e-fulfilment services to third parties, because they wished to control all aspects of their supply chains. A model that was sustainable pre-COVID19 crisis quickly became obsolete when demand increased rapidly, and more Italian consumers needed groceries delivered at home. Problems did not only arise on the supply side, but more crucially, on the fulfilment side, which lacked agility and flexibility.
Furthermore, when compared to other big retailers such as Walmart in the USA and Tesco in the UK, there have not been enough investments made by Italian supermarkets on their digital infrastructure because e-commerce was not deemed a strategically important part of the business.
Finally, when Ti interviewed several major logistics companies in view of the 2020 e-commerce report, it was highlighted that e-commerce was more agile in China as big players had not been bogged down by legacy infrastructure already in place, like in Europe, but had the possibility to develop infrastructures that met their needs. Italy was an example of this, as it later became obvious.
It might be, then, that as Italy enters phase two of the lockdown on May 4, 2020, and a new ‘kind of normal’ is implemented, a phase two of online grocery shopping would also start becoming a priority in the country. This would require a more focused approach on technological improvements and collaborations with LSPs to survive and live up to the challenges ahead, perhaps even thrive, and hopefully, keep feeding the country.
Source: Transport Intelligence, April 30, 2020
Author: Caterina Ciccone