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Overhauling an Online Grocery Strategy

A grocer returned to profitability after revamping its online grocery strategy.

A grocer’s online business was underperforming against international benchmarks. Deliveries of online orders were inefficient, leading to sluggish growth and increasing red ink. The grocer needed a plan for short-term efficiency savings and a longer-term strategy to develop a more profitable online operating model.

BCG analyzed the grocer’s performance and identified several efficiency initiatives, including picking (by changing cut-off times and back-room management), delivery (by smoothing demand), and the call center (by changing the substitution process). Longer term, we helped the company develop a new value proposition and operational model tailored to local markets, a dark store for fulfilling online orders, and click-and-collect models to improve delivery efficiencies. The grocer is still implementing these changes, but it has already fundamentally revamped its picking and loading processes, leading to a 5% gain in efficiency. More important, the online unit has returned to profitability.

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