Startup Picnic runs grocery delivery bus in Dutch online shopping boom

[September 21, 2018]   By Toby Sterling

Utrecht, Netherlands (Reuters) - Coming to a stop outside yet another front door on Utrecht's narrow streets, 25-year-old Susann Huber gets out of her electric minivan, pulls out a crate of groceries and hands them over to a waiting customer.

Huber works for Picnic, an online supermarket which targets middle-income shoppers and is the first to offer free delivery in the Netherlands, where online grocery shopping is booming.

Statistics Netherlands on Wednesday said that 29 percent of Dutch households ordered groceries at least once online in 2017, the most in the European Union, passing Britain at 28 percent.

Multinational Ahold Delhaize was the first to offer online groceries in the Netherlands in 2010, but the practice has kicked into high gear recently due to what ABN Amro analyst Henk Hofstede dubbed the "Picnic Effect."

"It has acted like a cattle prod to the other major players," he said.

Hofstede estimates Ahold's market share at 50 percent, followed by privately-held Jumbo, which holds 30 percent. Picnic has taken 10 percent market share since its launch by four entrepreneurs three years ago.

Picnic snagged an eye-catching 100 million euro investment last year which it is using to fund a rapid expansion, including opening its first hub in Germany last month.

Chief Executive Michiel Muller told Reuters that the company was saving on costs by delivering along regular routes, somewhat like a public bus -- or the "Milkman 2.0".

The milkman of yore was "a very nice guy, very fresh products, always on time, once per day," Muller said.

"We kind of replicated that model, and added technology."

Customers can place their orders by smartphone app only, and pay upfront by 10 p.m. for delivery in a 20-minute window the following day.

Muller said the company, which had 150,000 customers at mid-year, can only add 1,000 customers a week against a current waiting list of thousands. So it cherry-picks its launches along the most attractive routes. He forecasts the company will more than double sales this year, from 100 million euros in 2017.

Sam Spijkerman delivers the groceries to customer Arend Jansen in Amsterdam, Netherlands August 14, 2018. REUTERS/Eva Plevier

Customer Marieke Dubbelman, a mother of four, said Picnic's selection is somewhat limited, but the quality was fine and prices comparable to that of a mid-range supermarket.

"I really use it for staples shopping: laundry detergent, bottles of milk, stuff you don't want to waste your time getting and dragging home," she said.

Muller acknowledged Picnic's model could not compete with "on demand" or same-day delivery services, such as those offered by Instacart in the U.S., and that it faces a long-term threat from highly automated competitors on the model of Amazon.com and Britain's Ocado.

But for now, there is room to grow in online grocery, and Picnic has advantages: it is free of the costs associated with brick-and-mortar stores, including store staff and prime real estate locations.

The company prefers to invest in its software app and in its cheery electric vans, which contrast sharply with the diesel trucks used by competitors.

Customer Dubbelman said she wasn't necessarily sold on the company's green credentials, but she could see the "Milkman 2.0" model might cut down on overall city traffic.

"To me the main thing is just having my groceries delivered to my door," she said. "If it's environmentally friendly, well, that's a plus."

(Reporting by Toby Sterling; Editing by Raissa Kasolowsky)
 

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