Category: Technology

The shift in Grocery

I am 50 this month, I have been in high technology and emerging technology for 30 years.

I am an early adopter – I buy all the new services I can, explore new ways to shop and pave the way for the mass market to follow.

I have seen this in technology first hand – usually by being around a decade too early!

In Grocery as with all retail – things are changing. Asked years ago consumers would say they were perfectly happy with shopping in supermarkets rather than fiddling around with their computers to buy online.

But online is taking a grip of grocery quicker than many can appreciate.

Americans buying Groceries online

CB Insight have produced some great information on the changes in the grocery market. Take a look here.

How we did FoodTech for just £3 million

Up until quite recently food has been a technology backwater. Now we are awash with FoodTech companies but at Move Fresh we have been a technology company long before that portmanteau was coined.

We have spent about £3 million developing our software systems. I am very pleased about how cheaply we’ve managed to do it. Many of our competitors have spent an order of magnitude more to get similar systems. Some of our ideas have been quite obvious, other less so. Here’s the top six:

First, to cover offer the most obvious is that we used Amazon Web Services. There’s two big ways that this saves money:

  • There is on demand scalability. We can multiply up servers when we need them and drop them hours later. This alone is a six figure saving for a seasonal business like ours.
  • Day to day systems administration is largely automated. As a result we no longer employ Systems Administrators and instead just have DevOps.

Secondly, we reckon to save a seven figure sum through developing in-house rather than using consultants. Our view is that software development is absolutely core to an e-commerce company so it’s something we would want to do ourselves.

The third saving is also fairly obvious which is just to have a very efficient development process. We use a Kaizen process and have automated deployments and a high level of automated testing. There’s more to it than that, but basically we made a big up front investment which is now resulting in massively increased productivity.

We love hosted services which has been our fourth saving. We replaced all of our development servers with a GitHub subscription. Address entry is through PCA Predict. Many thousands of items a day are printed through PrintNode which costs us just $99 a month! We save a six figure sum every year through using the free token system from Braintree Payments and we also save on PCI compliance too. We also use many other hosted services for development and management of our marketing.

We are now getting onto less obvious stuff. Saving five is to avoid enterprise software. We have migrated from extremely expensive enterprise software onto either open source or simple hosted services. For example, on our ERP system we have saved around 92% by moving to Odoo. We also saved over 90% on our move from an enterprise email service provider to MailChimp. We saved 98% by moving from corporate DNS to Amazon. In all three cases, these are direct savings but we made more savings through the improved functionality by dumping the enterprise software. There’s been a further saving through not having to constantly have lunch with account managers.

Saving six is that we constantly market test our technology. We do this in two ways:

  • We regularly test outsourcing to compare with delivering in-house; a recent example was the Bean to Door website where our internal team absolutely smashed Shopify.
  • We also sell our services to external companies and indeed for 2018 Q1 about a quarter of the transactions on our platform have been for third parties. Selling your service to other companies is proof that you really are market leading.

Our development team is very clearly a technology company that happens to embedded in a food business. Indeed, we employ more software engineers than some software startups.

So that’s a very brief overview of how we developed a £20 million plus system for just £3 million.

If you’d like to catch up with us the Move Fresh technology team we will be attending DjangoCon Europe 2018 in Heidelberg, Germany, May 23-25 and EuroPython 2018 in Edinburgh, Scotland, July 23-29.

Amazon buys Whole Foods

Amazon acquires Whole Foods Market

Amazon (AMZN) announced on Friday that it was acquiring Whole Foods (WFM) in a move to extend its reach into Grocery.

We have long said that Grocery is one of the last areas of e-commerce penetration and although many have tried (Ocado for example) most have failed with a pure play e-commerce offering. This is mainly due to the complex nature of the supply chain and the fact that a large part of the product base is perishable.

We have followed a number of “foodtech” businesses for the last 5-10 years and competing with the integrated nature of traditional store based retail has been very hard.

The market view is that Whole Foods give Amazon access to both local distribution hubs (historically called stores) and a very integrated and unique supply chain. Whole Foods has a strong presence in North America and a few stores in the UK but has great coverage in the US in demographically richer neighbourhoods (Whole Paycheck).

But for FMCG brands the creation of Amazon as a retailer and a potential competitor will be an interesting area to watch. We suspect a number of brands may have to increase there own technology investment and this might be based on so called “acquihires” of struggling startup in the sector.

Good news for brands – but not fantastic news for investors who have paid high multiples to fuel the burn within a number of these companies.

Long term we think this is great for the consumer, great for Amazon shareholders and fantastic for brands that have well developed e-commerce capability – allowing them to leverage the investment that Amazon is making in this sector. Not great for Walmart though!

Amazon Go

The future of convenience shopping is here and its called Amazon Go.

Amazon is one of our top technology holdings and we continue to be very bullish about the future of Amazon.

Amazon Go allows the vision of the future with no checkouts, no baskets, no staff, just great technology. All you need to get access is a simple barcode on the app. Everything else is done automatically.

Grocery shopping will never be the same – launching in Seattle in early 2017 this leapfrogs most other convenience retailers.

Amazon Robotics

One of the businesses everyone at Move Fresh respect (and invest in!) is Amazon.  The focus on growth and the vision of the founder Jeff Bezos is truly outstanding.

The entire company constantly thinks about the future and have convinced public market investors that long term growth is the best use of Amazon’s impressive cash flow.

The BBC just covered the robotics division that are rolling out in the UK.

Kiva the company that built this technology was acquired by Amazon in 2012.

There are approximately 30,000 robots in operation in Amazon warehouses!

Supporting Django

We divide our technology requirements in two:

  1. Backend systems such as finance or warehouse management which are commoditised. We buy these systems off the shelf.
  2. Customer facing systems such as mobile apps and our website which are key differentiators. These systems we develop ourselves.

Our own platform runs on Django which is one of the more modern frameworks (incidentally it is also what Ocado use). We are delighted to announce that we are supporting Django by sponsoring the Django: Under the Hood conference in Amsterdam, 3-4 November 2016. We do think it is important that commercial users of open source software put something back into the community.

Scalability by Wally

Wally is of course the real star of the Dilbert cartoons.

I was thinking today in talking to a new entrepreneur that there is a lot to learn from Wally in creating a scalable business.

Everyone in business is presented with enormous numbers of things to do. It’s very easy to become a “busy fool”. But being slightly lazy is a much better approach by following my 5 stage guide to avoiding unnecessary work:

1. Don’t do the task

The first thing when presented with a task is to consider whether it’s worth doing. A surprisingly large number of tasks can simply be dumped completely. When deciding whether to dodge something a key criteria is how much time the task will take to complete. Many meetings or phone calls fall into this category.

2. Procrastinate

There’s a lot of tasks that really need to be done at some stage but not right now. If it doesn’t cut costs, increase sales or improve customer satisfaction then it probably can be pushed back a few months without much issue.

3. Automate the task

A huge number of tasks in an e-commerce business simply should never arise in the first place. Some real world examples from my experience of massive time wasters are:

  • Reporting and KPI’s which should be an automatic reports;
  • Standard emails to customers which should be templates;
  • Customer contacts which should be self service;
  • Google bidding is almost always done better by Google Conversion Optimizer;
  • Form filling which should be eliminated (such as TSCA by ETD);
  • Checking customer orders from Zen Desk (should be thru API);
  • And lots more.

4. Outsource the task

I am a reasonable accountant and I quite enjoy it. Give me a complex journal entry to complete and I imagine myself in Dickensian London with a quill pen sitting on high stool in front of an ink stained desk and thinking through my double entry.

However this really isn’t a great use of my time. In the last month I have doubled sales at FCC through concentrating on the US project. There’s no way I could add anything like that value through my accountancy skills and much as it pains me people like Paul Kelly at Blue Crest are much better at it than me.

5. Delegate the task

Arranging for our bins to be collected from FCC has been a truly Herculean task. It took many hours of effort. I’m very pleased that Clare rose to the challenge and battled with Biffa to get the bins collected and the sums taken out of our account refunded.

However it really would not have been a very sensible use of my time to do this.

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