Dutch app supermarket boss sees tech boom in online delivery

Advances in artificial intelligence are poised to drive a “massive” boom in online grocery deliveries, according to the boss of Picnic, a Dutch app-only supermarket rapidly expanding in Germany and France.

Picnic revolutionized the Dutch supermarket landscape with its free delivery offer within 20 minutes – made possible thanks to the efficiency extracted from huge amounts of data.

The company already uses AI for a wide range of operations, explained CEO Michiel Muller, 59, at the company’s 43,000-square-meter distribution center in Utrecht, in the central Netherlands.

“For example, predicting how many bananas we will sell within three weeks. Or what happens when the weather is good or bad. Or doing all the route planning,” he told AFP.

As technology improves and data sets grow, predictions will become more accurate, further reducing food waste and offering even more accurate time frames to customers, he predicted.

“Don’t forget that supermarkets didn’t exist 60 years ago. There were only smaller stores. So there’s always a movement around new technology and new ways of delivering goods.”

“The supermarket will remain. That’s for sure. The stores will remain. But the online part will grow enormously”, he stated.

Picnic has developed its own in-house software to fine-tune every element of the delivery process, from the processing and packaging of warehouse inventory to the famously complex “last mile” of goods delivery.

Delivery times are calculated with extraordinary precision, with information processed by 300 data analysts and 300 software engineers at Picnic headquarters.

“We know exactly how long it takes to get around the vehicle and when it gets dark outside, we add six seconds to the delivery time,” Muller said.

Unlike a physical supermarket, each order arrives via the app, so the company knows exactly what it needs to order, deliver and how long it should take.

The company estimates this results in seven times less food waste than in regular supermarkets.

“There is not a single baguette ordered and not delivered,” said Gregoire Borgoltz, Picnic’s head of operations in France.

The company’s drivers in the ubiquitous white Picnic vans are given a rating after each trip based on their driving, even rating whether they accelerated too quickly around corners.

– ‘Automation level’ –

The huge investments required in custom software, plus the company’s distribution centers with 14 kilometers (nine miles) of conveyor belts, mean it has been difficult to turn a profit.

Sales increased from 10 million euros in 2016 to 1.25 billion in 2023, with the number of employees rising from 100 to 17,000 employees in the same period.

But Muller said the company suffered losses of “around 200 million euros” last year due to expansion in Germany – opening slots in Berlin, Hamburg and Hannover.

For the first time since its founding in 2015, it finally made a gross profit this year in its domestic market. “It took eight years to be profitable in the Netherlands,” he said.

At the beginning of this year, the company raised 355 million euros from investors to finance its investment in Germany and France, namely through the Bill & Melinda Gates foundation and the German retail giant Edeka.

When it comes to profits, it all comes down to technology again, Muller said.

“Basically, the level of automation determines our level of profitability,” he said.

“Today, we have around 30% automation in the Netherlands. We will grow to 100% within a few years,” with Germany and France close behind.

So far, Picnic operates mainly in the northern French city of Lille and the suburbs of greater Paris. Central Paris is a “great opportunity, but it also has some of the worst traffic jams,” Borgoltz said.

“We will go to Paris, but we have to find the right time.”

Muller has ambitions to expand the company further. “Well, there are 183 countries in the world,” he jokes when asked where Picnic will next expand.

But for now, he said the company would consolidate its activities in Germany and France before looking further afield – not ruling out a foray outside Europe.

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