According to the Motley Fool, meal-kit delivery is one of the most challenging business models, with more than 150 competitors jockeying for market share in an environment in which the packaging and logistics of delivering a highly perishable product profoundly affect customer acquisition and retention.
However, the meal-kit business is expected to grow from the current 2.2 billion to 11.6 billion by 2022. Meal-kit delivery companies are here to stay - at least some of them are.
Recently, grocery retailers have acquired or partnered with meal-kit companies to take advantage of the growing trend. These partnerships, while sometimes beneficial, can add additional pressure to reduce costs. Blue Apron had to reduce prices by 30% to get kits into Costco.
Blue Apron had to reduce prices by 30% to get kits into Costco.
Companies that fail to be acquired or find a partner face significant financing challenges. Chefd's inability to secure financing and unexpected exit from the market is pushing the other players to innovate to become more efficient. While Sun Basket saves millions on refrigeration by storing ingredients in a converted limestone cave, others are turning to technology to help them scale operations and package orders quickly and accurately.
"My advice to the majority of meal-kit companies who contacted me was to place focus on designing and implementing an optimized supply chain and production capability to reduce costs and maximize operational efficiency".
- Brittain Ladd (business strategy and supply chain management expert)
One of the easiest ways to reduce costs and maximize operational efficiency is by streamlining the process by which ingredients are bundled into an order. In the supply chain industry, the process of bundling multiple items together is called kitting. Kitting is often made faster and more accurate with pick-to-light technology.
Pick-to-light (or put-to-light) technology can reduce meal-kitting costs and maximize operational efficiency by improving picking accuracy, speed and flexibility. Let's look at each of these in more detail.
Imagine shipping the wrong ingredient to a customer, or worse - shipping the wrong ingredient to multiple customers! Customer retention rates drop, refunds have to be issued, and you lose potential new customers. On the other hand, you have an opportunity to delight and retain your customer - simply by shipping the correct ingredients every time.
Cloud Display Devices can automate the order packing/kitting process. Devices are highly flexible and can be configured to accommodate various operational processes. There are two main ways to use the devices - as a pick-to-light or a put-to-light system (or both).
Pick-by-light and put-to-light are similar processes that use the same hardware. In a pick-by-light scenario, devices are mounted to each inventory location and light up, indicating which ingredient should be placed into the kit.
Conversely, in a put-to-light scenario, devices are mounted to a picking cart or sortation wall and the light indicates where the ingredient should be placed.
Cloud Display Devices improve accuracy rates, customer satisfaction, and customer retention.
Shipping not-so-fresh, or worse - rotting ingredients can be as detrimental, if not more damaging than, shipping the wrong ingredient. Both scenarios lead to angry customers, lost revenue and fewer sales. But how to do you ship highly-perishable fresh food quickly?
Cloud Display Devices can help your pickers locate the right ingredients and package orders faster and more accurately than manual picking. Pick-to-light systems generally produce a 30-50% increase in pick rates. Traditional pick-to-light is prohibitively expensive with disruptive deployments, but you can be up and running with Cloud Display Devices in days and it doesn't have to disrupt your operation.
Some meal-kit companies provide customers with the opportunity to add or subtract ingredients, based on their preferences and dietary needs. While this might appeal to customers and sets some meal-kit businesses apart from the competition, it creates a logistical nightmare. Tracking a large number of ingredients that change frequently is no easy task. Kitting different ingredients for each order is even more of a challenge.
This is where a wireless pick-to-light system has advantages over a traditional hard-wired system. Cloud Display Devices can be attached to each ingredient location, moved from week-to-week (or day-to-day) and reassigned to new ingredients as needed. Devices light up, telling the picker which ingredient to add to the order and can even accommodate special instructions. The system is highly flexible and even works with Google Sheets (or any modern WMS/ERP software).
This way your pickers are selecting the right ingredients and shipping orders quickly.
Cloud Display Devices can help your pickers put the right ingredients together, quickly, and accurately. Best of all, they can adapt and grow with you as your operation changes. It's affordable and easy to implement - we'll walk you through it!