The engineer looks upon grocery delivery in terms of the cost of freight.
“Freight is a classic engineering problem,” he said. “I thought it was really interesting, because freight moves around at 10 cents per ton per mile. Consumers buy groceries and move them at about $45 per ton per mile. So it’s astronomically less efficient. I got in the business to solve that problem.”
Relay, like Giant’s Peapod, starts by relying on central warehouses to fill the initial order. The groceries are then loaded in trucks and delivered to select pickup locations. Relay’s orders must be made online the night before the pickup. The food is put in refrigerated “totes,” where it is taken to central locations such as the Trohv Shop in Takoma Park, Md., or the Mint Gym in Adams Morgan. Customers can stop by between 3 and 7 p.m. to grab their groceries.
Peapod trucks the grocery orders during the night to designated grocery stores or to pickup-only locations such as the gas station on Connecticut Avenue. Customers must order by 6 p.m. for an 8 a.m. pickup the next day. They have until midnight if they want to pick up the groceries the next afternoon.
“This is something new we are trying,” said Mike Brennan, 49, a 16-year veteran of Peapod and its chief operating officer. “The goal here is to give customers an option. They order online or on their mobile, you pick a time and you go to the store.”
With Americans spending hundreds of billions of dollars a year on groceries, Brennan said, “if we capture 5 percent of that, it’s a really big number.”
Buckner of Relay Foods said he offers a choice of 30,000 grocery items, which presents its own logistical nightmare. To solve it, he has a cadre of engineers who pound away on the software in pursuit of flawless delivery at his 100 locations throughout Virginia and Washington.
“We have millions” in our research and development budget, Buckner said. He said that as the company scales its revenue, the research costs will drop as a percentage of that revenue, and profits, hopefully, will follow.
The goal is refining the automation so a cracked egg, bruised bell pepper or wrong order doesn’t reach the consumer.
“This business requires automatic handling of a million possible failures,” Buckner said. “Your order is a complicated orchestration of hundreds of moving parts.”
Some efficiencies may be easier to accomplish. For example, as people become more comfortable with the Internet and mobile devices, they are ordering online while going about their everyday tasks.
“It turns downtime, whether you are on a train or waiting for a recital to begin, into productive time,” Brennan said.
Combine lots of those little orders and an employee manning the central location for the deli can cut and package much greater amounts of, let’s say, roast beef sandwich meat, without having to take each order individually.
That’s how they still do it at the Chevy Chase Supermarket — a neighborhood grocery just down the street from Giant’s new pickup spot.
You wonder for how long.
For previous Value Added columns, go to washingtonpost.com/business.