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supermarket with fresh produce

AI and Automation are transforming the E-Grocery experience

AI and Automation are transforming the E-Grocery experience

The concept of e-grocery is not new, with existing e-commerce businesses like Walmart To Go, Amazon Fresh and Instacart, but with Amazon acquiring Whole Foods, all the players in the grocery retail industry have realized that grocery shopping is at the brink of transformation and are changing their strategies to accommodate and incorporate online shopping into their business goals. 

The focus is on providing solutions to enhance customer engagement, optimize inventory management and upgrade logistics for accurate and speedy delivery. To address these concerns, businesses are investing in technologies like artificial intelligence (AI), machine learning (ML), big data, internet of things (IoT), cloud computing, autonomous robots, virtual and augmented reality (VR/AR).

Challenges of e-grocery inventory management

The success of an e-grocery business essentially depends on inventory management. The fundamental problem that needs to be addressed is stocking: with grocers finding the right balance between understocking and overstocking. 

Overstocking uses up costly warehouse space and locks up capital which could be otherwise made available for resources. Products decay over time and with perishables, the decay is often quicker, in some cases, by the end of the day. Every wastage affects the business, increasing the costs and making it unproductive.

While on the other hand, understocking hinders the growth of the business. No grocer wants customers abandoning their shopping carts because of the inability to supply an item. While there are options to pre-order products that are not in stock, groceries are fast moving products that customers need on a regular basis. Grocers cannot list fruits, vegetables, cereals, soaps, detergents, and personal care items as out of stock. The demand for them is instant.

Optimizing inventory is crucial for the survival of the grocery industry. It’s no surprise that e-grocers are leaning towards innovative technologies to enhance and optimize their inventory management processes.

aisle with fresh fruits

Emerging trends in e-grocery

Big Data, AI and Machine Learning

E-grocery businesses generate a significant amount of data about purchasing patterns which can be useful to predict future trends. However, this data needs to be examined and categorized to make it efficient and useful. Here’s where data analytics and machine learning come in to help grocers extract relevant insights which help them make strategic business decisions.

Businesses are leveraging AI to predict operational failures and improve warehouse management. As machine learning models get smarter, the systems get more efficient over time.

Automation and use of robots

Besides inventory maintenance, the physical movement of the inventory is another challenge for the grocers as it requires a considerable amount of human labor. Technologies like automation and robotic systems are helping businesses by taking over these manual tasks.

The robotic systems are automating operations for customer orders and are also helping businesses to build space-saving warehouses and utilize the complete area efficiently without wastage. There are rails between aisles for robots to move around, stock and fetch products. Robotics and automation go hand in hand towards reducing the size of real estate investments.

Self-Drive logistics

Another challenge that e-grocers face is delivery of the products to the customers.

Groceries differ from regular e-commerce products such as shoes, or furniture items in two ways: the quick turn around time expected by the customer and the perishable nature of grocery items. As the order volume of the e-grocery business grows, the logistics system needs to scale along with it. This, in turn, increases the delivery cost that further affects the business.

Businesses are turning towards self-drive vehicles to deliver groceries to customers and with startups like AutoX with self-drive car deliveries and Marble with a sidewalk delivery robot coming in the market. As transport technology advances, self-driving automatons can become the next big thing to look out for.

The future of e-grocery

As online grocery businesses are adopting the latest technology to solve the supply chain, inventory management, and logistics problems, even small grocers are able to leverage these technologies to scale their businesses through automation and predictive analytics.

Moving grocery online has been a major problem with the high demand for operational excellence and the low margin of the products. This is a hard sell for many businesses, but with the advancements in AI, Machine Learning, Automation, Robotics, this is changing. This can be seen from the growth of e-grocery ventures that are emerging around the world.

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