Quick.com Tackles Vancouver Grocery Home Delivery
PROVING that a chosen strategy works rather than rapid growth tops the list for Quick.com. Having seen a multitude of other online grocers try and fail, the home delivery start-up company in Vancouver, British Columbia, set out with a small operation and a goal to prove that it would work.
Quick Home Delivery [Canada] Inc opened for business in Richmond, British Columbia, a suburb southeast of Vancouver, in October 2000. Prior to making its first public sale, Quick ran its full warehouse and delivery crews in test mode for three weeks. “Our goal was to make sure we had the entire system, software, web interface, buying, receiving, warehousing, order selection, loading, and delivery working perfectly before we took a chance with a live customer,” says Alan Petrie, vice-president distribution. “We spent that three-week shake-down run selling and delivering to ourselves and our friends to work out all the potential bugs.”
Quick also designed its system for cost control and efficient operation rather than explosive growth. The business team that includes management, financial, and logistics experts looked at mistakes made by previous online grocers and designed ways to avoid the same traps. For instance, the operation — particularly the fleet — is designed to have a much lower cost structure than some of the online grocers that have tried and failed. In addition, Quick adheres to a strict canon of internal rules. It makes no unattended deliveries. While all ordering is processed across the Internet, Quick refuses to take payment online. All payment is handled in person by Quick personnel at the time of delivery using a wireless communication system. Quick accepts only credit cards for payment. Delivery personnel will not handle cash or checks; nor are they allowed to accept tips.
The system is based on repetitive, consistent service. Nothing is allowed to interfere with system function. For instance, the distribution center is not set up for customer pick-up, and Quick states its policy against coming to the warehouse after orders clearly on the company web site.
Charge for Service
In addition, Quick has a minimum order size and charges for its service. Delivery is a convenience that is sold on the basis that it saves up to four hours weekly for Quick customers. That convenience has a value in addition to the price of delivered product. Customers must order a minimum of $50C in groceries and kitchen supplies. Quick sells beer and wine, but the $50 minimum must be reached before the price of beer or wine is added to the tab. For orders between $50 and $100, a delivery fee of $5.95 is added to the total.
Quick attempts to encourage customers to order in quantity. No delivery fee applies to orders of more than $100. Large orders provide a real incentive to customers. Orders that total more than $200 are subject to a 2% discount off the total. The discount rises to 3% for orders that total more than $300.
Quick sells from an inventory of 8,000 items ranging from dry groceries and cleaning supplies to milk, juice, butter, and eggs. Produce, especially organic produce, is emphasized in the inventory. The one product group that seems to be missing is fresh meat. Quick sells frozen meat, poultry, and seafood along with a large line of fully prepared frozen meals. Prices are competitive, Petrie says, and include a range of weekly specials.
Customers Choose Delivery Window
Customers are offered two series of delivery windows. All ordering is by computer. Orders received by 10 pm are available for delivery starting at 7 am the following morning. Same day delivery starting at 4 pm is available for those who get their orders in by 10 am. Delivery windows are open in 90-minute increments. Customers choose their own delivery window. Delivery can be specified for the following morning or same day or as far out as five days in advance.
Obviously routes with deliveries scheduled after 4 pm have a different start time than those that start delivery at 7 am. Although Quick offers delivery to offices, Petrie says that more than 90% of deliveries are to homes in the Vancouver metropolitan area with its population of more than two million.
Routes carry an average of 10 to 15 delivery stops for service that begins at 7 am and ends at 8:30 pm. They are built around delivery density by area using RIMMS routing software from Descartes.
To maintain this service level, the Quick distribution center is open 24 hours a day and operates with two crews of workers. Crews receive inbound loads, stock the warehouse, and load for afternoon delivery during the day. The night crew selects orders and loads trucks for the early morning departures.
Daily Perishables Receiving
Quick receives inbound inventory on a daily basis, especially perishables. The total supply of perishables in the distribution center would not last more than three days. This rapid turn of product is intended to ensure high quality and freshness. Three groups of Quick personnel, buyers, warehouse workers, and order selectors have been trained to inspect produce. With each group looking at produce daily, most goods are inspected up to five times a day.
“We are selecting produce for other people, so we have to be extra careful,” Petrie says. “We don't let anything with suspect quality in our warehouse, and we certainly can't take a chance on keeping something too long and letting it get into a customer order.”
Orders are selected into ordinary plastic grocery bags just like those used by supermarkets. Following selection, the bags are stowed in plastic tote boxes for transit. At delivery, only the plastic bags are taken inside.
Eight-Truck Fleet
Quick currently operates a fleet of eight trucks held on lease from Ryder Logistics and Transportation Solutions Worldwide in Delta, British Columbia. The W4500 series GMC trucks with 14-ft aluminum van bodies are a big part of Quick's cost control program. The trucks are used to deliver frozen and perishable products under positive temperature control, but are not insulated or refrigerated.
Instead of leasing a fleet of new refrigerated trucks, Quick chose to equip the fleet with Flexico2ld insulated containers from H&R Industries. Flexico2ld containers are insulated polyethylene containers on wheels. Containers use dry ice as a refrigerant and are said to maintain temperature of chilled, frozen, or deep-frozen product for up to 72 hours. Product is placed on movable shelves, and the container front is closed securely with a flexible, insulated panel. Multiple temperatures can be maintained in a container by placing a baffle between temperature zones. Dry ice is loaded into a special tray at the top of the container.
In practice, Quick replenishes dry ice in the containers daily. Containers for frozen product are charged with 10 pounds of dry ice. So far, every container has come back from the route with dry ice remaining in the tray, Petrie says.
The Flexico2ld containers cut the start-up costs for Quick significantly, says John Badgley, business development manager for Ryder. Trucks of the same size with the multi-temp refrigeration system required for Quick's operation would have cost almost $20,000C more than the dry vans.
These are not simple dry boxes on low priced trucks. The low-cab-forward GMC chassis are powered by 175-hp Isuzu diesel engines and have four-speed automatic transmissions. Truck bodies have custom shelves for the plastic delivery totes on each wall. In addition, bodies have two rows of logistics track on each wall for securing the Flexico2ld containers.
The containers are a relatively small investment, Petrie says. Quick owns only 32 containers. This provides enough containers for each truck to have two or more and still leave a few at the distribution center for order selection. The containers are rolled from the trucks into the coolers and freezer for order selection directly into the insulated boxes. Containers are kept under temperature control until just before route departure. In general, trucks carry one container for frozen food and one for chilled goods. If loads are particularly large, a third container may hold a combination of chilled and frozen product.
Rapid expansion is not the goal at Quick, Petrie says. In fact, premature expansion has harmed many other online grocers. The plan at Quick is to prove that the concept works and then clone the Vancouver operation in other locations.