Development of Food E-Commerce Collection

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Case: K-Citymarket Pirkkala

Bachelor’s thesis

Valkeakoski Campus, Bachelor of Business Administration Fall Semester 2021

Joni Saari

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International Business Abstract

Author Joni Saari Year 2021

Subject Development of Food E-Commerce Collection – Case: K-Citymarket Pirkkala Supervisors Merja Helin

Opinnäytetyön tavoitteena oli tutkia, miten ruoan verkkokaupan keräilyä voitaisiin kehittää kohdeyrityksessä Pirkkalan K-Citymarketissa. Opinnäytetyö kirjoitettiin yhteistyössä

Pirkkalan K-Citymarketin kanssa.

Opinnäytetyön teoreettinen osuus sisältää määritelmän ruoan verkkokaupasta ja kaikista sen sisältävistä prosesseista. Teoriaosuudessa on myös kuvailtu ruoan verkkokaupan hyötyjä ja haittoja yleisesti sekä ruoan verkkokauppaa ulkomailla sekä Suomessa.

Tutkimus toteutettiin laadullisena tutkimuksena, jossa hyödynnettiin teemahaastatteluja, kohdeyrityksen sisäisiä tietoja, sekä havainnoivaa tutkimustapaa. Henkilöt, joita

haastateltiin, olivat kaupan johtava henkilö sekä ruoan verkkokaupan vastuuhenkilö.

Havainnoivaa tutkimustyötä suoritettiin työpaikalla töissä ollessa itse ruoan verkkokaupan keräilijänä, että ulkopuolisena kaupan asiakkaana.

Opinnäytetyön tutkimuksen perusteella saatiin selville, että ruoan verkkokaupan keräilyssä on kehitettävää, josta tärkeimpänä nousi esiin keräilyn tehokkuuden puute. Opinnäytetyön tutkimuksen tuloksista selviää myös, että mitkä tekijät vaikuttavat ruoan verkkokaupan keräilyyn, millaista olisi optimaalinen ruoan verkkokaupan keräily sekä minkälaisia haasteita ruoan verkkokaupan keräilyllä on.

Avainsanat Ruoan Verkkokauppa, Keräily, Prosessi, Kehittäminen Sivut 31 sivua ja liitteitä 1 sivu

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International Business Abstract

Author Joni Saari Year 2021

Subject Development of Food-E-Commerce Collection – Case: K-Citymarket Pirkkala Supervisors Merja Helin

The purpose of the thesis was to study, how the collection of an online grocery store could be developed in the target company K-Citymarket Pirkkala. The thesis was written in collaboration with K-Citymarket Pirkkala.

The theoretical part of the thesis includes a definition of the online grocery store and all the processes that it includes. The theoretical part also describes the advantages and

disadvantages of food e-commerce in general and food e-commerce abroad and in Finland.

The study was carried out as a qualitative study, which utilized theme-centered interviews, internal information of the target company, and an observational research method. The persons interviewed were the person in charge of the store as well as the person in charge of the food online store. Observational research was carried out in the workplace while working as a collector of an online food store and as an external customer of the store.

Based on the research of the thesis, it was found that there is room for development in the food e-commerce collection, the most important of which was the lack of collection

efficiency. The results of the thesis research also show that what factors affects the

collection of food-ecommerce, what would be the optimal e-commerce collection and what kind of challenges does the food e-commerce collection have.

Keywords Food E-Commerce, Collection, Process, Development Pages 31 pages and appendices 1 page

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Appendices

Appendix 1 Interview 1

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1 Introduction

Visiting a grocery store is certainly a familiar habit for many people and it might take some time to get all the products collected in the grocery store. What if there would be a more effortless and easier way to do grocery shopping? – Yes, it is. Namely, through the online grocery store people can make their purchase in a few clicks online and the order would be delivered to customers doorstep and still at a very humane price.

The concept of an online grocery store is still quite new, but it means buying and ordering groceries online. This service has continued to rise sharply in the wake of the glaring

pandemic and visiting a brick-and-mortar store has been a major risk and threat to many. To avoid the human contact, many have switched to buying food online and with this the online grocery store has also developed to a whole new level.

This thesis focuses on the processes of the online grocery store in K-Citymarket Pirkkala and specifically presents possible development proposals on how the collection process could be further developed from the current point.

1.1 Structure of the Thesis

The thesis consists of an introduction, a theoretical part, and a research part. The introduction highlights the topic of the thesis and the factors involved, such as what the research is about and what kind of research methods have been used in the thesis. In the theoretical part, the contents and concepts related to the topic of the thesis are opened and the online grocery store is delved into in Finland and abroad. The research part presents the results of the research, reflection about the future and the conclusions drawn through it.

1.2 Objectives, Limitations, and Research Questions

The aim of this thesis is to find development factors for Pirkkala´s K-Citymarket food e- commerce collection activities. This thesis has been implemented in collaboration with Pirkkala´s K-Citymarket. The decision of the topic of the research was based on the topic

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being interesting and relevant and is also largely based on the fact that researcher have been working for the company for the last 3 years.

The work has been limited into one stage of the food e-commerce processes, which in this case is the product collection in food e-commerce. In the picture below the whole e- commerce process and the focus of this thesis can be seen. (Picture 1)

Picture 1. Different stages of the food e-commerce process.

The problem that is seeking for answers in this thesis is, how the food e-commerce collection could be developed in K-Citymarket Pirkkala. With these research questions, the aim is to get the problem solved and find out how the service could be developed.

The research questions for this thesis are:

Sub questions:

- What factors influence the operation of e-commerce collection?

- What are the challenges for e-commerce collection?

- What is the optimal e-commerce collection?

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Main question:

- How could e-commerce collection be further developed?

1.3 Research Methods

In this thesis, is used a qualitative research method. The aim of the qualitative research is to understand a topic, issue, or problem in depth from an individual´s perspective. Qualitative data describes qualities or characteristics, and it is collected by using questionnaires, interviews, or observation. The data of qualitative research is frequently in narrative form and descriptive words that can be examined for patterns or meaning (Macalister, 2021).

The answers to the research questions are sought by interviewing (Appendix 1) two the most relevant people, whose answers are presented in the research results. In addition, there is used personal observation as a research method, when acting as an e-commerce collector in the workplace. The insights are demonstrated among other research results.

The interviews that were implemented in the thesis are theme interviews. The theme- centered interviews offer interview partners the opportunity to develop their special point of view in detail. The focus is more strongly on the individual person and his / her

experiences and opinions for the issue in question (Schorn, 2000).

The observation is a way of collecting data through observing particular phenomena.

Observation data collection method is classified as a participatory study because the researcher has to immerse herself / himself in the setting where his / her respondents are, while taking notes and / or recording (Business Research Methodology, n.d). The

observational work for this thesis was conducted during the working days in the Pirkkala K- Citymarket and as a visiting customer outside the working hours.

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2 Grocery Shopping Online in General

The development of modern digitalization has allowed many facilitations to normal everyday life and the online grocery store is one of them. The concept of grocery online means a service that allows you to make grocery purchases online, without visiting a physical store.

Customer makes its order online and gets it delivered to the wanted destination. The service makes grocery shopping particularly effortless and has been found to be of great benefit, especially if the order is large, and thus would take a long time for the customer to shop in a market. Grocery online still has a long way to go, if it is trying to get a meaningful piece in the grocery market share, as the traditional brick-and-mortar stores are in use.

2.1 Benefits of the Food E-Commerce

The main reason why people do consume and buy their groceries online is the convenience and easiness of making the grocery shopping. It is effortless to do grocery shopping online and it saves time and energy for the customer. Customer can make his / her grocery shopping online and use the time that would have gone to the searching products and walking through the physical store to something else when waiting for the order to arrive.

Customer do not need to stress about finding a free parking lot or to carry their grocery bags to their car, instead the order is fully delivered to the customers wanted destination (k- ruoka, 2021d).

Additionally, the flexibility of the service comes as a benefit for the customer. The customer can always see the price tag of the shopping basket during grocery shopping online and do not need to keep calculations about the final price of the shopping. And also, the customer can fulfill and modify the order how many times he / she wants even after when the order has been completed and purchased. Customer can modify the order at the latest a day before the delivery day of the order (k-ruoka, 2021d).

The whole selection of a grocery store can be seen, and the customer do not need to try and find a certain product from the store. If the grocery store is big and there is a plenty of products from various manufacturers, customer might not find out all the products during the shopping trip at the store. From the online grocery store customer can see all the

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products that are in the selection of the store and would find their wanted product guaranteed. (k-ruoka, 2021d).

The benefit of online grocery store is that it is available for customer around the clock and customer can make her / his grocery shopping whenever they want. As many of the grocery stores have started to operate around the clock still not every shop is available any time to consume (k-ruoka, 2021d).

2.2 Challenges of the Food E-Commerce

As food e-commerce has benefits it also has challenges. There are customers who are skeptical with the service and would always do their grocery shopping themself to the physical store instead of ordering online and letting someone else do their shopping and product collecting at the store. For some people it is a familiar habit and a routine to go to a grocery store and therefore would not even consider using the online service at all. The customers do not trust to their personal shopper’s ability to select the freshest and highest- quality items, which keeps them away from the online service (Jilcott Pills et al., 2020).

The costs that the service brings for the customer has also taken some of the potential customers out from consuming the online grocery store. Some of the customers do not find the amount of money that the home delivery and storage come with and would rather go themselves to the store for their grocery shopping. This is seen as a challenge for the food e- commerce, as the service needs some income as well for to be even a profitable business (Agarwal, 2021).

The evolving market trends that come by the time has a massive impact on the grocery business and the services that it provides. As the exceptional pandemic is happening at the time the food e-commerce is a market trend right now and has huge growing numbers in the industry at the moment. The new trends that come within a time in the future are going to be a huge challenge for this service, unless the retailers and businesses could develop and invest to the service according to the evolving market situation and take advantage of it (Agarwal, 2021).

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The food e-commerce as it is a service online, it is possibly threatened to the cyberattacks and hackers, which is a challenge for e-commerce. All the information and data of a business or customer could be in danger when operating online. When constantly transferring

information online and to the internet usage, the cyberattacks are becoming more and more common and companies must have maintained and advanced security system for their websites to keep the businesses and customers information safe (Agarwal, 2021).

2.3 Food E-Commerce Abroad

Leading the e-grocery market in the U.S. are big grocery businesses Walmart and Amazon. In the U.S., online grocery sales grew 54 percent in 2020 to reach 95.82 billion U.S. dollars, coming with a 12 percent market share of total US e-commerce sales and 7,4 percent of all grocery sales (eMarketer, 2021). The sales forecast for online grocery is estimated to reach 187.7 billion U.S. dollars by 2024 (Blazquez, 2021a).

Over the last decade, the number of British individuals shopping online for food and other groceries has doubled. In UK, when asked, which provider consumers had ordered from in the past 12 months, approximately 45 percent of online shoppers stated they had ordered from Tesco. Overall, 29 percent of British adults bought groceries online in 2019 (Blazquez, 2021b). However, online grocery sales in the United Kingdom fell 2.6 percent in the summer 2021, the first ever fall, as Britons returned to physical stores, workplaces, and restaurants (McKevitt, 2021).

In the United Kingdom, Tesco was the first one, who opened its dark store in 2009, to provide online shoppers with the convenience of click-and-collect delivery. Dark store is defined as a warehouse, which is hidden away from shoppers. Customers do not have a physical access to the dark store, only for the operators who are preparing the online orders for the customers (Qvalon, 2021). The orders can be picked up from the dark store or to be delivered to customers. U.S. has also started using the dark stores, as big grocery chains Walmart and Target have seen the convenience and efficiency that the measures provide.

In Sweden, the food e-commerce is led by grocery giants ICA and Coop. ICA´s market share in the food sector in Sweden in 2019 was 52,3 percent and 18,8 percent for Coop (Blazquez,

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2021c). In Sweden, food sales increased by 3,1 percent during 2019, from which the fastest growth was noticeable in the food ecommerce, as store sales increased by 2.8 percent, while e-commerce grew 21.9 percent (Ecommerce News, 2020).

As seen in the Picture 2 below, there is shown where the most groceries are bought online in 2019. In this made research, the countries are selected to show differences between

countries in the online grocery buying in general. South-Korea is leading with huge 20,3 percent and secondly coming China with the 15.2 percent. For UK, the e-commerce has been active a long time with the big grocery businesses Tesco and Amazon. UK accounted for 7.6 percent according to the study, which is quite low for the fact that the service has been in place for a long time already. The developing countries like Brazil and India having a 0,1 percent of groceries bought online shows that the service has not got meaningful impact yet for the countries (Buchholz, 2020).

Picture 2. Where the Most Groceries Are Bought Online. (Statista, 2020).

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2.4 Food E-Commerce in Finland

Online grocery stores have become very popular in Finland when alternative ways of handling food purchases have been considered during the exceptional pandemic. Demand for this service has grown beyond supply and thus has prompted stores to make the necessary changes. In the early days of the pandemic, demand growth was as high as 800 percent (Kesko, 2020b).

The stores managed to meet the demand by increasing e-commerce capacity by connecting new stores to e-commerce and strengthening digital capacity. In 2020, e-commerce sales increased by almost 400 percent and accounted for 2,9 percent of grocery sales in Finland (Kesko, 2020a). Companies that provide most of the food e-commerce operation in Finland, are K-Groups food online store, K-ruoka, and S-Groups food online store, Foodie. In 2020, S- Group was having the biggest market share in grocery sales with 46 percent as K-Group had 36,9 percent (Kempas, 2021).

The largest customer group of the service in Finland are families with children, who make about 40 percent of all orders (Kesko, 2020b). The most basic reason that people use or have started to use the food online store is the easiness and the time saving when doing grocery shopping online (Hartwall, 2019).

In Finland the food ecommerce volumes are around 0,5 percent, whereas for neighbor country Sweden about 3 percent. Regardless of the growing numbers, that the food e- commerce already has in Finland, the country is abundantly behind other countries with the business. The main reason behind this, is that other countries like Sweden have a larger market for the service and have also attracted retailers to invest more on this service. In addition, the fact that customers have been skeptical about the new service in Finland, the usage of the online grocery store has not reached all people yet (Hartwall, 2019).

In Finland the dark stores are already being used also in the grocery industry, as food delivery businesses Foodora and Wolt have opened their own dark store markets for online grocery buying to customers. In these markets, like said previously the access is only for the workers and the collectors of the customers’ orders and customer cannot visit the store

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themself. With these markets the selection of the product is quite narrow when compared to the original grocery stores but guarantees a quick delivery and within the same day as ordered. This is particularly seen as a competitive advantage for these dark stores against the other grocery stores when the customers are demanding a fast and effortless delivery (Ketonen, 2021).

2.4.1 K-Group´s E-Commerce

K-Group is formed from K-food stores, which is owned by organization chain Kesko. Each K- store has a private retailer as in the lead of the store. The K-Group includes K-Market, K- Supermarket, K-Citymarket and Neste stores. K-Group´s food online store is K-ruoka, where the customer can order food online. In Picture 3 below, the website of the online food store is shown (K-ruoka, 2021a).

Picture 3. K-Ruoka food online store (K-ruoka, 2021a).

During the exceptional period of time, the K-Group opened counseling and telephone ordering services, which helped the elderly to make food purchases in K-food stores. Several K-stores also offered other services aimed only at the elderly and offered their own, calmer business hours only to people over the age of 70 and other people who are in the risk group (Kesko, 2020a).

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2.4.2 S-Group´s E-Commerce

S-Group consists of from 19 regional cooperatives, The Finnish Cooperative Society (SOK) and their subsidiaries. Members of cooperatives, in other words customer owners, owns the cooperatives, which in turn own central movement SOK (S-ryhmä, n.d.). The shops have a store manager who is in lead of the certain shop. The shops that include in the S-Group are S-Market, Sale, Prisma, Alepa and ABC-stations. S-Groups food online store, Foodie, operates within all these stores, depending on the demand of the exact location in question.

Picture 4. Foodie food online store (Foodie, 2021).

S-Group has started an ongoing experiment with food transport company Wolt, where customer can order food at home from certain s-stores. Wolt is operating in food delivery business in Finland and has been delivering food from the restaurants but has expanded its services also to the grocery store deliveries. Wolt´s delivery services are in use in the smaller markets locating near the city centers, with the purpose of quick and short distance

deliveries (Pirkanmaan Osuuskauppa, 2021).

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3 The Process of Food E-Commerce

The online grocery store consists of many different processes, which as a whole becomes the food e-commerce. Process as a concept is a set of interrelated events and tasks that begins with the customer´s need and ends with satisfying the customer´s need (Logistiikan

maailma, n.d.). The process starts when the customer places their order online on grocery store website and ends when the customer has received their order to their wanted destination.

3.1 E-Commerce Marketing

Marketing as a definition is an activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers

(American Marketing Association, n.d.). E-commerce marketing, therefore, is the practice of using promotional tactics to drive traffic to the online store, converting that traffic into paying customers, and retaining those customers post-purchase (Wang, 2018).

The e-commerce marketing is in a very important spot, when trying to get more customers investing to the service in question. Many people might not know about the service as it is still quite new and they have been practicing old habits like visiting a physical grocery store, without knowing there would be an easier choice to do grocery shopping. The marketing of food e-commerce is made up of multiple different channels, to reach the most customers possible. The marketing is done in magazines, television, radio and in social media. With this multichannel marketing, the food e-commerce is going to be known for people in different customer groups regardless of the age.

3.2 Placing an E-Commerce Order

The order is made electronically, which is possible either on a computer or by phone via the website or the phone application. The customer can start collecting his / her order directly after reaching the site. The order is started by selecting the grocery store from which the customer wants to place their order. Customer has an option to give a permission to the collector to replace products on his / her order to a similar other product, if a certain

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product has been ended on the store, or prohibition of compensation, which means that collector cannot replace the product.

When choosing a store, customer can see which stores have a home delivery or pick-up service available, from which the customer must choose another one at the end of their order. Once the grocery store is selected, customer can start making their grocery shopping in the online store by clicking on the products they want in their shopping cart. Once the products have been collected, customer needs to add their own contact and payment information, after which the grocery purchase order can be completed. Additionally, the order can be edited after it has been purchased from the online store before the day it is going to be collected in the store. The customer needs to be logged in or sign up and make a user for the web store to add their payment information and to modify the order.

Made purchases will be charged on the day of delivery and large margins will not be charged from the card at the time of ordering. The purchases can be paid as an online payment with a Visa or Mastercard credit or debit card or Visa Electron. The customer can choose either to pay the order beforehand online or at the time when it is delivered. In the online payment there is used a strong identification, where the customer needs to identify his or her identity with the bank id or with another identification process which is demanded from the bank (K- ruoka, 2021c).

3.3 Product Collection

Once the customer has completed and ordered their order online, the ball goes to the grocery store and to the collection of the order in the store. The collection is carried out at the time the customer has ordered it, either as a morning collection, which is collected during 6-9 am and delivered between 9-12 am. Or as an afternoon collection that is collected during 8 am to 2 pm and delivered to the customer during 12 am to 6 pm. In collection, the collector has access to long collection carts, cardboard boxes for packaging, and a collection device to beep through each product ordered by the customer. In Picture 5 below, the collection carts and boxes can be seen.

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Picture 5. K-Citymarket´s collection cart and boxes.

Collecting in a grocery store follows a specific route, which revolves around the entire store.

The collection round is designed to proceed systematically from the food side of the store to the consumer goods side of the store, from where it is returned in order to collect products backwards (Vuori, 2021a). Collection round starts from dry food products and ends with fruit and vegetables and meat products. The frozen products in the customer´s order is collected separately from other and with a quick round at the store to prevent the products from melting.

The importance in the collection is in choosing products for the customer just like it would be to yourself. The collected products must be in great condition and have the best date possible. Especially in the fruit and vegetable products, collector must be extra precise with the quality of the products and choose the best ones possible. In the collection, collector has in use a date promise list (Picture 6), which is everyday newly printed, which collector needs to follow carefully during collection. In the date promise list is seen listed all the product categories and what dates are the limit for each product sector. If certain products that

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customer has ordered are not available in the store and customer does not have prohibition of compensation on the products, collector always aims to replace the product with the nearest similar product (Vuori, 2021a).

Picture 6. Day promise list in the collection 10.9.2021.

3.4 Product Packaging

Packaging means the wrapping or bottling of products to protect the contents from any damage that could happen during transport, handling, and storage. Packaging has also other important roles like the safety of the content and consumer information that is added to the package (Tiuttu, 2020).

In collection, the customer´s order is collected in K-ruoka´s own cardboard boxes, which are environmentally friendly and reusable if necessary for the customer. Customer can also send back the boxes to the grocery store after collecting the order for reusage in the collection if wanted. When packaging customer´s products, the goal would be to get heavier products under and at the edges of the box so that the weight is evenly distributed, and the box would not tear when lifted. Light products like fruits and vegetables are packed either in

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their own box or on top of other products but not under them to prevent leaking. Frozen products are packed in their own separate plastic bags to maintain the cold chain.

Picture 7. K-ruoka cardboard box (K-ruoka, 2021b).

3.5 Product Preservation

The meaning of preservation is to protection of the property through activities that minimize chemical and physical deterioration and damage and that prevent loss of informational content. The primary goal of preservation is to prolong the existence of property. (NEDCC, n.d.).

Once the customer´s order has been collected, the order is taken for storage in the store´s refrigerated containers (Picture 8), where cold products such as milk and juices cannot heat up and thus the cold chain remains in good condition. Before the transfer to the containers, sticker labels are put to the customers boxes to identify the orders to the drivers of the delivery. The order then waits in the container for delivery to the customer. Frozen products are stored in the freezer according to the cold chain.

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Picture 8. Preservation cold container.

The exceptions in preservation are fresh herbs and live flowers, which are kept warm and apart from other products. Large consumer goods such as speakers or a desktop computer are also stored separately from food products, thus saving space in the containers, and keeping the collected orders clearly separated in the back of the store.

3.6 Order Home Delivery / Pick-up

Logistics in general is about the management of the way the resources are obtained, stored, and shipped to their end destinations (BigCommerce, n.d.). When spoken about e-commerce business, the logistics becomes a critical factor for the business to operate and can be an affecting factor for the buying decisions to the potential customers. In e-commerce business the customer’s order online is delivered to the customers by the logistic company that is being used for a certain business, whereas if the customer uses a brick and mortar store the delivery is done by the customer themself.

Lastly, when the orders have been collected and put into preservation at the store, it comes to the logistics point of view and for the delivery or pickup of the order. The food

ecommerce orders are delivered by the logistic company Kuljetusliike Jakopalvelu Oy to the

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customers. Pickup orders are retrievable for customers near the parking lot in the refrigerated container where is read pickup point.

Home delivery as a service means a delivery of an order that is made in online grocery store, which is delivered to a customer’s wanted destination. This service is available when

ordering, whether you want your own grocery purchases as a home delivery or pick-up order. Home delivery takes place in Kuljetusliike Jakopalvelu´s vans and follows a specific route, taking orders to the customers’ homes. Home delivery prices range from a minimum of 9.90 euros with K-Plussa card and without it a few euros more (K-ruoka, 2021a).

According to the law, customer is not able to buy age restricted products like alcohol and cigarette products in his / her home delivery order, as the age of the customer needs to be physically checked at the store.

Pickup as a service means picking up an order from the store itself once it has been ordered and collected for the customer to pick up from the store. The customer´s pick-up order is stored separately from home delivery orders, and they are located in a separate refrigerated container near the store´s parking lot. The price of the pick-up order starts from 4.90 euros with K-Plussa card (K-ruoka, 2021a). In a pickup order, customer is able to buy age restricted products, as customer´s id is being checked when handing over the order to the customer at the store.

4 Process Development

Development is a process that creates growth, progress, positive change, or the addition of physical, economic, environmental, social, and demographic components. The purpose of the development is a rise in the level and quality of life of the population, and the creation or expansion of local regional income and employment opportunities, without damaging the resources of the environment (Society for International Development, 2021).

Companies and businesses must always keep maintaining their competitiveness. This is improved by offering customers better products and better service and by developing cost

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efficiency. When thinking of a process development, the goal is to develop operations comprehensively instead of sub-optimization (Logistiikan maailma, n.d.).

Central to the development of processes is the involvement of real experts, meaning the people who work in the process. Often the first step in developing processes is to describe the processes together. Even if descriptions of processes exist in, for example, quality standards, common description and going through the process helps to understand the whole, find areas for improvement and create a common understanding of the current state of the process (Logistiikan maailma, n.d.).

5 Case: K-Citymarket Pirkkala

5.1 Target Company

K-Citymarket Pirkkala is a limited liability company founded in 2009, whose main business is food stores, followed by food products (Finder, 2020). The company´s current CEO and the retailer is Petri Putila. K-Citymarket Pirkkala operates around the clock and its

comprehensive services guarantee that customers´ needs are fully met. Services include a very wide range of food, including a sushi counter, a meat service point and salad bar, a global beverage department, and a grocery home delivery and pick up service.

5.2 Implementation of the Study

This thesis has been implemented in collaboration with K-Citymarket Pirkkala. The study has used publicly available information from the Internet as well as direct sources from the store. Inside the store, certain people have been interviewed, such as the retailer and also the person in charge of the food online store. Within the workplace and during the working days at K-Citymarket, the observational research work is done both as an e-commerce collector, and as an external customer. The study was conducted during the late summer and autumn of 2021.

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5.3 Research Areas and Subjects

The area of research has been Pirkkala´s K-Citymarket and its staff. The persons studied in this study are responsible persons in their own department and bring an in-depth insight into the study and into the necessary research questions. The persons to be examined are K- Citymarket Pirkkala´s retailer and the head of the food online store.

5.4 Food E-Commerce in Pirkkala K-Citymarket

Food online store started operating in Pirkkala K-Citymarket in the spring of 2018 and has been on a really strong rise ever since. At that time, Citymarket was undergoing a major store renovation and many things within the store received needed renovations and

improvements. On top of all this, the food e-commerce business was launched and has now employed a large number of people in the trade and logistics sector. In K-Citymarket Pirkkala there is employed 10 store’s own employees and about 20 more employees from rental company in the food ecommerce section (Putila, 2021).

In K-Citymarket Pirkkala, the food e-commerce is starting to operate from morning at 6 am and this is the time that the collection starts as well in the store. The collection process lasts normally until 2 pm, but sometimes might take a little longer regarding to the amount of orders and collectors that there are at the time. When the collection process is done, the head of the pickup orders takes care that the orders are properly handed over to the customer at the store as they come pick up their orders from the store.

Overall, the food e-commerce collection in K-Citymarket Pirkkala has performed great this far. The service has gotten good and bad feedback but mostly good. The bad feedbacks often consist of the same mistakes that are being done in the collection process. This is being explained with a lot of new employees coming to the service and the fact that humans do mistakes sometimes. The head of the food e-commerce goes through these mistakes with the collectors and takes care that the same mistakes would not come again. The good feedback is about the service being existing and especially for the people that are not available to do their grocery shopping at the store depending on disability or belonging to a risk group (Vuori, 2021b).

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In K-Citymarket Pirkkala the collection is divided into collection zones, which are frozen products, other products, and consumer goods products. Other products in this category are the food products. This is being made to simplify the collection to the collectors and that there would be certain people collecting the frozen products and the other ones the food and consumer goods products and that it would not be confusing the collection between these zones. When choosing an order to collect in the collection there is seen what collection zones are involved in customers order (Picture 9) and that way collector knows that what products needs to be collected for the exact order (Vuori, 2021a).

Picture 9. Collection device and collection zones.

With the consumer goods collection in K-Citymarket Pirkkala, it is collected in advance by the Citymarket´s own workers at the consumer goods sector and are stored in the back space of the store for the e-commerce collectors to collect during their collection round in the store.

This procedure was done by the e-commerce collectors earlier but is being changed and seen as an efficient factor for the collection so far. The fact that the people who works in the

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consumer goods side of the store has the knowledge of the area completely and can collect the products for the customer’s order much quicker than an e-commerce collector is essential for the efficiency of the food e-commerce.

6 Research Results

This chapter opens up the research results from the interviews and observational research work. The results are done to answer to the research questions, which were given in the beginning of the thesis.

6.1 Factors Affecting E-Commerce Collection

First of all, for the e-commerce collection to even happen, it requires the workers who collect customers’ orders and put the products on the shelves of the store. Everything that is prepared for the collection to even start is essential factor for the collection to operate. If there is too little amount of workers in the collection sector, the work becomes impossible to get into the right timetable, especially in the morning when there is the busiest time for the collection. It goes also other way, it is good that there are enough workers in the collection, but if there are too many people, the work would be done quicker, and workers might not get the promised working hours that’s in the working agreement.

Secondly comes all the equipment and software’s that are being used during the collection process. Electronical devices must be operating and be up to date for to maintain the collection process as a whole. The collection equipment must be easily available for the collector to maximize the time efficiency with the orders. The facilities must also be available to the collectors and all the preservation spaces must be usable for the customers’ orders.

For the third factor, which affects the e-commerce collection is the amount of the online orders. The amount of the orders determines how much work there is, and how long the day would be for the collectors. The amount of collectors is chosen upon the amount of the orders, which can be seen for the store a few days earlier before the order becomes collected.

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Lastly the amount of the customers in the store is an impacting factor for the collection process. In the food store, the visiting customers are the most important humans at the time, and they must have all the help and space they need. In the busiest business hours, if there is a lot of visiting customers in the store, it affects to the collection efficiency directly.

6.2 Optimal E-Commerce Collection

First and the most important factor for optimal e-commerce collection is highly orientated personnel in the workplace. The workers of the collection must be able to collect many orders at the time and to work independently in the store. For the collection process to be as optimal as possible, the collectors need to be up to date with the store and where all the products are existing in the shelves of the store.

For the optimal collection to happen, the arrangements in the store must be on point and the collection device must tell the collector where the products are existing in the store.

Meaning by this, is that when the products are marked in the collection system and where on the shelf they are, the collection device would show directly where a certain product is located in the store. This function would speed up the collection process to the limit and the collector would not need to waste time to find the products needed for the order of the customer (Vuori, 2021a).

Organizing of the customer’s order collection is essential for to maximize the efficiency in the collection process. Before going for the collection round to the store, collector should be focusing on the aspects like, does the customer have consumer goods or does customer have any message or wish in the extra information of the order and obey within those (Vuori, 2021b). In addition, it is good to check how big the orders are and to prepare with enough boxes where to pack the order. Organizing the whole collecting round minimizes the waste of time in collection and it also is much easier for the collector to do the round at the store when is prepared enough.

Collection needs to have three qualities, which are efficiency, punctuality, and precision.

When a collector is working efficiently it might lack the precision and it goes another way

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around also, if collector does precise work, the efficiency might be lost if the focus is

massively on overthinking of the right products. Collector needs to also be punctual with the timetable and with the right quality of the products when collecting.

Reaching the goal collection outputs when collecting is needed when thinking about optimal collection process in food e-commerce. These collection outputs are meant to be timings that the collectors should get into with the collecting in general. With this measurement, can be found that can the collectors get their collection within the time that is expected from the head of the e-commerce, and this way go through with the collector that what was the reasons why the collecting did not get into the wanted output.

6.3 Challenges Related to E-Commerce Collection

A challenge for e-commerce collection is that the whole day would be successful and there would not be any missing items on the customers’ order. Meaning that every aspect in the collection process would succeed and that the whole service would be on the best possible level. It is quite normal that some of the products are missing due to the delivery issues of the producing company or that the product has been already bought out by the customers.

Also, the negative feedback can come by the mistake of the collector where he / she has put a certain product to wrong customers box, which is unfortunate but possible when we are all human and mistakes can happen.

Getting the collecting of the orders within the timetable is a challenge for collection. For to get in the timetable given, the head of the e-commerce needs to gather correct amount of collectors, which is needed for the collection for the day. In the morning, when it is the busiest time for collection, it is important that there is a little bit more collectors than in the afternoon, otherwise it might not get into the timetable. As the morning orders are already leaving with deliveries at 9 – 10 am, the orders must be collected before this timeframe.

In the collection there is used these goal collection outputs to where a collector should reach into. This output is put in the form of in one hour basis, and that the collector should be collecting certain amount of orders in one hour. This is made as a measurement for the collectors, and it is calculated from previous collections as an average value that the

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collector should be collecting the orders. This particular is seen as a challenge for collection process as collectors are not reaching the needed goal collection output. In most of the times this output is reached but it is still occurring within the e-commerce collection and should be a standard for every collector in food e-commerce.

Deficiency and malfunction of the devices becomes a common challenge for the e-

commerce collection. The amount of collection devices is limited and when more collectors are required to the collection, there is not enough for everyone. When all the collection devices are in use, starts the operation of finding a remaining one from another section of the store. In addition, the technology does not always work, and the collection device might malfunction at times when it needs to be returned and switched to another one.

The selection of the products in the food online store are not updated to the online store website within the time they are bought out or if the selling season of a certain product have ended. These products are still shown in the food online store for customers to buy, which is a problem for e-commerce and collection. The customer is not happy, if he / she is not getting a product that he / she wanted and for a collector it is also time wasting to go and search if this certain product exists anymore in the selection.

The way to check if there is any in the balance of account, is needed an account for the certain app in the collection device, where the worker could check by beeping the product price tag and see how many are remaining in the store. These accounts are not made for everyone at the workplace, and this means that the collector must find a person that could check this particular products balance. This is a time-wasting procedure and also many of the other collectors might come and ask about the same product as the collection device does not update the situation even if the previous collector has clicked that the product is bought out or season have ended already.

The order of the collection is also confusing at times when the device shows certain product in wrong placement and is seen as a challenge for collection. Wrong placed product in the collection device can be changed to its own correct placement during a collection round, but it can be a challenging if the products are showing in the end of the collection process and the collector must go for another round to collect the order wholly.

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6.4 Development of E-Commerce Collection

Before going for the collection round to the store, the back space where the collectors prepare the orders is quite narrow, and it could be much wider. (Vuori, 2021b). When a several numbers of collectors are at the same time in the back space with their long

collection carts, it gets really tight really fast. Additionally, some of the shelf spaces are too narrow for customers and collectors and could be extended more in the future.

Living in the high-tech time of life, the scanners for the collection carts would be a

development idea for e-commerce collection (Vuori, 2021b). These scanners would check that collector would not put wrong products in a wrong customers order, as two orders are collected at the same time. These scanners would give an alarm or sound if collector

mistakenly puts a wrong product in wrong customers box and therefore would keep the amount of wrong products zero. This idea is quite hard to implement but would be an essential factor for to succeed every time when collecting an order.

The online grocery store selection and the time by the products are updated to the website needs development as it is otherwise a constant issue for the collection process. The website could be developed as such that when a certain product has been bought out, it would be directly transferred from the balance of account of the grocery store to the online grocery store balances. This action would save time for the collectors in the collection process and would create better customer experience through online grocery store.

The order of the products in the collection device is seen as a problem, which could be easily developed in the future. The organizing work should be more focused, where the collectors or the other workers of the store would organize the shelves to directly show to the

collector on the collection device that where a certain product is placed and would then ease the finding process of a collector in the future. As many of the shelf spaces changes time to time, it would be only better if this organizing work would be more done and done like once a week or more.

The finding process of the products could be developed also with new flashing price tags that could show the collector where a certain product is locating in the shelves of the store.

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The technology that is operating at this time and age could implement this to happen if it would be seen as an opportunity for the food e-commerce (Putila, 2021).

The amount of the collection devices is seen as a problem for collection process, and it needs improvement. Company should invest more in the collection side, where the devices are currently used the most, and that there would not be a situation that someone in the collection does not have a device in use. In addition, the accounts to the store´s own app should be available for everyone that are working in the collection sector, as they are the ones that might even check the products balance the most in a working day in general.

The collection could be more separated to the collection zones, which could improve the collection process in food e-commerce. Meaning with this would be that certain product areas would be separated to them own collection section and that the collectors would only collect a certain product in their collection round. This is happening with the frozen

products, which is obvious as they have to be preserved in the cold, but the section collection could be increased in the collection and it could enhance and centralize the collection process as a whole when certain people in the collection would concentrate only to the certain section of the collection, which could be improving the quality and the efficiency of the collection.

7 The Future of the Food E-Commerce

The food e-commerce is becoming more and more relevant as we go forward in today´s world, which also gives space for development and investments towards food e-commerce.

The opportunities for this service are huge and as the technology is developing constantly it could generate advantages for the service in the future.

7.1 Automatization of the Service

As in this modern day and age the automatization is becoming a new trend and easing the life of the businesses as the operations are done automatically and with the help of the

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robots and machines. In the food e-commerce, the automatization is taken as a great opportunity for collection process as it would speed up the process to its limits. The

downside with this is that all the products cannot just be collected as they are and some of the products needs the quality checking that a machine could not implement. The fresh products such as vegetables and the products with a short date like milk and meat products, needs to be checked during the collection and that the best possible ones would get

collected for the customer (Vuori, 2021b).

The automatized machines would only collect the product as they are in the shelf and would not consider the quality of the product at all. In this case the collection could be automatized from the food products, which do not have that strict date on them, and the employees would collect the fresh products which needs to be checked before collecting. This would speed up the process and the work of the collector would get easier but also much less, which could end up to the loss of the employees if the work rate would go down massively.

When developing the operations to automatization, previously mentioned dark stores comes to play in a huge way. In dark stores, the automatized collection would be done behind closed doors for customers that the machines could do their job without any

distractions and as efficient as possible. Dark stores are needed in e-commerce in general if the maximum cost effectiveness is wanted from the collection process (Ketonen, 2021).

In Finland, the K-Group has already been planning to invest dozens of millions of euros to the food e-commerce and by this keeping its edge in the lead of the grocery online business.

Kesko´s director of grocery trade, Ari Akseli is aiming for the market leadership and the best possible customer experience with food online store and to quadruple time efficiency to the collection process to what it is now. The automatization is already in the talks and is going to be started in capital city area first for K-Groups food e-commerce with a pilot version of the service as the volumes in the area are in that level that it could be implemented (Kesko, 2021).

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7.2 Competition of Food E-Commerce

As the food e-commerce industry is constantly growing up, the competition and new

companies and businesses arrive as well. The competition in this market is very competitive as many of the companies are seeing the convenience and the market for the service right now. Several grocery chains and companies are starting their e-commerce business and investing capital to improve and develop their e-commerce competencies against their competitors.

One of the biggest online stores at the moment, Amazon has expanded its operations to the grocery side of the business as well with their Amazon Fresh online grocery store. Amazon, which is globally huge already, does not have yet opened its online store in Finland at the moment. It has been confirmed that Amazon is going to expand and open its online stores to the north Scandinavian countries.

During this year, Amazon opened its web store to Sweden but not groceries included. It is still in the talks that Amazon could expand its services to Finland but not any confirmation yet. Amazon has already started to implement their online grocery sales in Europe in countries like Italy, France, and Spain (Paakkinen, 2018).

If Amazon would open its online grocery store in Finland, this would be a massive threat for the domestic food e-commerce businesses and the customers might be changing their grocery shopping straight to Amazon. The only critical aspect would be the language barrier for the people that are only understanding the domestic language, and they would stay as a domestic online grocery store customer. This particularly would increase the online grocery sales in Finland but causes huge competition with the big domestic grocery businesses (Paakkinen, 2018).

In each country and for each retailer, the online grocery will play out differently depending on margins, current market share, and other factors, but in general the value at stake is high and the market will change rapidly. The ability to anticipate and adapt to changes in the marketplace will be crucial for the businesses and only retailers that move quickly and assertively within the market, can win (Galante, 2013)

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7.3 Time After the Pandemic

Food e-commerce and the numbers that it has shown within the time that the pandemic has affected, it seems like that the service would retain its customers also after the pandemic is gone. The service has shown the demand for it and also the future for the service in an everyday life of a customer. Food e-commerce has become a new normal and the return back to the normalcy can be tough after the pandemic has subsided (Morgan, 2021).

As the exceptional pandemic forced customers to find another way to make grocery shopping, has brought many people regarding the customer group and age to the service and also made the service well-known at the moment (Putila, 2021). For the younger people online buying in general is already a common thing to do and with the pandemic times in the world it also got the elderly people to the known of the service and possibly got them as a loyal online customer even after the pandemic.

The retaining of the customers would depend on the fact how well the service is maintained and updated within the quickly changing market. The convenience that the service provides for the customers is the main reason for the usage of the service and the customers are getting used to it during the time they consume this service. The visiting and going for the grocery shopping to the physical grocery store after the pandemic has ended, can be tough when the customers knows that there would be easier and more effortless way to do their grocery shopping. The pandemic has attracted some of the customers to the service but there will still be the ones who likes to visit the store and do their grocery shopping at the store.

The cost effectiveness and profit optimization are the main key objectives for online grocery businesses. For the e-commerce businesses it is critical that the service would be a profitable business rather than making losses for the company when using it. If the businesses are going to increase the costs of the delivery or collection of the food e-commerce for to gain profit, it could lose part of the buying customers online and that way be even more

unprofitable business. Online grocery can be profitable only through maximum operational and marketing efficiency (Galante, 2013).

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When thinking about the future and the time when the pandemic has totally ended, the situation with the online grocery market and technology has been changed to another new level. By that time the food e-commerce has been in usage and has seen what is working and what is not and making the needed changes to develop the service to the level that it needs to be. As the technology develops constantly within the time, more convenient and efficient ways are coming into the operations of food e-commerce and the usage of the online grocery store, which will ease the operations, increase the efficiency and the customer experience of the service.

8 Conclusion

The main topic of this thesis was the development of the food e-commerce collection in K- Citymarket Pirkkala. The aim of the thesis was to study, how the food e-commerce collection process could be further developed and to see the recent situation with the food e-

commerce in K-Citymarket Pirkkala.

Qualitative research was made to study the food e-commerce in general and specifically the food e-commerce collection in K-Citymarket Pirkkala. The data collection for the research was done through interviews, observation, and literature review.

The research that was made showed that there is space for development for the food e- commerce collection process. The collection process for food e-commerce operates well at the moment but there is still room for development. The development points for the collection were updated web store, bigger collection spaces, new helping technology, and the lack of efficiency in the collection.

The research results showed also what factors are affecting the food e-commerce collection, what is the optimal e-commerce collection and the challenges that are included with e- commerce collection in K-Citymarket Pirkkala. With these results the whole picture of food e-commerce collection can be seen and what all factors are involved in it.

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The topic of the thesis was interesting and relevant to the situation in the world right now.

The service has been actively operating for the last two years and there was enough material to study from. Making the thesis was an educational journey, which was challenging but still rewarding. The most challenging part of the thesis process was the collection of the sources that needed to be high-quality.

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Appendix 1: Interview 1

haastattelu kauppias Petri ja verkkokauppa vastaava Samuli

1. mistä osatekijöistä hyvä verkkokaupan keräily koostuu?

2. miten verkkokaupan perehdytys tapahtuu perehdyttäjän ja perehdytettävän näkökulmasta? (sisältö, aika)

3. miten verkkokaupan keräily on onnistunut, minkälaista palautetta antavat keräilijät / minkälaisia huomioita antavat vakijäsenet? / mitä palautetta asiakkaat ovat antaneet keräilyn onnistumisesta?

4. minkälaisia haasteita keräilyyn liittyy? keräilijän näkökulmasta / toimintaympäristön näkökulmasta? (kauppiaalle/verkkokaupan vastaavan näkökulma?) perustele miksi?

5. miten kehittäisit verkkokaupan keräilyä? perustele miksi?

6. miltä näyttää verkkokaupan tulevaisuus? automatisointi? robotti? perustele miksi?

Lisäkysymykset kauppiaalle

• montako ihmistä ruoan verkkokaupan keräily työllistää?

• onko verkkokauppa toiminta tuloksellista?

• onko verkkokauppa tullut jäädäkseen?

• tietävätkö kaikki asiakkaat ruoan verkkokaupasta? millaista verkkokaupan markkinointi on?

• voiko opinnäytetyössä käyttää kaupan ja haastateltavien nimiä vai tuleeko niistä kirjoittaa anonyymeinä?

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