How Picnic made free delivery profitable

Dutch online supermarket Picnic is proving that you can make money with free delivery, as long as you organise the last mile efficiently. For further growth, the retailer is mainly looking at large countries, founder Michiel Muller says.

Focus on cities

A fortnight ago, Picnic released profit figures for the first time in its existence: according to Muller, that milestone is largely due to the company’s investments in robotisation. The collaboration with German market leader Edeka, in the purchasing alliances Everest and Epic, also contribute to the positive results, Muller told Distrifood.

Delivery is increasingly efficient: “We can now realise six deliveries per hour, while others manage just two or three. We choose urban areas rather than the outlying areas, where you first have to drive twenty minutes, then stop, unload, and drive another twenty minutes for the next customer.”

The CEO therefore sees no reason to stop free deliveries: “If you can do the last mile as efficiently as we do, you can do it for free. On the other hands, even with the delivery charges some competitors charge their customers, they end up being more expensive.”

Looking at big countries

The online supermarket can count on loyal customers: of the hundred people who start with Picnic, thirty still order almost weekly after a year. “We see that people who have ordered five or six times understand the system. They get into the rhythm and stay with Picnic.” As a result, the retailer has to invest less in customer acquisition.

However, Picnic’s international expansion is proving to be challenging. Northern France is a “complicated economic area”, while customers in Paris order in much bigger baskets. In Germany, executive recruitment is a difficulty yet to be conquered. For now, the company has its hands full with expansion in Germany and France. “After that, we will look at the rest of Europe, and particularly the bigger countries. So not Luxembourg or Bosnia.”