Longo s Ecommerce Overview April 2015
US IS THE MOST CONNECTED AND WIRED COUNTRY IN THE WORLD
1 st in time spent online 280M internet users spend 43 hours online each month Source: Comscore, March 2013
64% Smartphones 205M Americans have a smartphone Source: Pew Research, Oct 2014
While it comprises less than 20% of retail sales Source: Kantar Retail Research and Analysis; Jan. 2015
The shift to online shopping is already here Source: Kantar Retail Research and Analysis; Jan. 2015
And is expected to accelerate over the next 5 yrs. To outpace traditional retail nearly 4x through 2019 Source: Kantar Retail Research and Analysis; Jan. 2015
While lagging, CDN adoption of online grocery shopping is also accelerating Source: Ipsos July 2014 online survey
We ve seen this growth firsthand Grocery Gateway accounts for approximately 6% Longo s revenue Anticipate this will increase to between 10-15% over the next 3-5 years 6% Revenue Grocery Gateway is growing at more than 10% annually
Tools used to drive traffic and increase basket size in traditional retail FLYERS PLAN-O-GRAMS IN-STORE FEATURES SECONDARY DISPLAYS
While underlying psychology is the same, outside of pricing, the tools used online are markedly different QUALITY PRODUCT PHOTOS AND INFO PRODUCT FEATURES ON MAIN LANDING PAGES, SEARCH AND NAV PRODUCT RECOMMENDATIONS EXTERNAL SEARCH ENGINE MARKETING
Ability to track customer behavior is unparalleled When testing new product lines or private label research Compare actual sales data to purchase intent scores The performance of specific campaigns, messaging, content types and platforms Whether it is engagement through views or shares of a video or ultimately sales of products
Keep in Mind, It s Not about Cannibalization It is a growth strategy new and bigger share of wallet > It is also a defense strategy digital natives will fulfill a portion of grocery requirements online
The Broader Impact of Digital Extends well beyond ecommerce 100% 50% 11% Sales Influence on purchase Impact on experience Source: Kantar Retail Research and Analysis
Impact of mobile on store shopping Used mobile to shop: 62% at home, 48% in store, 22% at work, 18% on-the-go Source: Google 2014 Canadian Shopping Trends
Source: Nielsen Digital Consumer Report
Longo s Ecommerce Overview
Our Approach vs Integrated Multi-Format Multi-Channel True Omni- Channel
Grocery Gateway s Role within Longo s 1. Customer-for-Life Strategy: Distinct sub-brand that extends Longo s reach Better coordination between traditional Longo s retail and ecommerce channel Actively migrate customers between 3 different service formats 2. Building out Longo s digital commerce expertise 3. Strengthening our relationships with and investment from vendor community
Grocery Gateway Overview and History An industry pioneer founded in 1999 Longo s became an early partner allowing them to pick their orders from our stores Raised $100M in 2001, built a 300,000 sqft. state-of-the art facility Grew to more than 500 employees, servicing 16,000 unique customers, delivering orders 7 days a week to customers in the GTA all the way up to Barrie The growth needed to support overhead and infrastructure costs did not materialise soon enough Longo s bought them shortly after they filed for receivership in 2004
Grocery Gateway Overview and History Period of restructuring significantly reducing operating expenses and returned to a store-pick model While changes were difficult they were necessary, we turned our first profit 18 months after closing the deal and have been on a steady growth trajectory ever since 50,000 sqft. Dedicated Pick Store (DPS) opened in September 2012 More pragmatic approach: adapting existing technology to fit our business model and implementing a process consistent with our dedication to customer service
Grocery Gateway DPS Unique combination of technology and our personal shoppers Freshness and product quality are critical to our success Live shoppers that take as much care as you do is the only way to deliver this consistently It also helps to limit capital costs and overhead We have a brief video which I will play for you now
Grocery Gateway Today More than 200 employees, 40 trucks manage approximately 1,000 deliveries per day, 6 days per week Currently list 9,500+ skus across traditional retail grocery and health & beauty categories Strong national brand representation Unique product offering Deliver to residential and business customers 90% residential, 10% business today
Delivery Area
Business Model $45 minimum order Flat delivery fee: $10 for residential, $15 for business Customers can order online or via our mobile apps Deliveries are available Mon-Fri between 6:00am and 10:00pm and Sat and Sun 6:00am 4:00pm Deliveries can be scheduled up to a week in advance or as early as the next day
Why Shoppers Choose Grocery Gateway Convenience Order anytime, anywhere Next day delivery for all orders placed before 11:00pm 90 minute delivery windows for most areas Pay online or at the door with debit and credit cards WOW customer experience 100% satisfaction guarantee Call centre availability (6am-10pm M-F; 6am-4pm Sat.) Drivers personal touch even deliver groceries to the kitchen counter As you saw in the video our personal shoppers take as much care as you do when shopping for an order Freshness and quality In line with Longo s tradition only offer the highest quality fruits and vegetables Freshness guarantee guaranteed shelf life of 7 days on most perishable items Unique product offering In addition to the comprehensive selection of national brands our customers love we also offer unique products from around the world through our private label program
Different Service and Fulfillment models to consider FULFILLMENT Store/ Wareroom Dark Store DC DC STORE OTHER LOCATION Sharing Economy
Other items you may want to consider Approach: Omni vs. Multi-Channel Technology: Enterprise level platform vs. less expensive alternatives (i.e. Shopify) Team skills: outsource, build slowly, acqui-hire Supply chain/demand planning complexity Buying behaviour different from brick and mortar Product is forward sold
Some additional take-aways Ecommerce is here and it s an important part of our future At home delivery: critical to have high route density and large average basket size Level of investment must be sustainable and reflect capital and margin structure of your business Large part of our success has come through taking a balanced and measured approach
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