CCJ

January 2015

Fleet Management News & Business Info | Commercial Carrier Journal

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COMMERCIAL CARRIER JOURNAL | JANUARY 2015 29 INNOVATORS DOOR TO DOOR ORGANICS Boulder, Colo. and the metropolitan areas of Chicago, Philadelphia and Kansas City, Mo. The predictability of its subscription model helps keep delivery costs under control. About half of its orders are on a recurring weekly schedule; for most of its residential areas, Door to Door lets customers choose the day of the week for delivery. The other half of its orders are dy- namic; they change daily as new custom- ers sign up and when existing customers change orders such as skipping a week or changing their delivery day. Door to Door manages new orders by opening and closing days that are avail- able for delivery. This helps distribute orders to the days of the week where it needs more volume, or density, to bal- ance its routes. On average, the company delivers 65 orders per day on each ZIP code route, says Aaron Peele, outbound logistics manager. Prior to August 2013, the outbound lo- gistics team had been using a commercial software package to determine the most effi cient way to route orders each day. It used the software to optimize orders for delivery after its deadline had closed. Door to Door gave its customers fi ve days from the day they received a delivery to fi nalize their next weekly order. If a customer received a delivery on Friday, he had until 8 a.m. on Thursday of the next week – the day before the delivery – to fi nalize his next order online. With this process, the logistics team waited until 8 a.m. on the day before the delivery to begin the route planning E xperts predict the online grocery industry will grow from 2 percent of the $650 billion spent annually on domestic groceries to between 10 and 17 percent by 2023. The business model looks appealing, at least on paper. With a single warehouse and a small fl eet of delivery vans, an online grocer is able to serve a large city without the overhead of a chain of brick-and-motor stores. Despite the cost advantage, the model is challenging. Most online grocers charge a delivery fee to make money. While this fee is acceptable to some consumers, many may not be willing to pay extra for something they can do themselves at a neighbor- hood store. Door to Door Organics has taken a different approach by offering a subscription model. Its customers can sign up and shop online for local, natural and organic food delivered to their home at no extra charge on a weekly or biweekly schedule. The business is all about "empowering people to eat good food" through a curated experience where customers can plan meals and shop by recipe. By clicking on a featured recipe on Door to Door's website, the main ingredients are added to a weekly delivery box to go along with staples such as milk and eggs. In August 2013, the specialty online grocer changed the process it was using to route its deliveries to increase effi ciency and set the stage for continued growth. Since then, its order volume has increased by 20 percent, while labor costs in its logistics department have dropped by more than 10 percent. Optimized routing Door to Door currently delivers in 11 markets and 30 Midwest cities to more than 35,000 active customers. Its current network covers most of Colorado and Michigan Door to Door Organics creates a route planning strategy for its home deliveries to cut inefficiencies and errors. Online grocer develops subscription model for home delivery BY AARON HUFF

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