What are the prospects for selling food online? Why don’t the largest retailers develop their own online stores? How to teach Ukrainians to buy food via the Internet and what is the demand for such service from food chains and consumers?
Commercial Director, Yevhen Netreba, has been developing Zakaz.ua since February 2018, in addition to his position at Chernovetskyi Investment Group, the main shareholder of the project. According to Yevhen, Zakaz.ua business has grown by 300% within a two-year period.
In an interview, the top manager explained what stipulates the number of orders to increase, what innovations the company drives and how Zakaz.ua plans to grow in 2019.
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A perfect market
- Could you share what the current trends in the food delivery market are?
- A number of Ukrainian food retailers have previously tried to start selling their products online on their own: they attempted to create an online store, digitize content, engage in logistics, and organize a call center. But it is difficult. We cooperate with the largest Ukrainian retailers, such as Auchan Ukraine, Fozzy, Metro Ukraine, Novus, and MegaMarket. Some Ukrainian grocery chains have their own online stores. However, since the organization of an online channel is a non-core and complex business for an offline retailer, collaborating with Zakaz.ua becomes profitable for all the parties.
- How have you managed to attract partners?
- We started with Metro, Auchan, Novus, and Fozzy. In 2018, we have become partners with MegaMarket (Kyiv, Surikova, 3) and have also increased our presence in Ukraine, opening delivery in Lviv and Dnipro. Our product delivery service can be reached in eight cities of Ukraine.
- According to the results of the study of online shopping, Zakaz.ua is the most popular platform ...
- …because there is no competition in essence, and Zakaz.ua is number 1 in its market segment. A number of retailers have their own online stores with a small market share. There are startups that follow a different business model by, for example, adding their mark-up on the products; however, our prices are the same as on the shelf in the supermarket.
- Do you think retailers are ready to go online?
- Undoubtedly, more and more retailers became aware of the prospects of going online. In advanced developed countries, for instance, the share of online businesses in food retail has already reached 15%. Therefore, this is a tremendous opportunity for Ukraine.
Retailers who already work with us understand that the share of online sales will only increase.
About the business structure
- Do you have a big team?
- There are more than 50 people in total working in the office, including developers, the content department, etc. The IT department consists of more than 10 specialists. There is also an operations department within our company`s framework, which includes logistics and a call center, as well as managers who supervise contractors who assemble, package and deliver the products to the customers.
- Do you employ all of them?
- We have our own call center, as well as a training center where the assemblers are upskilled to choose the products according to an expiry date, quality, and other parameters. New employees are firstly trained, then they work with the trainer in the store for about a week to understand the processes and principles of working with our software, how to talk on the phone with a client, etc. They are the ones who call customers and clarify questions about replacements.
Proven contractors provide the services of logistics in terms of delivery. Currently, there are many logistics companies that want to cooperate with us.
Our logistics system is designed to load several orders into the machine, which subsequently results in a cheaper delivery for the client.
- In the end, how many cars do you have?
- We do not buy our own fleet. All our contractors are the couriers with their own cars. For instance, we employ approximately 30 drivers with cars Only in Kyiv.
- How do you measure the KPI of these employees?
- It`s important for us to take into account both quantitative and qualitative performance indicators of the employee work. For an assembler (a personal shopper) these are the quality and speed of the assembly, and for the courier, the indicator is the timeliness of delivery to the customer. After each order, the customer can rate his call center operator, an assembler and a courier.
- Is there a marketing department in the company?
- We have a small marketing department, but as of the beginning of 2019, we plan to expand significantly. We have all the necessary expertise and a huge storehouse of knowledge in this vertical. There is a number of partners doing marketing independently, and for some clients, we are going to take charge of this function.
- Do the partners decide autonomously on the volume of products to appear online?
- The more goods available, the higher the probability of purchase. We have our own photo bot, whereby we can digitize products quickly and accurately. Usually, we take it along to the partner`s store. When digitized, the content appears on the partner`s website. Some of our retailers have up to 50,000 SKU, and we provide for the fastest digitization of goods possible.
- How do you integrate with a new partner?
- In general, the parties have to understand precisely what are the key means, whereby a positive result of the common project will be achieved. After all, the expansion of online sales is not always a quick process.
Next, we discuss and come to a consensus on commercial terms and sign the contract. After signing the contract, we endeavor to start all the processes in up to three months.
We need this time to digitize the content of a retail partner, deploy our equipment, hire and train personnel, arrange IT infrastructure, etc.
The retailer should have enough space to accommodate our facilities. We have an operating unit with separately allocated cash registers, where assemblers deliver the collected orders on trolleys. It is not visible to customers of the supermarket and is most often located in the warehouse area. The retailer should adapt it to our requirements regarding the electrical equipment (such as wiring and sockets), we also place a special peter for refrigerant freezing, because we transfer the products that require special temperature conditions.
- Do you create content from scratch?
- Yes, we digitize the content using our own resources. We take pictures of every item from different angles and then publish them on our platform.
Many of our customers are into reading the reverse side of the package with the information on the composition. It is partially duplicated in the product description.
Robotization and automation
- Speaking of automation, which processes have you made automated?
- Today we already have automation set up from the moment of receiving a client order to sending a message, when the courier is located 1 km from the client. Obviously, there are still many automation-related tasks to be implemented.
- Under what conditions do you occupy the retailers` premises?
- We agree with each of the partners on a case-by-case basis.
- What is determinant when it comes to the share of online purchases?
- To a greater extent, it is the customer's awareness of such a service on the market what matters. It is surprising, but there are many people do not know that they can stop wasting their time in the queue, carrying heavy bags, and start ordering everything online and have the freshest products delivered to their homes or offices at an opportune time with absolutely no extra charges.
We are constantly increasing our efforts to improve the platform, and our partners are certainly intensively engaged in marketing.
The way retailer communicates such opportunity to the client and to his/her audience is also of great significance. At this moment we arrive at the place where more and more people are ready to order products online.
- Are these people new customers for the retailer or are they offline clients who switched online?
- This is a different audience that bides its time. If a supermarket raises its brand awareness, then the client will most likely go to Zakaz.ua, choose a favorite brand and not go to your competitors on their way home. That`s the logic behind it.
- Could you describe your buyer?
- Most often we buy Fruits (bananas in the top), vegetables, groceries (especially sugar), dairy products (like eggs), fresh meat (chicken fillet), and drinks (mineral water, juices) are the largest selling products. The majority of our customers are women (60-64%) and in general active young people from 20 to 45 who value their time. There are also young families and those whom we call the lifestyle party makers, meaning people who are really party lovers and ones preparing for different holidays starting from birthday to New Year parties. Also, another segment of our audience is drawn up by people who, while living in another country, order products to their relatives.
A separate part consists of B2B customers (up to 15%) who order products to the office or HoReCa representatives.
- Is expansion your desire or the desire of your partners?
- If a partner works on the all-Ukrainian scale, then he is interested in online presence far and wide. Now we are working in eight cities, including Kyiv, Kharkov, Odessa, Lviv, Zhytomyr, Vinnitsa, Dnieper, Zaporizhya.
- How many orders are generated in Kyiv?
- Kyiv is our core. But we are sure that in the regions our service will remain in high demand in the very near future.
- Where do you get the investment from?
- Most of the investment come from our profits and funds from the main shareholder. Since 2014, the investment fund Chernovetskyi Investment Group has invested more than $ 2.5 million.
The check is at the helm
- What are the terms of working with retailers, what are your income sources?
- We earn from commissions. The price at Zakaz.ua and on the shelf of the retailer is identical. The client only pays starting from 69 UAH for the delivery up to 40 kg. The key source for us is the average check. We would like to work with many partners in Ukraine, but their average check does not “fit” into our economy. Small checks and a large number of orders make up for the logistics breakdown, and our economy simply does not work in this way.
- That is the reason why ATB, for example, will not work with you, isn’t it?
- The question of work with similar retailers is currently under discussion with our team.
- Some retailers see cooperation with Zakaz.ua as a start, and then they plan to go their own way ...
- We have been working in the market for over 8 years with the largest retail chains. We have expertise in technology, development of a product, the attraction of the target audience, the organization of the assemblers, logistics and so on. An offline retailer runs a business in a different way which usually boils down to receiving the goods, putting them on the shelf and subsequently selling.
- You have grown by 300% in two years. What has changed in the company?
- The IT team works every day to improve the platform. We also work in the direction of automatization of the financial activities in our company. Since the more we automate, the fewer people we need. We are pursuing maximum automation.
- How have you managed to grow in terms of order quantity?
- We make tens of thousands of orders monthly. But it is important to highlight that we have two types of clients: B2C and B2B. The second is HoReCa, whose check is obviously higher check than in the case with B2C.
- What are your plans for the future?
- Mobile is edgy worldwide. We are on the verge of global improvement of our platform and its adaptation. This year we will introduce an app for mobile platforms. And in the first half of 2019, we will make a release on the launch of a new web platform. We have put lots of effort to make sure it will succeed. The new functionality and interface will be much more convenient and intuitively understandable for the user. Due to this, we expect an increase in conversions in several times.