‘Amazon’ Has Put The Food Retail Market On Notice, Is This The Beginning Of A Trend?

2/1/2018

Prepared by: Gregory Smith |  ColdPICK / Chill Produce                                             

Amazon is responding to a market trend; Social Media is creating a new market paradigm.  The Boomers through the Millennials have gone from reacting to ads in newspapers delivered daily, to news flashes and tweets delivered on a second to second basis.

Amazon acquired ‘Whole Foods’ and will create an online provider of food and services.  Whole Foods, as a result, of the Amazon acquisition will create a new age of grocery shopping characterized by an ‘on-line’ scheduled pick-up and delivery.

This will change, fresh produce supply dramatically. The Grower / Shipper / Marketing Company needs to recalculate the road ahead to ‘supply the new end user’.   

In the future this will occur; less at the retail store and more directly to the individual buyer; through purchasing via Amazon and/or the National Supermarket / Big Box retailer’s offering ‘On-Line’ programs for pick up and home delivery.

The Effect on the Fresh Fruit and Vegetable Grower / Packer / Shipper and Marketing Company;

1. Packaging will change to deliver fruit and vegetable in “family style” units.

a. Package weights may increase.

b. Designs need to hold up to the material handling associated with ‘mail order’ deliveries; 

                                              i.     Nesting feature to accommodate automation through the delivery process.

                                             ii.     Venting that will provide ‘freshness’.

                                           iii.     An insulated ‘master shipper’ and ‘pallet system’ to accommodate multiple products.

2.    Field Pick and Packing will be replaced by Line Packing to accommodate

“Family Style” packaging units.

3.    Methods of Post-Harvest Pre-Cooling will need to change to accommodate Line Packing.

a.    A packaging change is not an easy step for a grower/ packer/shipper and it should be noted that the material handling in the existing packing- houses will not support the ‘new’ direction of the market.

4.    Change is a Positive Step.  The Fruit and Vegetable Grower / Packer Shipper / Marketing Company has not changed material handling procedures in decades; dating back from wood boxes to corrugated.  Pick and Pack at the grow site will be adversely affected by the different packaging required to serve the new market direction.

What needs to happen;

5.    Automate Material Handling in the Cold Chain to accommodate Line Packing versus Field Packing;

                                                 i.     Pre-Cool individual family oriented cartons,   not pallets – this will significantly Reduce Dwell Time

1.   Energy Cost Reduction

2.  Improved Quality – Shelf Life

3.   Improved Productivity

                                             ii.    Automation will Eliminate LABOR

                                           iii.     Cost of Automation; OFFSET by Energy and Labor  Reduction 2:1

                                         iv.       Package design needs to accommodate automated material handling and a change from ‘stacking tabs to nesting’

1.    NESTING design adds an extra layer of trays per pallet level – Increasing Pallet Revenue – Decrease Shipping Cost resulting in (19th truckload is free).

‘Vertical / Greenhouse’ Urban Grow Sites

 “Urban Grow Sites” will locate near defined Market Destinations;

a.    The “Economy of Scale” associated with ‘Packing House Throughput’ will be modified to suit the new Fresh Market Paradigm.

                                              i.     Each produce unit (head of leaf lettuce, sprout, berry) has a per acre measurement.

                                             ii.     Each of these measurements can be calculated into a truckload of production.

1.  Time, energy, labor, depreciation, material handling, break bulk, weight, et.al. is associated with the Truck Load Cost.

b.  The building of ‘Urban Farms’ to serve fresh produce to the differentiated end user markets is characterized by a single ‘Urban Farm’ unit that will increase production from 7% to 20% / acre of production grown on a conventional farm*Bright Agrotech

  i.  The cost of the ‘Urban Farm’ acre compared to the conventional cost per acre can be calculated and consideration can be given to partnerships to provide fresh produce to a ‘Client’ who grows and packs for a defined market end use.

                                             ii.     Defined Client;

1.    Retailer (Big Box, National Supermarket Brand, Independent) for a defined geographic area.

2.    Third party supplier; Sysco

3.    Defined End User; University and Corporate Campuses.

4.    Recreation Areas – Resorts – Destination Sites

The new Fresh Market Paradigm will promote the growth of the VERTICAL and GREENHOUSE grower.   This growth will not be in competition with conventional fruit and vegetable farming. It will be in partnership.  A partnership that will be forged by start-ups that promote the new Fresh Paradigm.  

      i.        Instacart (www.instacart.com)

    ii.         Grocerkey (www.GrocerKey.com)

   iii.         Deliv (www.deliv.co)

  iv.          84-51 (www.8451.com)

    v.         Boxed (www.boxed.com)