Nowadays Picnic is pretty familiar, definitely here in Rotterdam, but this week I came across article that was published just before the launch of the Picnic app. One of the founders, Michiel Muller, predicted how Picnic would win from big players in the Dutch retail market: Albert Heijn and Jumbo. Earlier attempts, for example Superdirect.com, lost this battle quite soon. Albert Heijn, as well as Jumbo, already offered the service of delivering your groceries at home, so you have to come up with something new.
Michiel Muller states the two biggest obstacles for consumers concerning ordering them online: ‘’they don’t want to wait too long and they don’t want to pay for the delivery’’. Picnic is able to offer these services because they don’t need a physical store to put their groceries in. This way Picnic aims to disrupt the grocery retail market.
But does Picnic actually follow the disruptive path? According to the article ‘What is disruptive innovation’ in the Harvard Business Review the disrupter offers a product to the low-end of the market with a lower service level for a lower price. As soos as it gets picked up, it will move to the mainstream market. In this case, actually, Picnic offers delivery of groceries for a lower price, but also offers a higher service level. And is the service offered by Picnic not already picked up by the mainstream market (customers who already made use of delivery of groceries)?
The big question is if the business model of Picnic is sustainable. Picnic gets a lot of praise these days, for example with an article in the USA weekly lately and the title of fastest-growing startup in the Netherlands. But are they good enough in the long run? Albert Heijn already launched a competitive service (Rappie) and I would say that Albert Heijn is big enough to overcome this threat. I can’t see how Albert Heijn, with the power it has in the market, will not be more succesful than Picnic with the same business model (next to their existing services).
In the future, I assume that everyone in the Netherlands gets their groceries deliverd at their home. And if Picnic makes it or not: they would definitely have contributed to that.
https://www.sprout.nl/artikel/e-commerce/waarom-michiel-muller-ah-en-jumbo-w%C3%A9l-aankan-met-picnic
https://hbr.org/2015/12/what-is-disruptive-innovation
Startup Picnic runs grocery delivery bus in Dutch online shopping boom
PICNIC earns title of fastest-growing technology startup in The Netherlands in 2018
Interesting article! However, in my opinion Picnic is not easily pushed out of the market. The current incumbents might be more conventional by depending on their traditional business model, which has proven to be successfull in the past. However, this could become their weak spot which Picnic could benefit from. For instance, when considering the marketing tactics from multiple supermarkts. Picnic has an unconvential marketing strategy by collaborating with a company called Storm Digital, and thereby solely focusing on digital marketing. Not many incumbents have expanded their marketing to online platforms yet (with the expection of Albert Heijn). Being on top of the current digital transformation or innovations in general, might help Picnic survive or even become a market leader.
Hi Lars, what are your thoughts on the lower cost benefit that Picnic has over its competitors? Picnic does not need to be in the expensive city centers, and it makes use of data and technology to prepare orders faster and faster. They could gain an advantage in this area, especially considering the substantial costs incumbents need to make, and also their focus on the traditional business model.