Cathelijn Swagemakers

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In 2015, online supermarket Picnic was founded in The Netherlands. At that time, this business model was very new and innovative for the Dutch Food Retail market. Although the young company is not yet profitable, this online supermarket has grown enormously over the past five years. In 2020, Picnic has approximately 300,000 customers, 4,000 employees and delivers in 125 cities in The Netherlands and Germany (Schelfaut, 2020). It is expected that the company will even further expand and grow in the coming years. Very recently it came out in the news that they will collaborate with the huge German supermarket chain Edeka to create its own private label that is entirely focused on e-commerce in order to achieve even more sales (Business Insider, 2020). With special logarithms, Picnic is able to drive efficient routes in order to save costs and for sustainability purposes. Furthermore, they strive to deliver on time and to be customer friendly (Van Tatenhove, 2018). Based on these insights, it seems that Picnic is a success story and that it can be regarded as a threat for incumbent firms.

However, the competition in the food retail e-commerce has grown in recent years.
Existing physical supermarket chains, such as Albert Heijn and Jumbo, started offering online delivery services as well. Picnic has had a competitive advantage over these supermarket chains for a long time because of its low costs, free delivery and customer centric commerce (Business Insider, 2015). They distinguished themselves as ”the modern milkman” to transform the way people do their groceries (Van Tatenhove, 2018).
However, Albert Heijn for instance has also improved their online service due to the high demand and sales for online grocery delivery. They have reduced their minimum order amount and also set up more hubs across the country in order to be able to deliver even faster (AH, 2019). About two weeks ago, Albert Heijn launched a grocery delivery service application that is very similar to Picnic: Albert Heijn Compact. With this concept, AH delivers groceries free of charge at home, the minimum order amount is the same as that of Picnic and the functionalities of the app are practically the same (Van Woensel Kooy, 2020). This could be a threat to Picnic, as Albert Heijn has a long history, strong reputation, large customer base and much capital. Additionally, another growing online supermarket was introduced in 2018, named Crisp, which focuses on fresh, local food delivery (Crisp, 2020).
As a result of these new entrants in the industry, competition is increasing. Picnic is no longer the only online supermarket in the Netherlands and runs the risk of losing customers to competitors. Furthermore, the turnover of incumbent supermarket chains remains stable, despite the entrance of potential disruptor Picnic (Smit, 2020).

Based on these insights, I wonder whether Picnic is as disruptive as was thought a number of years ago? Is Picnic not at risk of being overshadowed by a newcomer to the market that incorporates even more advanced technologies and really overtakes the existing markets?

Perhaps in future consumers will only have to name what they need, and it will then automatically be ordered for you and delivered within a short period of time?

I look forward to reading your views on this.

References

AH. (2019). AH kondigt 5e Home Shop Center aan om forse online groei bij te benen. [Online] Available at: https://nieuws.ah.nl/ah-kondigt-5e-home-shop-center-aan-om-forse-online-groei-bij-te-benen/ [Accessed 4 October 2020]

Business Insider. (2015). Dit doet de nieuwe websuper Picnic anders dan Albert Heijn en Jumbo. [Online] Available at: https://www.businessinsider.nl/picnic-online-supermarkt-albert-heijn-jumbo-591766/ [Accessed 4 October 2020]

Business Insider. (2020). Websuper Picnic komt met een eigen huismerk – omdat alles online wordt verkocht zijn de verpakkingen anders dan normaal. [Online] Available at: https://www.businessinsider.nl/online-supermarkt-picnic-huismerk-verkopen/ [Accessed 4 October 2020]

Crisp. (2020). De supermarkt-app voor knettervers eten. [Online] Available at: https://www.crisp.nl/ [Accessed 5 October 2020]

Schelfaut, S. (2020). Picnic breidt capaciteit flink uit na explosieve groei online boodschappen. [Online] Available at: https://www.ad.nl/koken-en-eten/picnic-breidt-capaciteit-flink-uit-na-explosieve-groei-online boodschappen~a872e4a9/#:~:text=Wij%20verwachten%20de%20komende%20weken,mensen%20aan%20te%20nemen.”&text=Het%20bedrijf%20telt%20nu%20zo,klanten%20en%20ruim%204000%20medewerkers [Accessed 4 October 2020]

Smit, P. (2020). Marktaandeel Albert Heijn stabiel op 34.9%. Available at: https://www.nieuweoogst.nl/nieuws/2020/01/21/marktaandeel-albert-heijn-stabiel-op-349-procent [Accessed 5 October 2020]

Van Tatenhove, J. (2018). Picnic: the modern milkman transforming urban distribution. [Online] Available at: https://medium.com/lifes-a-picnic/picnic-the-modern-milkman-transforming-urban-distribution-bae975749a12 [Accessed 4 October 2020]

Van Woensel Kooy, P. (2020). Albert Heijn gaat vol door op online markt. [Online] Available at: https://www.marketingtribune.nl/food-en-retail/nieuws/2020/09/albert-heijn-gaat-vol-door-op-online-markt/index.xml [Accessed 2020]

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Many companies use pricing strategies whereby they charge different prices to different customers, based on personal data. This type of price discrimination is called personalized pricing. Through this pricing strategy, companies are trying to charge a price that is close to the consumers’ willingness to pay in order to increase their profits (Whinston, Stahl & Choi, 1997). Price discrimination has been applied for many years in various sectors. For example, E-commerce companies adjust their prices based on the website visitor’s search history. If they can deduce from the search history that an individual is highly price sensitive, it is likely that this person will see a lower price for the same good than someone who is not being considered as price sensitive (Mikians et al., 2012). Also, different prices are being charged to individuals based on for instance their geographical locations (Borgesius & Poort, 2017). With the emergence of the Internet, firms have gained more access to personal data, making it easier to apply price discrimination (Borgesius & Poort, 2017).

As data has become increasingly important in the digital age, new legislation was introduced in Europe on 28 May 2018. The General Data Protection Regulation (GDPR) aims to improve the protection of personal data by giving people more say in what companies do with their data (Europese Commissie, 2020). This law concerns many organizations, as it covers not only the data that companies have stored in their systems but also the data linked to Cookies and IP Addresses (Den Breejen, 2020).

According to the law, firms are required to be transparent in what is done with consumer data and also need the consent to use the data of the consumer (Borgesius & Poort, 2017). Therefore, the introduction of GDPR has made it more complex for companies to apply price discrimination. Previously, companies could apply price discrimination without website users or consumers being aware of it, in order to make profits. Nowadays, violating GDPR could result in high fines and damage to the company’s reputation (Schoonen, 2020). It is therefore important for companies to comply with the law.

For me, it is questionable whether companies that use personalized pricing can continue to do so while still complying with the General Data Protection Regulation (GDPR). In my opinion, greater transparency in companies’ pricing strategies could evoke feelings of unfairness. Moreover, consumers’ confidence in companies may decrease if they find out that their data is being used for profit objectives. Subsequently, this may lead to a decrease in demand for the product or service.

I am very interested in your opinion on this.

References

Borgesius, F.Z.& Poort, J. (2017). Online Price Discrimination and EU Data Privacy Law. Journal of Consumer Policy, 40(3), 347-366.

Den Breejen, A. (2020). Privacywetgeving AVG, wat moet je ermee? Available at: https://www.kvk.nl/advies-en-informatie/wetten-en-regels/privacywetgeving-avg-wat-moet-je-ermee/ [Accessed 27 September 2020]

Europese Commissie. (2020). Gegevensbescherming in de EU. Available at: https://ec.europa.eu/info/law/law-topic/data-protection/data-protection-eu_nl [Accessed 27 September 2020

Mikians, J., Gyarmati, L., Erramilli, V. & Laoutaris, N. (2012). Detecting price and search discrimination on the internet. Proceedings of the 11th ACM Workshop on Hot Topics in Networks, 79-84. HotNets-XL. ACM. http://doi.acm.org/10.1145/2390231.2390245.

Schoonen, D. (2020). Al 160,000 schendingen van de GDPR gerapporteerd. Available at: https://www.techzine.be/nieuws/security/51890/al-160-000-schendingen-van-de-gdpr-gerapporteerd/ [Accessed 28 September 2020]

Whinston, A., Stahl, D.O., Choi, S.-Y. (1997). Chapter 2: Characteristics of digital products and processes. The Economics of Electronic Commerce. Indianapolis, IN: Macmillan Technical Publishing

Picnic – Disruptive Enough?

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