Dinner on the Front Porch: How E-Commerce Is Affecting the Food Industry
As consumers receive more and more of their food through e-commerce, food manufacturers, assemblers, and distribution networks are going to have to think differently.
2017 Food Processing
Today, dinner on the front porch means something totally different. Not many people have a front porch, few have time to prepare a home-cooked meal, and we hardly know our neighbors. The only constant we have is the weather, although we don’t see as much of it as we should because we are usually inside and distracted. Today, dinner on the front porch means that a delivery person with a plastic sign on their car roof arrived, or the big brown delivery truck stopped by and left cardboard boxes of food on your front step.
We have all had our dinner delivered to the front door at some point. Pizza, oriental, sandwiches, chicken wings, and so on, ready to eat. Convenience drove the consumer to the decision to place the call, and taste and quality became secondary. Ordering “dinner in” has become a common part of our American lifestyle and more so now because we live lives where we feel that time must be rationed, and shopping and cooking are less likely to get a piece of the precious clock we watch so closely.
In addition, while the idea of someone else making food for the consumer is an attractive option, food TV shows have changed how we look at this task. Doing a little bit of cooking interests more people today than before. Nowadays, the consumer wants convenient foods that taste great and they don’t want to shop, although they might be willing to take the time to do a little bit of the work themselves after they open the box.
How to Logistically Satisfy New Consumer Desires
So how do we, the industry professionals, satisfy this new consumer desire of wanting great foods that he or she might put some effort into? No secret here — e-commerce is the answer. Whether the consumer wants tasty boxed meals with healthy attributes for the microwave, or indulgent ingredients and instructions for cooking like the pros, they can have this delivered right to their stoop.
What if a ready-to-prepare-and-cook meal provider wanted to drive the most efficiency and cost-effectiveness into their deliverable? So, how does this happen? Logistically speaking.
We know these foods are not coming from grandma’s kitchen down the street; rather, it is our own high-volume food manufacturing plants, assemblers, and distribution centers. While it seems the globe is getting smaller, there is an extreme amount of logistical thought, action, and stars aligning to ensure that when consumers order online today, the box with fresh food is on their porch tomorrow. The behind-the-scenes element of this e-commerce, some-assembly-required, prepared-food industry is pretty complicated.
For example, imagine the consumer orders a simple gourmet hamburger meal for two from one of the ready-to-prepare-and-cook meal providers. That box will contain meat patties, produce, condiments, hamburger buns, side items, and instructions. The meat might be in a freezer or vacuum pack, but everything else is fresh. Sounds simple, but getting all of those items into the box and keeping them in the right conditions actually starts back at the food manufacturing plants, which may be spread across the country. This new way of delivering a meal is causing food manufacturers to rethink what they do to remain in the game.
Meat gets packaged differently for this scheme than for the general market; produce and side items are carefully monitored to assure freshness through the process and delivery; and the baker is now individually wrapping hamburger buns that typically are packaged in bags by the dozen. These processes are easily done, but negatively affect plant efficiencies — ultimately affecting the price tag.
Because of the growth in this ready-set-food channel, food manufacturers must find ways to make it happen efficiently to remain relevant. Manufacturers are doing the best they can right now as they wrap their heads around this new and exciting segment of the food market.
So now all these individual items are in flight or on a 53-foot trailer and on the road to an assembler. This is where the logistics become really important. This is where, as they say, location is everything. It’s easy to realize that a box of ingredients ordered for delivery in California is not going to be assembled in Maine. While the supplies for the meal boxes need to be in proximity to the ultimate gathering place, existing food manufacturers are usually spread far and wide. Assemblers and their distribution systems are strategically located to cover a prescribed marketplace, simply because they are new and can be in the right place.
Ramp-Up of E-Commerce–Driven Meal Delivery Options
The current ramp-up and growth of e-commerce–driven meal delivery options has been steady, and predictions are that this burgeoning industry is moments from breaking out in a big way. Today, it is believed that foods purchased through e-commerce comprise 1 to 2 percent of the total purchase of foods by consumers, which includes meals to prepare. Predictions are that this market will grow to 18 percent of total food purchases very soon.
Whether the consumer wants tasty boxed meals with healthy attributes for the microwave, or indulgent ingredients and instructions for cooking like the pros, they can have this delivered right to their stoop. To respond to the expected growth in this market, food manufacturers, assemblers, and distribution networks are going to have to think differently. Imagine that one day there are more people who prefer this convenient way of meal preparation than those who visit the local grocer to shop for their ingredients. When this becomes reality, the systems that make this happen must become more robust, more aligned, and even more strategically located.
What if a ready-to-prepare-and-cook meal provider wanted to drive the most efficiency and cost-effectiveness into their deliverable? What if they stepped outside the box and created the right method to efficiently meet consumer demand? What if they developed a complex that resembled the USDA’s MyPlate format? In other words, what if they could create a single complex where all the food categories needed for the box are produced and packaged without ever leaving the building?
You can visualize this as a large wagon wheel design. The assembly of the meal box is the hub. Several spokes come off the hub where proteins, grains, vegetables, fruits, and dairy products are produced — each in its own factory, but all connected to the hub. You could have a red meat plant, a poultry plant, a seafood plant, a produce plant, a dairy product plant, and a bakery — all separate companies, but all feeding the hub. The outer “wheel” could be for raw ingredient receiving and storage that would allow for proper food safety and separation.
Imagine the efficiency that could be generated by this concept. Imagine the price point that could be obtained by removing post-production transportation. Imagine the freshness that could be obtained by removing time and distance. Imagine the growth that this industry could see because they are providing even fresher foods, at a better price, to more people.
Yes, it may sound far-fetched, but so was the idea of delivering packages with drones. When imagination aligns with an appetite for risk, anything can happen. The reality is that one day, ready-to-prepare-and-cook meal providers are going to need a bigger box.
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