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Sooraj Shah

Contributing Editor

Sooraj Shah is Contributing Editor of New Statesman Tech with a focus on C-level IT leader interviews. He is also a freelance technology journalist.

Picnic CTO on conquering the online food market by building tech in-house

Picnic is a Netherlands-based online supermarket that launched in 2015. The company’s aim is to disrupt the online food industry with a new business model, where it delivers without fees and within 20 minutes of the given time.

The company’s chief technology officer (CTO), Daniel Gebler, explains that this was based on analysis which showed that consumers switched to e-commerce alternatives when there is parity with brick and mortar retailers, and when there is a significant convenience in comparison to traditional retailers.

The idea has peaked interest, as the start-up secured a large series B funding of €100m which was nearly four times that of Uber ($27m).

The company officially launched in one city in Netherlands back in 2015, before launching in other cities across the country, and then opening up the business in Germany. It has gone from a few hundreds customers in 2015 to 300,000 customers in Netherlands and 30,000 in Germany. Picnic is available in 80 cities in the Netherlands and 10 in Germany, while launching every other week in a new city.

Building rather than buying

Gebler explains that the mission critical services that could give the company a competitive advantage from a technology and intellectual property side were all built in-house.

 “So we started with the consumer proposition meaning the shopping application, customer service communications systems and payment systems, and then the first step on the supply chain side has been manual operations and then also automated performance operations, forecasting, purchasing systems, warehouse fulfilment systems, food planning systems, the app for drivers – the stack is whatever is needed to make an end-to-end platform for consumers,” he says.

Meanwhile, Picnic has used off-the-shelf products for other parts of its technology, including its cloud infrastructure where it relies heavily on Amazon Web Services (AWS).

 “We’re using a little bit of Google’s cloud services, but we’re pretty big on AWS, where we use the entire stack, starting with EC2 instances to S3 to Kubernetes to Docker and Redshift and many more,” he says.

This includes Picnic’s proprietary route planning system.

“The solutions on the market were not suitable for inner city distribution or for urban logistics so we had to build this ourselves, but we used data from external parties like Google to add information around the distance between houses, where the house entrance is, which floor the customer lives on and so on,” he says.

Salesforce is also used for some of the company’s customer service features, while other technologies are used from technology vendors when it makes sense not to go to the effort of developing them in-house, Gebler explains.

 What’s next?

There are three main pillars the company is working on now.

Firstly, as the company is growing around 5 per cent a week, the tools required need to be developed to support and facilitate this growth.

“As an example, we started with 30 people which is when we could do a piece of planning such as knowing who is working in a warehouse or as a driver you can do this in a manual way, if you have 300 then you can do this on spreadsheets, but if you have 3,500 like we have now then you need proper systems to help you,” he says.

The second pillar is around tools and systems that support business innovation. An example of this is where Picnic offers to handle third party returns, allowing them to return items from other retailers through Picnic.

The third pillar is around automation. The company is automating customer success processes with sentiment analysis and automated feedback handling. In fulfilment it will use robots to help orders to be picked more efficiently, and finally it is building automation capabilities to help support its drivers.

A few years ago, the company had a market share of around 9 per cent, but Gebler believes a better metric is to look at the market share of online food.

“The areas where we are active for at least six months we are becoming market leaders, with about a 50 per cent market share in online food,” he says, adding that the market size itself is growing which means that the company is not just conquering the market but it is helping to grow it.