When physical stores are connected to quick delivery platforms, there is always concern about cannibalization – that the customer will choose a costly and external delivery method instead of shopping via the company's own e-commerce site. However, at Lyko, they do not see Wolt users as customers being moved from their own platform, but rather as a completely new target group with urgent needs.
Customers who are in the Wolt app and looking for a solution to a need will see our products and order them there. We see it as a new sales channel. We are not adding Wolt as a delivery option on Lyko.com or in our app, says Tom Thörnblom, Communications Manager at Lyko.
Real-time sync and summer tests in store
Using stores as micro-warehouses places high demands on technology. Knowing what was in the store this morning is not enough; inventory levels must be accurate to the second so that a bicycle courier does not waste time going for an item that a physical customer has just taken from the shelf. According to Tom Thörnblom, the project required a major internal transformation.
It required a lot of preparation and development to succeed with this. We had built some basic functionality before opening our warehouse hub in Berlin a few years ago, but the real-time inventory sync from the stores and the ability to "book" products are a large part of the IT development required internally to enable this launch. In addition to the integration with Wolt's system, he says.
Before the rollout, the concept was tested under the radar in selected stores to ensure that staff could handle orders in parallel with regular in-store customers.
During the summer, we have tested the entire process live in a handful of stores with a total of over 1,000 real orders. The pilot has gone very well and the staff have been positive. If the number of orders from the channel increases significantly, we will of course review the process if we need to adjust it further, says Tom Thörnblom.
However, there are currently no plans to change the overall store strategy to adapt to the requirements of delivery platforms.
If demand explodes, we do not rule out that we could have dark stores in the future in central locations, but probably from premises with a completely different rent than a store location.
How to make small purchases profitable
For Wolt, the step into retail means a transition from warm restaurant meals to everything from dog food to lip gloss. The challenge lies in making the calculations add up when customers order cheap individual products. Linda Fors, Sweden Manager at Wolt, believes that the pricing model is flexible.
It is true that retail can involve both smaller and larger purchases, and therefore the offer is designed to work for different types of orders. Delivery fee and possibly a minimum order value vary depending on the store and order. At the same time, we see that customers in the "health & beauty" category often buy several products at the same time rather than a single item, she says and continues:
The important thing for us is to build an offer that works for the customer, the retail partner and the logistics behind the delivery. Retail already accounts for more than a quarter of Wolt's global sales and is an important part of our continued growth.
That beauty and health have become an attraction is clear, even if the platform keeps the exact local figures to itself.
We do not release detailed growth figures for individual categories at the market level. What we can say is that retail now accounts for more than a quarter of Wolt's global sales and that health & beauty is one of our three fastest growing retail categories, along with electronics and pet products, says Linda Fors.
Globally, more than 2.5 million orders within health & beauty have been made via Wolt from more than 3,000 stores and actors. The development reflects a broader change where customers are increasingly using Wolt for other everyday purchases than food.
Responsibility and customer data
The quick delivery industry has received criticism for working conditions, especially when couriers cycle in harsh weather with goods that are not considered life-sustaining. Linda Fors believes that the contents of the bag do not affect the company's obligations.
What the customer chooses to order does not change our responsibility towards courier partners. Safety must always come first, regardless of whether the delivery contains a dinner, groceries or a beauty product.
Courier partners choose for themselves when they want to be online and which deliveries they want to perform, and our starting point is that no one should feel that they need to take unnecessary risks to complete a delivery. We are continuously working on traffic safety and safety features and adapting the business when weather or other conditions require it, she says.
Another hot topic in e-commerce is who actually owns the relationship with the customer when the purchase is made on an external marketplace.
For Lyko and other partners, the collaboration with Wolt means that they get to sell the product, but not necessarily tie the customer to their own loyalty club.
The purchase is made via Wolt's platform and Wolt handles the customer and transaction data needed to complete the order. Our retail partners receive the information they need to prepare and handle the order, as well as access to relevant sales data and insights into their business on Wolt, says Linda Fors.
Customer personal data is not freely shared with partners for example for own marketing or recruitment to customer clubs. How loyalty solutions can be integrated depends on the respective partnership and on the customer's choice and consent.