Krispy Kreme’s kicking goals online
In addition to becoming the first national company to offer courier delivered food in Australia, Krispy Kreme is poised to become the first player to do same day food delivery in February next year.
“Initially, all the courier companies refused to deliver food for us,” said Krispy Kreme digital business manager, Russell Schulman, said. “But we worked on a special double layered delivery box with a tamper proof tape, which now has food authority accreditation.”
In the past, the iconic doughnut group’s processes for selling its edibles online were manual and inefficient. Customers could choose from a limited list of products to be sent to a very restrictive set of postcodes. And, with fulfilment an afterthought to its website, it often wasn’t until the very last stage of online checkout that customers would find out they weren’t within the delivery radius.
Once an online order was placed, Krispy Kreme’s head office staff would work out the nearest store, call the store to reserve and pack the order, and then call the carrier to arrange for delivery.
“Depending on the volume of orders, manual work could consume between two to four staff members’ entire days each week,” said Schulman. “And there were lots of errors.”
Krispy Kreme turned to Temando Shipping Extension for Magento.
Magento is a popular software solution in Australia, but as Temando managing director and CEO, Carl Hartmann, told Inside Retail Weekly, it doesn’t have certain abilities. For example, it can’t look at the whole of inventory at multiple locations, or interface with couriers, or show customers’ different delivery experiences after checkout.
He noted that the trend of “the unberfication of everything” was driving consumers to demand better experiences and more options.
“Customers are being conditioned to expect to be able to press a button and have something on demand, but, at the same time, they also expect higher levels of transparency and control over how they consume products,” he said. “This adds complexity for retailers.”
Doughnuts are a time-sensitive product, best eaten within 24 hours of being made. Krispy Kreme can now facilitate orders placed before 1700 on any day to be received the next day, by working out the most efficient way to fulfil the order. It can also now determine the nearest store to arrange the carrier to collect from, and which of its two nominated carriers is best suited for the job.
The system also ensures there is no waste product created to account for online orders or that no store would lose its allocation to online orders. And it allows Krispy Kreme to be able to offer “mix your own dozen” products, which would otherwise be chaotic to fulfil.
Customers are given as much control as possible over the delivery experience, including being able to track their order and see where the courier is.
The new system also allows for dynamic pricing, meaning Krispy Kreme’s customers pay the exact cost of delivery. Customers were previously charged a flat $12 delivery fee per dozen, regardless of their location. Now customers (and Krispy Kreme itself) are charged shipping based on the delivery location and are also given the option of regular or fast delivery.
In addition, zones, or delivery locations, can be switched off in the backend. Customers located outside delivery areas (for example, some regional areas) are then unable to place an order, but are given a very nice apology.
Best of all, Schulman noted that Krispy Kreme could “just flick a switch” when it introduced same day delivery in February next year and could ensure any order received by 1000 would be delivered by 1400 that day.
“Going same day delivery is more about us needing to coordinate our internal logistics,” he said. “We feel that we are now future proofed – that for the next two or three years the system can do more than the business can do.”
Schulman noted that online purchases averaged two and a half to three dozen doughnuts per order and attracted a different type of customer, often one organising a party or catering an event.
“The efficiencies we have created mean that even on a really busy day, we don’t notice the difference and don’t have to scale up resources. The most online orders we have received in a day in the past three months was 380. But with the new system, it was seamless.”
Krispy Kreme has also invested in its website in a bid to make its online experience as much fun and interactive as possible. Online visitors can, for example, chose their own mix of 12 doughnuts on its website and if they shake their mobile phones, the system will pick a random dozen for them or recommend the 12 best doughnuts for them.
And these efforts are paying off for the business.
“We used to have about 30,000 people on the website every month; now we have 140,000,” said Schulman. “We have seen close to three times more orders on mobile than we did previously, because it works so well now. And we’ve enjoyed a 430 per cent increase in online sales in the past three months, compared to the same three months in the prior year.”
Percentage-wise, he said the online business was the largest area of growth for Krispy Kreme, although the group was enjoying strong growth in other areas too.
“We are doing well across the board. We’ve had 20 per cent growth in our retail stores, more in the 7-Eleven stores and we are looking to open up another 100 stores in the next year.”
The group sells its wares through the Jesters pie company in Perth and just over 7-Eleven 600 stores around Australia.
“We are looking at a few other partners, but at the moment every production store is running at almost 100 per cent capacity,” said Schulman.