Israel's Online Shoppers Can Wait Two Weeks for Food Deliveries

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A Rami Levy employee at one of the company's fulfillment centers for online orders, March 29, 2020.
A Rami Levy employee at one of the company's fulfillment centers for online orders, March 29, 2020.Credit: Ohad Zwigenberg

Prime Minister Benjamin Netanyahu and other government officials have repeatedly warned Israelis against leaving their homes during the coronavirus pandemic. Moshe Bar Siman Tov, the Health Ministry director general, called it a “matter of life or death - nothing less.”

But for Israelis adhering to the warnings and shunning trips to the supermarket, the alternative of ordering online is no option at all, a survey by TheMarker finds.

Haredi leaders learn harsh corona lesson as Israel sends in the troops

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Online orders can take two weeks to arrive, even in the best of circumstances. In the worst case, shoppers are told “no delivery times are available.” When deliveries do arrive, items are often missing, or they include expensive products that weren’t in the order.

As a result, many Israelis head to the supermarket anyway, putting their health at risk. Keeping the recommended two meters away from others is impossible in the confines of a crowded store. Alternatively, they can order from the neighborhood grocery, where prices are much higher but the goods arrive within a reasonable amount of time.

Online supermarket orders have soared 50% since the start of the coronavirus crisis to a rate of about 150,000 a week. But demand is believed to be more in the area of 250,000. In addition, the average order has grown to 800 shekels ($223) from 550 shekels before the outbreak, because people are hoarding goods.

Still, the biggest problem is the time to delivery, which was typically 24-48 hours before the coronavirus pandemic.

Some are accusing the supermarket chains of doing nothing to alleviate the crisis, something that Aviram Ganot, CEO of the online supermarket Quik, denies.

“Chains have done everything they could, as we have. But the government could have done things to make it easier for us and to ease deliveries. We need government help,” he said.

One of the biggest challenges is finding workers to process orders, which Ganot said could be solved by assigning soldiers from the army’s Homefront Command to supermarket duty. Right now, soldiers are being used but only to help the neediest, not the general population.

Hiring ordinary workers is difficult because of the government’s unemployment benefit policies that covers people put on unpaid leave.

“It pays better to stay at home on unpaid leave than to work,” he said. “In addition, you have to be on unpaid leave for a minimum period of time to get [benefits], so no one wants to take a job at all. A worker who was making 10,000 shekels a month and is now getting 7,000 has no reason to take a job.”

Ganot’s solution is for the government to declare online food orders an essential industry and offer workers a tax break that incentivizes them to work in this sector.

Aviram Ganot, CEO of the online supermarket Quik.

Weighing a tax break

The treasury declined to provide an official response. However, a senior official, who asked not to be identified, said proposals like a tax break for supermarket workers were being considered.

Quik, which works with local supermarkets to source orders through its website, says the labor shortage is so severe that two stores set to join his service can’t because there is no one to assemble and deliver the orders.

Ganot said other coronavirus directives were also making the job of fulfilling orders more difficult. He cited a sharp reduction in public transport, which has forced Quik to bring employees to work by taxi – and only one at a time, in accordance with government rules.

Not everyone agrees with Ganot that there is a labor shortage. Shufersal, Israel’s biggest supermarket chain, says it has recruited a whopping 4,000 workers since the start of the pandemic, of whom 1,500 are working in online operations. Another 5,000 have applied for positions.

“We’re the biggest player in Israel’s online segment, with a turnover of about 2 billion shekels in 2019, equal to about 15% of Shufersal’s total,” says Zvi Baida, vice president for customers and service. “Yet, even though we started from a good point at the start of the crisis, nothing prepared us for as rapid a rise in demand as this.”

Shufersal has sought to pack orders at night and has dedicated three of its stores exclusively for online orders, while adding another 60 stores to its online operation. The company was also the first to join a government initiative to allow shoppers to order a pre-set shopping basket online, which is easier to prepare and can get delivered faster, Baida said.

“The big challenge is really logistical and operational, although it’s more than that. Service centers have crashed and there’s a big turnover of staff because the work is so hard,” he said.

He dismissed a solution implemented by Super-Pharm, Israel’s biggest chain of pharmacies, which has organized pick-up centers for online shoppers to get their goods. “Self-pick-up doesn’t address the problem, because the bottleneck is organizing the orders,” Baida said.

Rami Levy, the No. 2 food retailer in Israel, has adopted many of the same measures at Shufersal. Levy, the founder and owner of the chain, says he has hired about 1,300 new staff and offers shoppers a fixed basket that arrives within 72 hours after the order is placed.

“We’re letting older and sick customers call customer service to get priority for their orders,” he said. “Nevertheless, you have to understand that there are limits to the number of workers we can hire because it would create crowded workplace conditions that violate Health Ministry directives.”

Groceries in a Ramy Levy online orders fulfillment center, Israel, March 29, 2020.Credit: Ohad Zwigenberg

Send in the marines

“It’s true that if they sent us some soldiers it would help a little,” Rami Levy adds, “but it wouldn’t solve all the problems. Our business plan calls for doubling our online sales from 7.5% to 15% of the total within a year, and to 22% in two years. We can’t reach targets like these in a few weeks.”

For Levy, the real solution is robotics. The chain built the first of 12 projected robot-based fulfillment centers in December with the help of Fabric, previously known as CommonSense Robotics, an Israeli startup that specializes in robotic micro-fulfillment centers. The centers are supposed to ensure deliveries within two hours of an order being placed, with far fewer mistakes than their human-manned counterparts.

Shufersal is also moving forward with plans to open two robotic logistic centers at a cost of 600 million shekels. But neither have got the operation up and running yet and both continue to fill orders manually.

Some assert that the big food retailers are in no hurry to beef up their online sales because they are less profitable than their brick-and-mortar stores, even now with the coronavirus causing demand to soar. Expanding online operations now would require big investments whose returns won’t be seen for a long time, including hiring and training workers who won’t be needed after the crisis is over.

“It’s a problem of the chicken and the egg,” said one food retail executive, who spoke on condition of anonymity. “On the one side, it’s problematic from a profit perspective, and on the other the chains weren’t ready to grow so fast. In other words, they don’t want to and they can’t anyhow.”

“When you go into a store, you do most of the work: You collect the merchandise, stand on line at the check-out and bring the good home,” explains another executive . “For the chains, delivery is less profitable than physical stores. It doesn’t make sense to expect them to dramatically expand right away.”

As it is, the rapid expansion of operations they have undertaken since the outbreak of the coronavirus is especially costly.

In any case, the supermarket chains forcefully deny allegations that they are doing less than they could.

“Shufersal wants to sell. Right now what we’re doing is out of a sense of national responsibility, but it’s also true that we’re a business enterprise and we have no interest in not increasing our activities,” Baida said.

Baida said online sales are profitable. “You don’t undertake a business that accounts for 15% of your turnover if it isn’t profitable.”

Still, representatives from other chains say that online sales earned them less money than store sales.

Zvi Baida, vice president for customers and service, Shufersal, in Israel, January 24, 2019.Credit: Eyal Toueg

The grocery store that never sleeps

Meanwhile, small grocery stores are cashing in on the online logjam. At the Nonstop grocery in central Ramat Gan, a visitor coming between 7 and 9 A.M. doesn’t encounter many shoppers — but there is a small army of packers preparing orders for delivery.

Like other small grocers, Nonstop can get orders to customers much faster than the big chain these days. It accepts them mostly online, but takes them by telephone, too. Some shoppers come to the store with long shopping lists and have their orders delivered.

“Anyone who orders today will get the order today,” said Oleg Kushnir, the store’s manager. “We’ve hired a lot of people to fulfill deliveries.”

Some of them are owners of nearby stores, who have been ordered to close and are looking to earn some money.

Another way for shoppers to get food fast is directly from the manufacturer or importer. Tnuva (dairy products), Strauss Group (dairy and other products), Central Bottling Company (Coca Cola), and S. Schestowitz (household, cosmetic and food imports) have all launched sites to order online, which are likely to remain open after the crisis.

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