What: An interview of the largest Thai supermarket chain e-commerce and digital director.

Why it is important: In addition to the numbers, 2 elements seem interesting: they are maximizing the profitability of their fulfilment centres by opening stores in the warehouse allowing to decrease waste and sell products on site, and, since they are not satisfied with their Information System, they plan to build one in-house and sell it to other retailers afterwards.

Central Food Retail represented in 2020 a turnover of €2.1 bn achieved in more than 1,000 stores of 1,400 sqm on average. E-commerce now represents 10% of this turnover, achieved in e-commerce only (no marketplace). They sell online more than 40,000 skus (25,000 from stores and 15,000 from their 2 dedicated warehouse).

On average, orders represent €33 with 20 items in the basket, significantly above the market average, and occur twice a month. Central Group retail is able to fulfil from stores (62%) or from its 68 online hubs (38%) and deliver within 25 minutes. Once stores have to fulfil a level of more than 250 orders a day, fulfilment is then performed from the online hubs.

Regarding their 2 fulfilment centres, since they are dealing with fresh goods with limited time life, they are now testing a small store located at the front of them to maximize profitability and reduce waste.

Thai market has some specificities:

• Their fulfilment model works mainly manually thanks to the cheap cost of labour. As a consequence, automatization would be difficult to be made profitable,
• Deliveries are charged €1.6 for orders less than €23 and €2.2 for 1 hour express ones. Interestingly, the express delivery fee is the same independently of the amount. They also offer a 25 mn super express delivery, which is fulfilled only with stores and delivered through third parties.

For the CDO, challenges are:

• How to increase NPS and reach a target of 70
• How to technically stay on par with the volume of activities. The current systems are not adequate with their needs, and Central plans to build its own in-house solution (and sell it)
• Increase scale and capacity now that the online model is profitable (again, thanks to the cheap labour costs in Thailand).

The Thai example of Central Food Retail - Understanding the elements of online profitability