In today’s connected and time-efficient world, consumer behaviour is rapidly changing. In this evolving landscape, e-commerce continues to grow at a furious pace in order to meet consumer demands for a simpler life. As such, new companies that are focused solely on e-retail are being launched across the world, posing a significant threat to traditional brick and mortar retail companies, many of which have little choice but to move their businesses online as well.
With this shift to e-commerce comes a whole new set of challenges for the food industry, starting with delivery. Of course, shipping expenses are the first thing that comes to mind in this respect, but health concerns pose no less of a conundrum, particularly when it comes to disrupted supply chains for chilled and frozen foods. Although this remains a significant challenge to both companies and consumers, little has been done to resolve the problem.
Cold hard truth
In a price-competitive retail environment, the extra costs of e-commerce can place significant pressure on a company’s bottom line. E-commerce businesses have quickly identified the biggest of these costs to be consumer delivery, and particularly, in the case of food distribution, the management of the chilled supply chain. Beyond basic cost concerns, the cold supply chain is very often faulty, as cooling van doors are typically opened 15 to 18 times during a delivery cycle for each truck, while each stop sees the doors remain open for three to eight minutes. Many companies believe they have an intact chilled supply chain that meets food safety regulations of four to eight degrees celsius for chilled goods and -15C to -18C for frozen goods. However, in many cases, real temperatures significantly exceed these regulations, despite the use of specialised equipment such as cooling vans, wool-lined storage, thermos bags and styrofoam boxes.
Online food suppliers are always looking for the most efficient and cost-effective delivery methods. However, when goods arrive with a supplier, they must then be transported to the customer. It is at this final destination that several problems occur. This last part of the supply chain, or ‘the last mile’, as it is known in the industry, is usually less efficient – not least because of consumer macro trends. In Sweden, for example, during the second quarter of 2016 the country saw an 18 percent rise in e-commerce compared to the same period last year, according to research from Swedish logistics company PostNord, trade organisation Svensk Digital Handel and HUI Research. For the online grocery business specifically, the same period saw an increase of as much as 38 percent, thereby indicating e-commerce is indeed playing a bigger role in total sales.
Many retailers work under price and time pressures from consumers who are not willing to pay more for online groceries than they do in physical stores. Consequently, many of the big players are now offering online shopping services, in addition to looking for new services in order to develop the market further. Even the most established physical grocery stores have realised they cannot survive without adapting to e-commerce, which puts further pressure on the problem of last-mile delivery.
As previously mentioned, there are a number of different solutions available for delivering frozen and chilled goods. Each of these, however, has a number of problems and leaves a lot to be desired when it comes to ease of handling, emissions, costs and, most importantly, meeting safety regulations for chilled goods.
Founded in 2013, Swedish start-up iFoodbag has stepped up to fill the industry’s looming void. The company’s eponymous product is a highly innovative paper composite technology that can store chilled and frozen goods for up to 24 hours. It boasts similar performance to a cool box and, depending on customer needs, active cooling can also be used, which consists of ice gel for chilled goods and dry ice for frozen goods. If active cooling is required, various factors are considered, such as the amount of goods to be chilled or frozen, as well as their starting temperature. Ambient temperature and humidity are also taken into account.
Beyond its performance, the iFoodbag also contributes to a sustainable environment, with fewer carbon emissions than other solutions. It is also important to note the product is recyclable, as well as reusable for consumers. Furthermore, testament to the company’s commitment to the environment, iFoodbag plants three new trees for every tree it cuts down.
The unique bag is based on three innovations: a new composite material consisting mainly of cellulose, a system that keeps the cold in and keeps condensation out, and lastly, a new type of closure. This technology means easier and more eco-friendly transportation of frozen and chilled goods, enhanced food quality, and less need for additives. It also solves the critical issue of cost, as it has a significantly lower price point than other last-mile alternatives, and enables easier and more efficient handling when delivering to consumers.
After successful tests by the Innventia research institute, Karl Fallgren, the founder and CEO of iFoodbag, launched this unique product at the end of 2015, instantly becoming one of the most exciting start-up companies on the market. That this is a major global product was illustrated when the company was awarded a grant from the European Commission’s Horizon 2020 SME programme in February 2016. This support, which consists of €1.7m over a two-year period, is also a sign of the product’s importance, particularly for the food industry.
Following iFoodbag’s agreement with global packaging company Mondi, business started to grow through partnerships with online retailers, as well as large companies such as Volvo. This has made it possible to deliver food in a whole new way, as, for example, an online grocery store can work with car manufacturers to deliver food directly to parked cars. The iFoodbag technology is designed to keep food frozen and chilled for a long time in a client’s car and during transit to the customer’s home. This places it far above anything else available on the market today.
The problems of last-mile delivery extend beyond the commercial food industry. Outside e-commerce, improved chilled delivery technology can be a huge aid in reducing waste and ultimately helping to improve living standards worldwide. Although over 800 million people worldwide are starving and are in need of life-saving vaccines, enormous amounts of food and medicine go to waste because previous solutions could not keep products cold enough to transport to their final destination.
In spring 2016, iFoodbag went to Kenya to explore how its product handled the transportation of food and vaccines in vulnerable environments. On-site, they found that, with previous solutions, vaccines were not kept cooler than 15C, but with iFoodbag’s cooling technology, temperatures could be kept at between two and eight degrees celsius – the recommended range for safe vaccine transportation.
Consequently, the company signed a purchase agreement with Equator One Logistics, a company based in Nairobi. With this partner, up to 20 million iFoodbags will be distributed across Africa to support efforts to reduce hunger and food waste. As Equator One Logistics has direct contact with various aid organisations, this project, which is the first of its kind, is expected to have a major impact across the continent.
While the first generation of the iFoodbag can already be considered a success, the company is currently in the process of developing the second generation, which will have a particular focus on cost effectiveness, so more people can afford to shop for their groceries online, as well as playing their part in reducing both carbon emissions and food waste.
For further information, why not check out iFoodbag’s LinkedIn profile?