The Future of Quick Commerce: Wolt's Marianne Vikkula on Affordability, AI & Retail

[00:00:00] It hasn't been an easy few years. In Europe, consumers have a lot of pressure on their wallets. Making it affordable to buy online is super critical and the way we've largely done that has been through our own subscription program. Customers want more affordability and one of the biggest friction points were our delivery fees. And what we started seeing was a lot of incrementality. So customers started buying a lot more on our platform when they were our members and didn't have the delivery fees.

[00:00:23] I think there is this kind of misconception that Quick Commerce is just about those distressed purchases when actually you found that baskets were about a third higher when contained an item that was on promotion. People do compare pricing in services like ours across different retailers and want to see and choose the most affordable item conveniently delivered that they can find, but then also having great deals helps you build bigger baskets. For the retailers that are tuning in today, what can they do to get the most out of Wolts?

[00:00:56] You're listening to Retail Disrupted, a podcast that explores the latest industry developments and the trends that will shape how we shop in the future. I'm your host, Natalie Berg.

[00:01:19] Welcome to Retail Disrupted, a podcast that explores the biggest trends shaping the future of retail. I'm your host, Natalie Berg, and today you are going to hear from Marianne Vaikula, CEO of WALT. WALT serves over 200,000 restaurants and stores globally. It's the number one delivery app outside of China, and it's now one of the top 10 European online grocers. I had the chance to sit down with Marianne Vaikula, CEO of WALT.

[00:01:47] I had the chance to sit down with Marianne when I was in Athens recently for WALT's Global Retail Summit. We talked all about her strategic vision for the business, how she sees quick commerce evolving, which I know is going to be of interest to a lot of you. It's something we talk about a ton on the podcast.

[00:02:03] And we also get Marianne's take on the future and how she sees both WALT evolving in the future and diversifying into new categories, but also how she sees the wider industry, and particularly in Europe, how she sees that evolving. So lots to unpack, but before we come on to the main episode, a quick request from me to hit that subscribe button.

[00:02:29] As a lot of you know, we are really focused on growing on YouTube. Every week we're releasing new video episodes and exclusive clips from the podcast. We want to bring you the sharpest insights from the leaders and the disruptors shaping the future of our industry. And every subscription really does help our independent channel to grow. So without further ado, I hope you enjoy this conversation with Marianne.

[00:03:01] Glad to be here. It's great to have you here. And thank you for taking some time out because I know this is a really busy day. It's a jam-packed agenda. Let's just set the scene for our viewers and listeners. Can you tell us a little bit about WALT and how you differentiate in a very crowded market? Absolutely. So WALT is a Helsinki-originating tech company. So we're 12 years old by now.

[00:03:26] And indeed, in our hearts, we are a technology company that builds technology to bring joy and simplicity to the lives and the neighborhoods where we operate in. We are a local commerce player connecting with local merchants to people who want to buy things from them and people who want to deliver those things. That's WALT in a nutshell. And I also should have said in my intro that you are part of DoorDat. Yes. And for our UK listeners, a lot of our UK listeners will know Deliveroo, which of course is a sister brand.

[00:03:54] Like a lot of on-demand delivery apps, you started out delivering takeaways from restaurants. Yes. And now you're diversifying, moving more into groceries and retail, pet care, pharmacy, flowers, you name it. Tell us, how significant is retail to WALT's next phase of growth? So today, retail makes roughly 25% of our business. And it's the most rapidly growing part of our business as well.

[00:04:23] And I think there's going to be a day when retail overtakes the original core business of restaurants. Hasn't happened yet, but given the rapid growth and just the sheer fact that retail is a bigger market out there than restaurant food, I'm very strongly believing that that will happen one day. And how we're going to get there is a lot of focus on what the customers care about, selection, quality and affordability. And obviously, we're not going to get there unless we're able to provide something to the merchants that otherwise doesn't exist.

[00:04:53] And our focus has largely been on creating services for those who it would be hard to do themselves. A very large share of our merchants say that they wouldn't have this kind of online or immediate deliveries without a player like ours. And we're investing a lot in the technologies to offer quick deliveries, both in our channel, but also in our merchants' own channels.

[00:05:17] We're building technologies like Storefront that allow the merchants to also themselves create a full digital experience. So we're thinking about the customer journeys very holistically. How have you seen customer attitudes towards quick commerce evolve? And can you give us a flavor of, I know you touched on some of the things that customers are looking for when they come onto your platform, but just talk us through, what are they looking for from all? Yeah. Customer expectations, firstly, are already going up.

[00:05:45] So what constituted a great customer experience in a service like ours 10 years ago, I think today is table stakes and need to improve our time. And we really think about this through selection, quality and affordability. So customers want to get, firstly, the ability to choose from all their local services. And when you think about retail specifically, it's categories like from grocery, pharmacies, basically anything in your local city.

[00:06:10] And it obviously isn't just about having the brand and the banner, but having the products you're looking for. So we're also seeing the more and more we go into retail, it's also becoming not just, hey, discover new things, but also people have very high intent. They search for specific products. It's also very seasonal. I mean, I live in Helsinki. Guess what happens when the first snow comes in? Snow shovels. Shovels and sleds. So people search for the stuff that's like immediately needed is the starting point.

[00:06:39] But then we also see platforms like ours go much beyond the immediate need. I think the perception with a lot of people still is, hey, this immediate need, I need this right now. But if you look at the purchasing behaviors of a lot of our customers, it's already starting to be the weekly shop. It's not just, hey, I need this baking item urgently for my recipe, but I buy all my family groceries on a service like Walt. And for that to be possible, then we also need to make sure the quality is high. So inventory accuracy becomes very important.

[00:07:08] Quality of picking becomes very important. Accuracy of delivery times is important. And then on an affordability front, it hasn't been an easy few years in Europe, right? Economies have faced all kinds of challenges, and consumers have a lot of pressure on their wallets. So making it affordable to buy online is super critical. And the way we've largely done that has been through our own subscription program. Well, plus it gives you savings and on delivery fees. That's super interesting. Now, you've touched on a lot of points there.

[00:07:37] And I do want to go back to grocery, because I thought one of the most interesting stats that was shared this morning was that a third of shoppers now expect grocery delivery within two hours. That is a huge shift, because not that long ago, we would do a big weekly shop, whether that was at a large out-of-town store or a big online shop. And now we're not just looking to quit commerce as consumers. We're not just looking to quit commerce for those distress purchases you just touched on. But it is becoming embedded in our everyday routines.

[00:08:05] So how has that changed your sort of strategy and what you guys are building as we look to the future? Well, I think largely we've tried to be at the forefront of all of this. I think even in the restaurant side, we brought something to the market that wasn't necessarily there before. So access to restaurants that didn't do delivery. And this is the use case we've been building. So access to immediate groceries that wasn't available before.

[00:08:28] And I think the coming of availability, companies like ours have created these demands from customers. Because before, you couldn't necessarily even imagine what could be possible. And now that these services have become available, more and more customers start expecting that. Yeah, you can't imagine life without them now, right? Exactly. And I think that's something I know we talked about earlier, that, you know, today's innovations very quickly become tomorrow's norm. So for retailers, you've got to keep innovating and got to keep following the customer.

[00:08:56] I just want to touch on your point about affordability. Because one other stat that I jotted down from this morning that I thought was really interesting, because I think there is this kind of misconception that quit commerce is just about those distressed purchases. It's just about servicing that immediate need. When actually, to your point about affordability, you found that baskets were about a third higher when contained an item that was on promotion. And I thought that was super interesting, because it shows that people are also looking to this channel for affordability and for value.

[00:09:26] So how, from a retailer's perspective, how do, like, what should retailers do? Like, how do they work out their strategy for being successful on mold? I think our learning after doing this in 30 countries and beyond across the brands we operate with is that there's no one single playbook for every single grocer out there. And everybody needs to find their path. We can obviously share learnings. Some of them would be that, indeed, customers also come and look for promotions.

[00:09:55] They're usually the things that, if you go to a physical store, you're also expecting some promotions. And those might end up being either your core basket builders, or then they are the top-ups that help you grow the basket. And we're seeing pretty much the same on our front, that people do compare pricing in services like ours across different retailers and want to see and choose the most affordable item conveniently delivered that they can find. But then also having great deals helps you build bigger baskets.

[00:10:23] And ultimately, having growing baskets is one of the key things in selling things also profitably and building a sustainable business. So that's something we're definitely working very hard on with all of our partners to come up with the right types of promotional strategies that are enticing to the customers, but also help driving profitability. So these could be then not just having single item discounts, but coming up with bundle deals, multi-item promotions, and so on.

[00:10:50] And I guess one way to grow basket size is to expand the categories. Absolutely. So could you tell us, will we ever see a time where you can buy things like a washing machine or a TV on Waller? Or maybe that's something you can do now. I'll start with the grocery category, where we even there have learned a lot. We also run our own grocery stores, Wall Markets, where I think the first selection size we had was 1,000, 2,000 products.

[00:11:19] And now we're talking about much more, like more doubling. And we've seen direct changes to the average order values. And I think if you would go and ask any of our grocery partners here at the conference, they would say the same thing, that the widening of the assortment on a platform like ours is directly driven up the average basket in grocery. Then thinking about other categories, generally what we, by the way, see is that the more use cases we bring, the more frequency we create.

[00:11:48] So we're very interested in broadening our selection to have pretty much anything and everything available. I think the biggest order we've delivered is in tons in kilograms. So technically... Not on a bike. Not on a bike. Definitely not on a bike with some cars. For that to happen at scale, we're not there yet. So we need to invest in technology, invest into operations to have scalable operations.

[00:12:14] So we're living in this era of global commerce with Amazon and Timu and cross-border everything. And yeah, Walt's entire bet is on local, hyper-local. Yes. In fact, your average order travels under three kilometers, I believe. So tell us a little bit more about this strategy and why it's been so successful for you. Yes, definitely.

[00:12:39] We are betting on working together with the local merchants, large chunk of them being SMBs, and helping them come online. The reality is that our cities already have a lot of selection. It's just not available for you right now. And obviously then the thing that we're able to do that some of these cross-border giants are not, it's available right now, right there. We can deliver in less than an hour or even less than 30 minutes in some cases.

[00:13:04] We talked earlier about the expectation for more and more convenience has really been the mega trend, the consumer trend that we've kind of ridden and created in some ways as well as we've kind of brought open eyes for people on what's possible. So that's been very much in the core of it. And then what we've seen as we've kind of worked through this is that there's a lot more use cases that we can build.

[00:13:32] It's not just, hey, come online on Vault Marketplace and deliver things fast, but we can support these kind of merchants in their own channels and build other future technologies that help these kinds of retailers and restaurants as well to grow in the future. Great. And I want to go back to something you said right at the beginning, which is around Vault Plus, your membership program. You now have partnered with Revolut, Deutsche Telekom, other retailers like Zalando.

[00:14:01] Can you just tell us a little bit about the program, how it works, and what are the benefits both for customers and for merchants? Yeah. So the program started from a simple idea that customers want more affordability, and one of the biggest friction points were our delivery fees. So we started playing with the idea, like our friends in the U.S., DoorDash, who has been a few years ahead of us, that, hey, what if these delivery fees didn't exist?

[00:14:28] If we create a membership program that could waive the fees with a small subscription you pay every month. And what we started seeing was a lot of incrementality. So customers started buying a lot more on our platform when they were our members and didn't have the delivery fees. So that's where it all started, but we're more and more turning ourselves into a lifestyle program, where it's not just about not having the fees, but looking for ways to give you more affordability,

[00:14:55] through, for example, program-specific discounts, or then member or partner offers. We, for example, started working with Dot, this e-scooter company. Now you can also have local mobility as part of your subscription and continuing to look for more ways to give everyday affordability for our members. Yeah, it's interesting, isn't it? Because I guess from a customer's perspective, you want to get value from any membership, so that means you're going to use it more.

[00:15:23] So I can see how that would drive people back to Vol. And also, I think it's interesting to see how customer loyalty is evolving. It's not just necessarily about points or discounts, but actually it's about offering additional value in those partnerships, I think, Laida, to think about. So your retail proposition only works if the logistics underneath are genuinely world-class.

[00:15:45] So can you tell us how you're improving on speed, reliability, while still being cost-effective and as productive as you can be? Yeah, I think we got a bit lucky as Walt with the fact that we are from Helsinki. And what I mean by that is it was never easy for us. Our home market isn't big in population. It's very vastly populated, so population density is very low.

[00:16:13] And generally buying from restaurants and restaurant industry is not a big part of the lifestyle. So for us to create a globally scalable company that can be also sustainable and profitable, we very early on had to invest into logistics technology that unlocks efficiency and ultimately profitability. So 10 years ago already, we were working on these hard problems of how do we do efficiency, bundling, logistics optimization.

[00:16:40] A lot of that core work is still the foundation of how do we do deliveries today. Obviously, then now things have expanded. We are expanding radii. We're expanding use cases. We're seeing that delivering groceries is not the same thing as delivering restaurant food. We're definitely seeing that delivering washing machines or fridges is not the same thing as delivering grocery bags. So we're obviously all the time investing into technology.

[00:17:06] We have altogether roughly 1,000 people, technology organization across engineering, product leadership, data engineering, data science, who's building these things every single day. And I definitely see the logistics side. It's a lot about this very small wins. There's not a lot of silver bullets, but you every day need to look for customer friction points. And also career and merchant friction points, for example. How accurate are our pickup estimates? Are the waiting times at the merchant too long?

[00:17:33] How can we save time from the couriers looking for the final address? How can we improve that experience? So from a hundred small things like that, we can find more speed and efficiency that's great for everyone because no one wants to waste time. Yeah. Yeah. So it's those small things that can make at scale a huge, huge difference. And is AI helping at all in that respect? Absolutely. Is that something that you're using? I think it's been pretty mind-boggling to follow the progress in the last, I would say, just few months.

[00:18:03] I think the biggest gains we're seeing right now largely come from our internal effectiveness. How much faster product development is? How much faster the shipping code is? Yeah. But next, we need to also get to a point where all of these benefits are visible to the customers through different, more AI-unlocked solutions. As a few examples of what we've been testing, though, in the US, we have an integration with ChatGPT.

[00:18:29] So you can build your grocery basket, for example, by just prompting ChatGB, hey, I want my DoorDash grocery basket. We've obviously used machine learning already before, the bigger breakthrough of AI and personalization. And that's only going to get more intense. So us becoming even better at recommending things relevant for exactly you is a big focus area for sure. And let's see where all this can take.

[00:18:55] Like, I'm sure there's a lot of things we can't imagine even today that we'll be capable of doing next year. Yeah, it's so interesting, isn't it? Because I think focusing on the customer experience and grocery, which is something we all need to buy. It's a non-discretionary purchase. And it's habitual. We tend to buy the same things week in and week out. Obviously, you know, baskets change a little bit. But we are creatures of habit. So I think as much as you can automate that and reduce the cognitive load for the shopper is going to be a win.

[00:19:23] How are you looking to things like autonomous delivery, robotics, drones? Are those things that you are testing right now? Yes, they are. We are both building our own technology in our U.S. San Francisco lab. And we have our own delivery robot called Dots. And then in Europe, we've also partnered with companies like Coco to test autonomous deliveries of robots. We actually just expanded to more cities.

[00:19:53] So we start being at a point where we are getting happy with the customer experience that it's on par with as we've delivered before, so to say. And looking to expand soon to new markets. I think it will be a complementary part to the deliveries we've done before. And generally, we see that there's a big segment of customers who really like their orders being delivered with autonomous vehicles, mainly robots. So excited about it. It's very exciting.

[00:20:21] And I guess at the end of the day, giving your customers more choice can only be a good thing, right? So as a final question for you, Marianne, for the retailers that are tuning in today, I'd love to get your advice for them. So what can they do to get the most out of Waltz? I start by saying that these channels are much more incremental than many retailers fear.

[00:20:43] I think one of the most common questions we get when we start discussing with someone who's not working with us yet is a fear about, will this just deteriorate my own channels? And does this make sense? And time and time again, we see that we're able to drive incremental sales and more use cases, more frequency to the merchants we operate with. And the second thing I would say is we're very keen on making both of your channels work, all of the channels work you want to use.

[00:21:12] Your in-store, your online, and the multiple online channels. We do really believe in this full ecosystem thinking and want to integrate that fully. And the more you can bring the in-store experience close to your online. And what I mean by that is having the full selection available, making it also available in a way where it's not just available online, but it's physically available when it's getting delivered and making that affordable will help drive your growth.

[00:21:41] When you jump in, let's test first, but then lean in because it can be very, very incremental and drive your growth. Marianne, thanks so much for your time today. Thanks for coming on the podcast and I hope you enjoy the rest of the summit. Likewise. Thank you for listening to Retail Disrupted. If you enjoyed this episode and would like to support the podcast, please leave a rating or review or share it with others. It really makes a difference.