Tesco's Customer Service Innovation: Robot and Drone Delivery Analysis

This report analyzes Tesco's adoption of robots and drones to address the increasing pressure for timely grocery deliveries. It examines the challenges Tesco faces in meeting customer demands for fast delivery of perishable goods and how the company leverages innovative delivery strategies. The report discusses Tesco's use of robots for short-distance deliveries and drones for longer distances, highlighting the anti-theft technology integrated into these systems. It evaluates the value proposition for both Tesco and its customers, including increased service capacity, higher revenue generation, and improved inventory liquidity for the company, as well as enhanced convenience, reduced spoilage, and order accuracy for customers. Furthermore, the report suggests improvements such as integrating electronic payment machines and developing larger capacity robots to maximize value creation. Finally, the report touches upon Tesco's financial value capture and strategic fit, emphasizing the company's ability to reduce delivery costs, attract investors, and enhance its competitive advantage against rivals like Amazon.

Running head: TESCO CUSTOMER SERVICE
TESCO CUSTOMER SERVICE
Name of the Student:
Name of the University:
Author Note:

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Table of Contents
Introduction:....................................................................................................................................1
Problem insight:...............................................................................................................................2
Portfolio of generated solution ideas:..............................................................................................2
Solution selection analysis:..............................................................................................................2
Value proposition benefits:..............................................................................................................3
Business model description:............................................................................................................3
Value proposition development and delivery:.................................................................................5
Financial value capture and strategic fit..........................................................................................7
Conclusion:......................................................................................................................................8
References:......................................................................................................................................9

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Introduction:
Customer satisfaction is the crux of revenue generation of multinational companies.
Achievement of customer satisfaction today is not dependent on the supplying appropriate
products alone. It is is equally reliant on delivering products to customers at appropriate time as
per convenience of customers. The fact holds truer for retail companies which offers a wide
range of products to consumers. The retail companies are under so intense pressure to supply
grocery products on time that some of the leading retail companies are using robots and drones.
The aim of the report would be exploring the salient business features. The research would be
based on the article dated January 8, 2019 in The Daily Mail which mentions that Tesco, the
British retail giant is using robot and drone services to deliver groceries within an hour within the
certain radii from the location of the stores (Poulter, 2019)
Figure 1. A picture of the robot Tesco uses to deliver groceries
(Source: Poulter 2019)

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Problem insight:
The problem which the research would explore would the continuous pressure which
Tesco is facing to deliver grocery products in the United Kingdom. Grocery items like food and
drinks have shorter shelf lives and hence have to be delivered to customers within shortest
possible time. The urgency to deliver grocery products within short time spans have necessitated
the retail chains to apply innovative delivery strategies (Noe et al., 2017). They can no longer
solely depend on their delivery personnel to deliver products on time. Tesco, the British
international retail chain has adopted the strategy to deliver groceries using robots. It can be
pointed that though the use of robots has enabled the retail chain to ensure higher level customer
services, it has put immense pressure on the existing resources of the company.
Portfolio of generated solution ideas:
The portfolio of innovative strategies which Tesco has generated to solve the issue of
customer pressure to deliver grocery within short span of time consists of robots and drones. The
robots are used to deliver grocery within short distances while the drones deliver grocery within
long distances (Baumers et al., 2016).
Solution selection analysis:
The two solutions namely, drones for long distances and robots for short distances have
been embedded with certain technologically advanced attributes which have made their selection
pertinent. First of all of robots and drones are embedded with anti-theft software which enable
Tesco offices to maintain track of their locations and their surroundings. If any person other than
the target consumer tries to open the product container in the robot, the Tesco personnel would
be able to locate the robots as well as drones and direct the police to the locations (Chen et al.,

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2016). The customers awaiting the delivery of groceries would be accordingly able to very track
the exact positions.
Value proposition benefits:
The use of robots and drones would create certain benefits or values for both the
company namely, Tesco and customers. First of all, the company would be able to serve more
customers by using the drones and robots. The second value which the innovative delivery
strategies would cause to the company is that since it is able to deliver more products to
customers, it is able to generate higher revenue (Alles, 2015). The third advantage which the use
of drones and robots has created for the company is that it is able to sell more products to
customers at a faster pace, which has ushered it with more liquidity in inventory. The company is
able to convert inventory into liquid cash faster, thus gaining more liquidity.
As far the customers are concerned, the use of drone and robots have caused value
creation for the former as well. First of all, customer are able to obtain more products at their
convenience without having to visit the Tesco outlets. Secondly, they are able to obtain grocery
products within shorter span of time, which decreases the chances of spoilage of grocery
products like meat products, thus creating value for the same (Sheehan & Bruni-Bossio, 2015).
Thirdly, the anti-theft technology embedded in the robots and drones ensure the customers get
the exactly what they order, thus creating value for them.
Business model description:
The business model description of Tesco is retail business model aligned to the needs of
the customers and business needs of the customers. The company receives online orders from the
customers and delivers products as per customers’ requisitions. The retail chain sends drones,

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robots and delivery men, whichever is appropriate to ensure timely delivery or products to
customers (Tantalo & Priem, 2016). The business model picturised below shows that ways in
which Tesco uses drones and robots to create value for customers. The retail chain on receiving
orders (green arrow) analyses the distance between the store and the location of the customer
concerned. If the location is far, the mode used to deliver the grocery would be drones. If the
location is near, the mode of delivery used is robot. The customers on receiving the delivery,
makes payment to the retail chain. Tesco in turn makes payment to the suppliers (red arrows).

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Tesco retail chain
Supplier 1 Supplier 2 Supplier 3
Customers
Is the customer’s’
location far?
Y N
Drone delivers
products to
customers
Robot delivers
products to
customers
Customers make
payments
TESCO CUSTOMER SERVICE
Figure 2. Value creation model of Tesco using drones and robots
(Source: Author)
Value proposition development and delivery:
The delivery of products using drones and robots creates value for both Tesco and
customers. It can be proposed that Tesco can use higher levels of innovation to create more value

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for customers and the company itself. The retail chain should use more advanced technology to
deliver products to customers. For example, the retail chain should bring about more
advancement in its robots and drones (Naik, 2019). The robots and drones should be fitted with
electronic payment machines which would enable the customers to make payments using both
cards and cash. As far as the capacities of robots are concerned, it can be pointed out that they
are not able to carry large amount of products owing to their small sizes. The company should
carry on research and development to to introduce larger sized robots capable of carrying goods
in large amounts. Development of robots of large sizes would also enable the company delivery
products to more than one customer. It can be pointed out from this analysis that these
advancements would create more value for the company and its customers (Gao & Su, 2016).
First of all, the customers would be able to make payments both in cards and cash, which would
increase their convenience. Secondly, due to manufacturing of larger sized delivery robots and
drones, the consumers would be able to order and obtain delivery of more goods. The customers
would be able to as a result receive more goods which would create value to them.
The proposed development in the delivery services which Tesco would be able to enjoy
using drones and robots would maximize value creation for the company. First of all, the
company using the bigger sized drones and robots would be able to deliver more amount of
goods to customers which would enable the company to generate higher amount of income.
Secondly, the proposed drones and robots of larger sizes would be able to deliver goods to more
numbers of consumers. Thus, this would enable the company to deliver goods to more numbers
of customers and generate higher revenue. Moreover, using larger numbers of robots, the
company would be able to sell larger amount of finished goods. Thus, it would be able to convert
the capital trapped in inventory into cash at a higher speed (Lu, Geng & Wang, 2015). This

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would enable the company to enjoy higher amount of inventory liquidity and financial liquidity.
Moreover, owing to increase in the numbers of orders which the company would receive from
the customers, the company would be required to hold the inventory of goods for shorter span of
time. This would lead to requirements of bearing lower amount of warehousing and inventory
management costs. Thus, the outcome of the uses of drones and robots would be reduction in the
inventory holding expenses which would in turn boost the net profit of the company (Zhang et
al., 2018). Thus, it can be inferred from the discussion that the new strategy which Tesco has
adopted to enable the company generate higher profits.
Tesco prior to launching bigger variants of robots and drones should customer
desirability, financial feasibility and technical feasibility. In order to assess customer desirability,
the retail chain must obtain feedback from customers regarding the features they would expect
from the bigger versions of the drones and robots. Secondly, the retail company should
collaborate with its R&D partners to assess the technical feasibility of the project. Thirdly, the
company should assess the financial feasibility of the bigger versions of drones and robots. This
means that the company should compare between the investment it would have to bear to launch
bigger varieties of robiots and drones to delivery products to customers. The company should
then estimate the profit it would likely generate by this new product delivery strategy. If the
profit compared to the investment amount turns out to very high, then the company must
perceive the financial feasibility test positive and launch the project.
Financial value capture and strategic fit.
Tesco is able to capture immense value using drones and robots to delivery products to
customers. The company is strong financially and technologically which has enabled it to
establish strategic fit with these two advanced solutions namely drones and robots. First of all,

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using of drones and robots would enable the company serve more customers. This would enable
the company capture more revenue by serving more customers. Secondly, by using drones and
robots to deliver groceries within short distances, the company would be able to lay off a part of
its delivery personnel. This would enable the company reduce the expenditure its bears to pay
salaries and incentives of the delivery staff (Kremers & Brassett, 2017). The company would be
able to generate higher net profits which would in turn enable it to give higher returns to its
investors. Thus, the company would be able to attract higher amount of capital from investors.
This means Tesco would be able to channelize more capital towards carrying on research and
development in robots as well as drone technology. Thus, it can be pointed out that the company
would be able to capture more value using the modern delivery system. Moreover, the company
would be able to carry out more research and development in product delivery operations. Thus,
the company would be able to create higher amount of strategic fit. It can also be pointed out that
this high degree of strategic fit would boost the strategic fit of Tesco (Macdonald,
Kleinaltenkamp & Wilson, 2016). This is because the retail chain would be able to compete with
strong foreign competitors like Amazon which has already launched robots to deliver products to
customers. Moreover, it can be pointed out that using of robots would boost the unique
proposition of Tesco. The retail chain would be consequently be able to limit the entry of new
competitors. Thus, it is evident that the new technology namely, robots and drones has boosted
the competitive advantage of Tesco.
Conclusion:
It can be concluded from the discussion that Tesco should carry out more research and
development to improve its customer services. It has already been pointed out that the modern
delivery methods using drones and robots would enable Tesco serve more customers. The

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customers would be able to track the delivery of goods. The innovation would as a result enable
the company ensure higher degree of customer satisfaction. The use of technological
advancements like drones and robots would boost the competitive advancements of the
company.

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References:
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Baumers, M., Dickens, P., Tuck, C., & Hague, R. (2016). The cost of additive manufacturing:
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forecasting and social change, 102, 193-201.
Chen, K. H., Wang, C. H., Huang, S. Z., & Shen, G. C. (2016). Service innovation and new
product performance: The influence of market-linking capabilities and market
turbulence. International Journal of Production Economics, 172, 54-64.
Gao, F., & Su, X. (2016). Omnichannel retail operations with buy-online-and-pick-up-in-
store. Management Science, 63(8), 2478-2492.
Kremers, R., & Brassett, J. (2017). Mobile payments, social money: Everyday politics of the
consumer subject. New Political Economy, 22(6), 645-660.
Lu, C., Geng, W., & Wang, I. (2015). The role of self-service mobile technologies in the creation
of customer travel experiences. Technology innovation management review, 5(2).
Macdonald, E. K., Kleinaltenkamp, M., & Wilson, H. N. (2016). How business customers judge
solutions: Solution quality and value in use. Journal of Marketing, 80(3), 96-120.
Naik, P. (2019). Developing a Customer Value Proposition for yourKONECRANES Service to
Support New Equipment Sales Unit.