Digital Marketing & eCommerce Innovation Blog

Digital Marketing & eCommerce Innovation Blog

Is Online Grocery Delivery The New Local Store?

One of the main reasons that the internet has become such an integral part of our daily lives is online shopping. Amazon and eBay have become ubiquitous because they’ve led the way in this new age of retail, but it hasn’t taken long for established names in the market to play catch up and multichannel retailers make up most of the UK’s top 10 online commerce websites. The next key market to claim is the FMCG one, but who will take it?

Convenience has always been a major selling point of eCommerce, allowing consumers to buy almost whatever they want, without leaving the comfort of their homes. As technology developed, buying from mobiles phones became simple, opening up the possibility of shopping while on the go without ever stepping into an actual shop. But real convenience store shopping remained something that required a real convenience store.

You could do your weekly shopping with Tesco, Asda, Sainsburys or Waitrose/Ocado, but if you ran out of milk and needed a bottle that night, your only option was to get in the car and go out to a nearby supermarket or corner shop. It’s a minor inconvenience for us as consumers, but for retailers, it is a gap in the market that could be a game changer if they are able to get it right. The problem is that getting it right means a sizeable shift in how they operate.

Amazon has been the first to attempt to open up this market in the UK, launching its Amazon Fresh service in the summer. However, there are so far quite large barriers to it becoming an overnight success, not least that it is currently only available in certain areas of London and only to Amazon Prime members who want to pay an extra £6.99 a month for the right to place orders of over £40 (so no last minute milk orders unless you need a lot of it), with same-day delivery available until 1pm.

Frozen goods were already available with one-hour delivery through Amazon Prime Now, while Amazon Pantry offers groceries, but fresh food remains very much a small part of its offering. For now. But for Sainsbury’s, it is literally its bread and butter, and the chance to take steps ahead of its rivals in the online market is why it has joined forces with an app called Chop Chop to offer one-hour grocery deliveries in London.

For Sainsbury’s it isn’t just a step into the future, but also in its own past with delivery couriers a key part of its business in the early days of the late 19th Century and early 20th Century. The technology involved in ordering the groceries may have changed but the transport will have remained the same 130 years later – the humble bicycle. For a fee of £4.99, consumers can order up to 20 items and have it delivered to them within an hour.

A Sainsbury’s spokeswoman explained that this was a localised trail, so the success or failure of it could decide it it gets rolled out across the country: “We have begun a trial of a new delivery service called Chop Chop in the Wandsworth area. On accessing the app, customers living within 3 kilometres of our Wandsworth store can order up to 20 Sainsbury’s products for delivery to their home within an hour. This trial, a UK first, is part of our strategy to give our customers more options to shop with us whenever and wherever they want.”

So is there a future for Amazon Fresh or Sainsbury’s and Chop Chop? For Amazon, its Fresh service has been running in the US market for nine years and remains a tiny player in the grocery market, available only in Seattle, parts of California, New York and Philadelphia and has a 0.8% share of total US grocery sales. One of the problems it has had so far is that fresh groceries are a lot harder and more expensive to transport and deliver, meaning it can’t be done as cheaply for consumers as most of Amazon’s main business.

Fresh was trialed in Seattle for six years before it was rolled out as far as it has been, which calls into question just how long it will be before it branches out beyond London in the UK. Prime Now has been quick to spread to most main urban areas in the country, but that still remains a very different prospect to Fresh. Meanwhile, Sainsbury’s is only at the start of its trial with Chop Chop, and it is not easy to see how it could be easily scaled up to operate outside of the small area this trial will be taking place in.

For now, the ability to order groceries online and either have them delivered or made available to pick up from your local supermarket the next day is as close as most of us will get to this kind of convenience, meaning that the days of ordering a pint of milk and then waiting for a drone to fly it over to us an hour later is still some time away. But the FMCG market remains a golden goose for whichever retailer can find the way to make it useful and affordable for the customers and cost-effective for the business.

Can online deliveries ever replace the local store?  Tell us in the comments section below or get in touch with us on social media.

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