Are You Paying Too Little for Your Grocery Delivery?

It is estimated that we spend roughly £136 per household, per year on delivery charges, it may be that we are paying too little. Though shoppers tend to be of the opinion that delivery charges are too high, retailers may actually be footing the majority of the bill, especially when it comes to grocery.

Sainsbury’s for example, currently charge between £2.75 and £6.95 for a grocery delivery, with Tesco similarly charging between £3-6. However according to analysts Shore Capital Stockbrokers, the process of choosing your items, bagging them and delivering them to your door costs closer to £20. They believe that the service is seen as more of a gimmick for retailers rather than a way to make a profit; in order for the service to become profitable, retailers would need to charge closer to £15 per delivery.



Dislikes of online grocery shopping among online grocery shoppers - 2011

With the number of shoppers who are opting for online delivery for their main shop increasing year-on-year (over half or all shoppers now shop online at least occasionally), analysts claim that in-store shoppers are subsidising the retailers loss in revenue by increasing the cost of the food itself.

Of course if this is the case and retailers do increase their delivery changes substantially (which is unlikely in the near future), the retailers that do not increase their delivery charges will likely see an increase in orders with shoppers switching their loyalties. Currently, half on online shoppers cite the cost of delivery as their biggest dislike of online shopping (see graph), and 80% say that free delivery would increase their frequency of use of this channel.

We investigate online shopper loyalty, the barriers to online shopping, and much more in our upcoming report ‘Online Food & Grocery: The Shoppers Perspective 2012’.

What are the Benefits of Click & Collect

Online shopping is ever increasing, with more and more shoppers choosing to purchase items from the comfort of their home, rather than facing the hustle and bustle of town centres and supermarkets. The benefits of online shopping are clear – it’s easy, convenient, can be done at any time day or night, and you don’t even have to get out of your PJs. 
 

The online channel is increasing year-on-year for Food & Grocery shopping as shoppers make use of the convenience of this channel. For families in particular – children don’t have to be dragged around the supermarket and mums and dads aren't forced to juggle a baby, shopping bags, and an umbrella all at the same time. The food is delivered to the door (even to the kitchen table in some cases). But of course, as with anything, online shopping isn't flawless. Shoppers complain about delivery charges, missed deliveries, and substitutions, amongst others. That’s where Click & Collect comes in.

 

Click & Collect works initially in the same way as normal online shopping – the shopper goes online and chooses their items, and proceeds to the checkout. However, instead of the items being delivered to the shopper’s home, the shopper picks them up outside of the home.
 

You might think, what is the point in that? Well, as we’ve mentioned, there are issues with standard online shopping. With Click & Collect the charges are much lower, and in some cases the service is free of charge. This is a great advantage as Evolution found that in 2011, over 50% of shoppers cited the cost of delivery as a barrier to online shopping.

 

Also, shoppers don’t have to wait around for delivery. Many find the delivery slots offered to be too large of a window and un-flexible. Either the shopper has to set aside a large portion of the day in which they can’t leave the house, or if something comes up, they can’t change the time. With Click & Collect, items are stored for collection at a time that suits the shopper. All they have to do is turn up and the rest is done for them. This still eliminates the trouble of in-store shopping, but does allow them the option of nipping in-store if they have forgotten any items, or just want to check out the offers.
 

Of course standard online shopping is still a better option for some shoppers (those without a car, for example), and the system is still in its relative infancy, but at Evolution we see great potential for Click & Collect in the future.  Our latest research in France highlights the advanced nature of this model compared to here in the UK. For shoppers opinions and further insights into Click & Collect, please see our 2012 report on this subject.

 

Click & Collect Becoming a Popular Option Amongst Shoppers

1 in 3 shoppers think that ‘Click & Collect’ is a good idea for online grocery shopping. Recent research has found that despite the current low levels of usage of this new service, the potential of it is high.

Considering that the option for click & collect has been available from some retailers for a decade now, it may be surprising that over half of shoppers have still never used the service. However, it has only recently become a widespread amenity amongst retailers, with new marketing campaigns advertising this type of online shopping. In fact, a quarter of shoppers already say that they use it occasionally, which shows the opportunity this service has in retail. 

 

Click & collect for grocery shopping is a very new concept. Many retailers do not offer this service and those that do, do not offer collection from their full range of stores. We can’t then be surprised that adoption of click & collect is still relatively low. We expect that as the features of the service becomes better known and understood amongst shoppers, uptake of this service will increase.

The idea of a Click & Collect service not only appeals to current online shoppers, but to in-store shoppers also. Considering that the main issues with standard online shopping fall into the category of delivery, if Click & Collect can successfully overcome these issues there is no reason that it cannot become as popular, if not more so, than having orders individually delivered to shoppers homes. 

The proportion of shoppers that have used Click & Collect is currently around  48%. In the above diagram we can see that the highest users live in Scotland and the South West, and the lowest uptake is in Wales and Northern Ireland.