News this week was that Aldi will be rolling out its rapid delivery service from 4 cities in the US to 35 states by the end of November, through its partnership with Instacart. This means that 80% of Aldi stores will offer delivery by the end of the year.
The Instacart partnership is an interesting move for Aldi, as it passes on the selection, logistics and delivery to a third party. Rather than Aldi managing online orders, Instacart go into the store of your choice, pick up your list of groceries and then deliver it to you within an hour. Staff are trained to pick up products with long sell-by dates and ensure that fresh products are as fresh as they should be, which overcomes the biggest barriers of online shopping – that customers don’t trust to receive the best produce via online orders.
It’s also been reported that Lidl have registered ‘Lidl Digital Logistics’ with companies house in April this year and they’re currently trialling a third-party rapid delivery service in Dublin. It costs 7 Euro’s for one-hour delivery and there is a mark-up in prices, starting at 15% and reducing as the basket value rises. This is a clever move if customers are willing to pay more, as the biggest challenge for retailers and brands is the increased cost of fulfilment online. However, for a price sensitive shopper this is a big barrier to overcome.
The question is, could the UK be next in the discounter’s quest to compete with online retailers and grocery.coms? Currently 7% of grocery sales occur online in the UK, which is significantly more than the states, who sit at 3%. Brits can already buy Aldi Special Buys and Beers, Wines and Spirits online so it would be a natural progression for discounters to roll out grocery deliveries too.
The move will be a warm welcome to customers who want to shop online but enjoy the prices that discount retailers have to offer. It removes the wait for online orders to be delivered from days to minutes. Plus, you get the same great prices, in the time it would take you to go to the shop and pick it yourself.
Other retailers are also trialling third-party companies to help with rapid grocery delivery. Waitrose have partnered with On The Dot for 1-hour deliveries in 8 postcodes in London. Quipup fulfils Tesco’s one-hour delivery service and Grophr are offering M&S deliveries in London. Whilst all small, it hints at a wider movement of online groceries needing to be delivered faster and more conveniently for the customer. Aldi will have more experience and bigger data points due to its US expansion so could be primed to be the dominant force in this space in the UK.
With a clear focus for rapid deliveries in other locations it’s only a matter of time before discounters look at where to roll out next, and brands need to make sure they are retail ready for this change in the market when it occurs.