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Grocery Guru Episode #30: The Rise of Rapid Groceries
Join Andrew Grant and Darren A. Smith in the thirtieth episode of the Grocery Guru. They discuss Rapid Groceries – The Rise of 10-minute Window Deliveries by 8 Start-Ups. Plus, the moves by Tesco and Sainsbury’s with ‘Whoosh’ and ‘Chop-Chop’, to compete.
You Can Read the Rapid Groceries Episode Transcript Below:
Darren A. Smith:
Hello, and welcome to Episode 30 of the Grocery Guru. We’re here with our guru, which is Andrew Grant. Andrew, how are you?
Andrew Grant:
Morning, Darren. Happy, happy new week.
Darren A. Smith:
Yes. A new week twice. We’ve just had a bank holiday. Andrew, what’s in the press at the moment around the world of grocery?
Andrew Grant:
Well, let me throw some words at you, Darren. See if they spark anything. Gorillas, fancy, wheezy, deja, zap.
Darren A. Smith:
Is that them calling?
Andrew Grant:
Jiffy. It was them calling, yeah. Zap, jiffy, deja, wheezy, gorillas, get here.
Darren A. Smith:
Okay. So what’s in my mind is animals with asthma.
Andrew Grant:
Oh, okay. Aren’t they all plays on fast, nippy, quick? I think that’s what they’re supposed to conjure up. But yeah, the world of rapid groceries.
Darren A. Smith:
Oh, okay. So we talked about this a few episodes ago, around there was one that Justin King had put some money into. Am I right?
Andrew Grant:
Snappy.
Darren A. Smith:
Snappy, right? Remember. Yeah, cool.
Andrew Grant:
I know a couple of weeks ago you were gently chiding me about getting a prediction wrong about Jack’s stores and Tesco Metros.
Darren A. Smith:
I certainly was.
Andrew Grant:
But I’m quite pleased that I picked up this trend, I don’t know how many episodes ago, and all of a sudden it’s like double feature in the Sunday Times.
Darren A. Smith:
Oh, okay. Okay. Yeah, you picked up on snappy and Justin King made an investment, I think of a hundred thousand pounds, and we talked about short windows, weren’t we? Narrow windows.
Andrew Grant:
Yeah. But the crazy thing is 19 billion of venture startup money has gone into these businesses in the last five years.
Darren A. Smith:
Wow.
Andrew Grant:
This blew my mind away. Have you any idea? You used to work there. What’s the market capitalization of Sainsbury’s?
Darren A. Smith:
Gosh. Now you’re asking.
Andrew Grant:
I know.
Darren A. Smith:
It’s start of the week. No idea.
Andrew Grant:
Okay, it’s 5.9 billion.
Darren A. Smith:
Oh, okay. I was going to say 12. I don’t know why 12. All right.
Andrew Grant:
Okay. Share price times the number of shares, basically what the business is worth.
Darren A. Smith:
Yeah, it’s expected. Okay.
Andrew Grant:
Gopuff, which is a American rapid delivery service, just arriving in this country. What do you think their market capitalization is?
Darren A. Smith:
Oh, I don’t know. But they sound like they’re new. They sound like they’re not worth much. 10 million.
Andrew Grant:
Well, 6.3 billion. So bigger than Sainsbury’s. More valuable than Sainsbury’s.
Darren A. Smith:
Wow.
Andrew Grant:
GetHere, that’s already over here, five billion. Morrisons is only 4.3. So these businesses, literally only just starting, are worth more than our second and fourth biggest supermarket chains.
Darren A. Smith:
Wow. So let me just get this right. These start up speedy delivery companies have a worth at the market. The stock market believes these things will be worth more than Morrisons and Sainsbury’s.
Andrew Grant:
Are worth more [crosstalk 00:03:07].
Darren A. Smith:
Are worth more because basically they have potential of what’s possible.
Andrew Grant:
Yeah. Now it’s got all the hallmarks of a bubble that’s going to burst big time at some point. Because I don’t know how many I read out, one, two, three, four, five, six, seven, eight players are in the market. There can’t be that many people who want a 10 minute delivery service to keep that many businesses going.
Darren A. Smith:
Well, I imagine these are just in cities? they must be.
Andrew Grant:
Yeah. I think to get it… I mean, they talk here about two minutes to pick your order. Seven minutes to get it to your door, and a minute to ring the bell and you answer it. That’s their 10 minute model.
Darren A. Smith:
That’s a lot of mopeds.
Andrew Grant:
Yeah. It’s a lot of mopeds. Clearly can only work in a urban situation. But do you really need something with 10 minutes? I imagine if you’re cooking and you’re just getting the bechamel sauce, and you run out of a key ingredient, and you want to keep an eye on the stove, maybe. You’ve just discovered you’ve got no wine and you’re about to sit down for dinner, maybe.
Darren A. Smith:
Maybe. I mean, you and I could brainstorm a bunch of scenarios, but really are they absolutely needed? I could see it for a birthday present, mother’s day, some flowers. Could see it, but are there enough? What’s their range like? They’re not offering everything, they’re offering what? What are they offering? Does it say?
Andrew Grant:
Well, it’s interesting. There’s some analyst quoted here saying the market is going to develop in two ways, the grocery shop or the I’ve run out emergency type delivery. So most of them are developing a broad range of groceries.
Darren A. Smith:
Wow. Okay.
Andrew Grant:
It’s interesting. There’s a punter here, a customer, and it says yeah look, the convenience just gets to you. It’s dumb and it’s super lazy, but it is great.
Darren A. Smith:
Well, that’s a good punt. I love that. So, does it say there… Are we talking about okay, I want to order a bottle of wine. Is it just an expensive bottle of wine, plus I’ve got to pay £10 delivery, or is it how simplified?
Andrew Grant:
Obviously, each one have different models. Most of them charge about three quid delivery.
Darren A. Smith:
Honestly.
Andrew Grant:
But they’re saying a lot of them aren’t that much more expensive than the supermarkets. So an example here with, I think Gorillas, is Ben and Jerry’s ice cream, £5 compared to £4.50 at Tesco.
Darren A. Smith:
Plus you’ve got delivery.
Andrew Grant:
Yeah. But all of them are offering sort of introductory spend £20, save £5 or free delivery with your first order.
Darren A. Smith:
Great. And I guess there’s an app that surrounds every single one of these, I would imagine.
Andrew Grant:
Yeah.
Darren A. Smith:
I order on the app, and okay. All right. Fair enough. So… Sorry, go on.
Andrew Grant:
I just said my view, and again, I make maybe a fateful prediction. This is just an internet bubble, isn’t it? This is dot.com boom written all over it.
Darren A. Smith:
It certainly does feel like that. What’s the impact on our traditional supermarkets? Do you think they’re going to try and squeeze their home delivery windows or offer something else in addition?
Andrew Grant:
Well, okay. This is where I may be proved wrong. Have a guess what Sainsbury’s and Tesco are calling their rapid delivery services.
Darren A. Smith:
I don’t know. Go on.
Andrew Grant:
Tesco are calling it Whoosh, which I quite like.
Darren A. Smith:
Yeah. Whoosh, yeah.
Andrew Grant:
Sainsbury’s may be even better, Chop Chop. I don’t know if there’s a slight racist overtone in that, but…
Darren A. Smith:
They’re not going to get away with that.
Andrew Grant:
They’re both trialing. So Tesco are trialing it out of their Wolverhampton store, in the West Midlands, so maybe our colleague, Andy, wants to give it a try. So they’re trying Whoosh out of Wolverhampton store. And Sainsbury’s are trialing Chop Chop. So they’re obviously looking at it. Whether they’re worried, I think, is another thing.
Darren A. Smith:
And do we have a generic term for this stuff yet? Is there one called [crosstalk 00:07:17].
Andrew Grant:
Rapid groceries, I think, is what it’s going to be called.
Darren A. Smith:
Rapid groceries. Okay. So we can imagine that search term on Google will start going up. Rapid groceries. Everyone’s getting in. Okay. And they’re eight players, you say, at the moment so who’s going to win? The one with the most capital investment? The one with the biggest reach? What’s your guess?
Andrew Grant:
Yeah. No, in the end, I think it will be the one that manages to hoover up the most loyal customers that keep coming back, because the costs of operation will be quite high. They’re all operating out of what they call dark warehouses. So again, cheap. They’re typically renting railway arches or renting cheap storage on industrial estates in less than pleasant parts of a city, and then picking dark and sending out the moped drivers to deliver.
Darren A. Smith:
So, it really is the one that will win will be the one with the slickest, most efficient, but most effective operations, is where this is really going to work.
Andrew Grant:
Yeah. I think it said in this paper, somebody said somebody who can deliver Amazon levels of service in 10 minutes will be the one that wins.
Darren A. Smith:
Yeah. Okay. And I guess the customers that try it for the first time are looking at reviews, what’s the rating and they’ll creep up. Okay. So I’m guessing once this establishes then we’ve got Amazon who are probably going to buy one of them.
Andrew Grant:
Well, yes, exactly. Exactly. But I mean, you look at… I’m almost a bit of a dinosaur, but I ordered my first Uber Eats last week, and its excellent.
Darren A. Smith:
Right.
Andrew Grant:
Absolutely excellent.
Darren A. Smith:
Yeah, brilliant.
Andrew Grant:
So now it is almost second nature to order any form of takeaway from delivery, Uber eats or Just Eat. Everybody’s doing it. Maybe, in five years time, everybody will be ordering their top up groceries through one of these rapid services.
Darren A. Smith:
Maybe it could be. Maybe it could.
Andrew Grant:
I think it is crazy. I mean, 10 minutes. Talk about-
Darren A. Smith:
That’s crazy.
Andrew Grant:
Does that mean that somebody is coming in planning a five minute service, or somebody is coming in planning a we’ll just predict it and turn up anyway service?
Darren A. Smith:
Well, did you want this bottle of wine? No. Oh, we just wondered if you did. Okay. Then we’re back to… Go on.
Andrew Grant:
We keep talking about shopper insight and how clever people like Tesco are with Clubcard being able to predict shopper behavior. Maybe the next thing is premonition services. Yeah. They turn up and go you’re about to think about having a glass of wine. Here it is.
Darren A. Smith:
Well, actually maybe you’re not that far from the truth. I mean, you’re right. We talk about insights. We talk about the data in, for instance, Clubcard. Maybe someone’s saying here’s our recommendation of what you order next week, because based on the last three years this is pretty much it. Lets just change the peripheral items, otherwise you’re good to go. Yeah.
Andrew Grant:
Or as I think Amazon have Amazon wardrobe, don’t they, where they send you eight pairs of jeans and you just send back the ones you don’t want. Maybe they just send you a box of food and say choose the ones you want. We’ll take the rest back.
Darren A. Smith:
Wow. Okay. For anyone listening, there’s two premonitions you may have heard here first, and we’re going to lay claim to these in some way. Okay. Andrew, all right. Brilliant. I love that. What’s the takeaway for our viewers?
Andrew Grant:
Take away, I like the way you said that. Yeah, no. Obviously these rapid grocery services are something to watch. Is it going to be a big hipped up bubble or actually do they become a credible channel in their own right, which suppliers need to wake up to?
Darren A. Smith:
Very true. Very True. Andrew, thank you for your guru [crosstalk 00:11:09]. We’ll see you next week. Okay.
Andrew Grant:
Bye.
Take a look at the Rapid Groceries video on our YouTube Channel. Also, check out our award-winning blog.
