Right now there is a battle going on to be the number 1 player in the 10-minute delivery service area. A number of key players have entered this increasingly saturated market, and so there is a race to grab market share. But what comes next? How do these service providers differentiate themselves and stay on top?
Market recap
To get you up to speed, pandemic life has seen an acceleration of energy going into super-quick delivery. Existing service providers like Deliveroo and Uber Eats have a real challenge on their hands as a wave of new start-ups are taking up the challenge of 10-minute delivery: Essentially, disrupting the disrupters.
So who are we talking about?
Zapp, Fancy, Weezy, Gorillas, Getir and Dija are but to name a few of the main players in the UK.
How does it work?
Fast fulfilment is the aim of the game, and the way that this new breed of start-ups work is by cutting out the middleman. In other words, where Uber Eats and Deliveroo ask their riders to go to stores to pick up customers’ items for them before delivering, ultra-fast operators centralise a core group of top requested products at dark storage warehouses, making collection and delivery much more streamlined.
These warehouses are located in densely populated areas, making them a decent solution to the issue of last mile delivery.
For example, Dija has begun trials in South Kensington, Fulham and Hackney with plans for over 20 hubs for this summer. In other words, rapid expansion, and their competitors are vying for attention, too.
What comes next?
There are two main implications that logically follow from the move to dark store warehouses and super-fast 10-minute delivery.
First, if quick fulfilment is solved by operating out of central hubs and not from supermarkets and convenience stores, what does this mean for convenience stores and supermarkets? It means they are destined to be the home of browsing and experience. According to Dija co-founder and chief operating officer Yusuf Saban, previously Deliveroo’s chief of staff, “grocery stores aren’t designed to facilitate the fast fulfilment of orders, rather they are designed for browsing”.
It’s therefore likely that grocers and brands with retail portfolios will be able to focus on what they do best: providing a great customer experience that isn’t detracted from by the constant flow of the helmeted hoard breaking the flow. This is good for everybody, as drivers will be more efficient and make more money and customers can enjoy a superior instore experience.
Perhaps some negative consequences may be felt by the convenience sector, which makes up 21% of the £205bn grocery market. If shoppers use delivery apps to get their convenience produce, then what happens to the convenience grocery sector?
A second implication comes from the close proximity of the sites that these new start-ups are selecting for their distribution. Given that they are so close to customers in the first place, there might be an opportunity for somebody to take the initiative and introduce customer-facing brand spaces.
Inspiration for this comes from Deliveroo’s foray into dark stores with a customer-facing component in Hong Kong, Deliveroo Food Hall, which was an extension of Deliveroo Editions.
It won’t be long before we start to see the impact of ultra-fast 10-minute delivery services on retail. If you’d like to talk to us about this or anything else, get in touch here.