Deliveroo muscles in on rapid grocery delivery in London with Morrisons tie-up
Deliveroo has made an entrance into the crowded rapid grocery delivery market by launching “Hop”, a partnership with Morrisons that will deliver groceries in south London from a dedicated “dark store”.
Hop promises to deliver in “as little as 10 minutes” and launches today for initial delivery to residents in Vauxhall and Battersea in south London, with a view to expanding its remit in future.
It propels Deliveroo into the billion dollar rapid grocery delivery market that is brimming with venture capital post-pandemic, as Getir, Jiffy, Zapp and Weezy all compete for Londoners’ orders. Most of these competitors also operate from dedicated “dark store” warehouses located across central and suburban areas.
But Deliveroo, with its logistics experience and pre-existing user base of 6m customers, is “well placed to compete with these new players”, according to Florence Wright, Senior Analyst at Edge by Ascential.
“It’s also important to note that Amazon own an 11.5% share in Deliveroo and are building a relationship with them giving prime members free Deliveroo Plus,” Wright said.
“It’s, therefore, no surprise that it’s partnered with Morrisons with its first foray into rapid delivery as it has a standing partnership with the supermarket where it sells Morrisons products on its site.”
Grocery delivery is increasingly a key area for growth for Deliveroo, and made up 7 per cent of customers’ total spending in the first half of 2021 – up from 5 per cent in 2020.
“Deliveroo Hop will enhance our on-demand grocery offering for both consumers and our grocery partners,” said Deliveroo chief executive Will Shu.
Through partnerships with Morrisons, Waitrose, Co-op, Sainsbury’s and Aldi, its grocery delivery coverage now stands at 70 per cent of the UK population – a rapid expansion from 36 per cent in the first quarter of 2020, just before the pandemic hit.
But until now, drivers have collected stock from around 4,600 supermarkets and convenience stores in the UK and delivered to app users within 30 minutes – a far cry from the rapid grocery delivery Londoners have become used to since lockdown.
Deliveroo and Morrisons forged one such partnership during lockdown, and as well as increasing delivery speed, the new move should make it less likely that customers receive subsititutions for their orders as the supermarket gains Deliveroo’s “grocery management technology” that helps them monitor stock in real-time.
Morrisons also has an existing partnership with Amazon through its Fresh grocery service, as well as its own online supermarket site.
The fiercely competitive on-demand grocery delivery market has been the receptor of billions in venture capital since pandemic-induced lockdowns hit Europe, and the sector could be worth as much as £4.4bn in the UK alone by 2025, according to analysts at Berenberg.
Meanwhile, Bolt announced closed a fresh €600m funding round in August that it said it would funnel into its new on-demand grocery service Bolt Markets, and Turkey’s Getir tripled its valuation to $7.5bn in June after raising $550m.
It’s a decisive move from Deliveroo, which has ramped up its investments in new products and services since its £7.6bn London IPO in March.