Online grocery trend heats up, as Woolies partners with Uber Eats and startup Send raises $3 million

Source: Franki Chamaki/ Unsplash.

The COVID-19 pandemic has led to an increase in demand for online grocery shopping and the emergence of faster delivery options, including startup Send which has secured $3 million for its service promising to have goods on your doorstep within 15 minutes.

But while the product-market fit is clear during lockdowns, what happens post-pandemic? Is this a trend that’s here to stay?

Today, Sydney-based Send has launched its exclusively online supermarket, allowing inner-city consumers to order a range of groceries and essentials with super-fast delivery.

It has also announced its $3.1 million raise, including backing from German VC Cherry Ventures and New York investor FJ Lab.

Having launched just in February, founder Rob Adams has already signed the leases on four local fulfillment centres, in Sydney and Melbourne, and has plans to open 30 by the end of the year.

Adams is also already working on the details of the next funding round. He’s anticipating raising some $15 million at a $50 million pre-money valuation.

“Send is redefining the way an entire generation shops for groceries and daily essentials,” Adams said in a statement.

He points to the huge successes of fast-delivery grocery services in Europe and the US — success he hopes to replicate on a national scale in Australia.

“Australian supermarket giants promote the idea of a big weekly shop; however, consumers don’t have time to curate long lists of groceries and spend hours shopping.”

The launch follows the news earlier this week that Aussie supermarket giant Woolworths has partnered with food delivery giant Uber Eats, to offer grocery deliveries inside the hour.

The partnership is initially rolling out in selected areas of Sydney and Melbourne from August 30, and is expected to expand across the east coast over the following weeks.

In a statement, Woolworths Metro general manager Justin Nolan said the Uber Eats service is intended to provide customers with “a fast, reliable and effortless way to get groceries”.

It’s designed for ‘top up’ or ‘last-minute’ shops, he added, and will help support customers “seeking to limit their community outings during the pandemic”.

Lucas Groeneveld, regional general manager for retail for Uber Eats in Australia, added that demand for home delivery has growth during the COVID-19 pandemic.

“This demand is only set to continue as customers increasingly look for faster delivery as the new normal,” he said.

What happens next?

While the case for online delivery is clear mid-pandemic, there are still questions around whether these services will be as popular when it’s easier and likely cheaper for shoppers to head out themselves.

Will people still want bits and bobs delivered within the hour or even 15 minutes when they could just pop in to Woolies on their way home from the office?

Speaking to SmartCompany, Lousie Grimmer, senior lecturer in marketing at the University of Tasmania’s College of Business and Economics, says it’s going to be interesting to see how big supermarkets incorporate the likes of Uber Eats into their offering.

She also notes that fast delivery — particularly Send’s 15-minute offering — will be a challenge outside of densely populated areas.

However, the emergence of these kinds of services plays into a broader, long-term shift in e-commerce in Australia.

It’s a trend that has perhaps not been entirely caused by COVID-19, but one that has certainly been hurried along by it.

In the grocery sector, Grimmer does believe we’re looking at a long-term change, rather than behaviours that will snap back when lockdowns ease.

For many shoppers, it was concerns around the risks of online shopping that kept them shopping in store, or a lack of tech know-how. The pandemic forced them to overcome those barriers, because there was no other choice.

“Now that many of those concerns are not in the equation, consumers are much more comfortable with shopping online or using a hybrid approach for their grocery shopping,” she explains.

Grimmer notes that the uptake of online grocery shopping in Australia was “very modest” before the pandemic hit.

“We certainly didn’t see the same consumer appetite for buying supermarket items online as existed in the UK and the USA, for example.”

Partly, she puts that down to the fact that the stores themselves were slow to invest in the technology and logistics required to make it work, as well as a lack of demand from consumers.

Of course, 2020 changed all of that.

“Buying grocery staples online became the only way many Australians could access essential products”, she says.

That led to a huge uptick in demand for grocery delivery, leaving supermarkets with no choice but to up their game.

As for what happens next, Grimmer predicts we will see a mixed bag of behaviours post-pandemic.

Some consumers will be “desperate to get back to bricks-and-mortar stores”, she says.

These are the people who enjoy the physical shopping experience — touching products, discovering new brands and experiencing the social benefits.

Others will have discovered the convenience of online grocery shopping, and find home delivery is a perfect solution for them.

“I suspect for many Australian consumers a mix of online and physical grocery shopping will be the norm post-pandemic,” she says.

“We will likely see a thirst for online grocery shopping for everyday staples that are easy to ‘set and forget’ using online systems, but for quick trips, top ups or speciality needs – going to physical stores will be the solution.”

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