Online grocery shoppers in the U.K. may soon have to pay a premium for convenience. Delivery charges could rise to £15 per order, up from the usual £5, according to retail experts interviewed by This is Money.
The rate hike stems from the high cost of running the service – grocery stores pay up to £20 picking out customers’ items, bagging them and delivering them to shoppers’ front doors. A price increase ensures the delivery service better reflects the costs involved, says Dr. Clive Black, head of research at Shore Capital Stockbrokers, a U.K. retail analyst.
Black notes the current low fees mean in-store shoppers are effectively subsidizing online customers. Poorer families, who almost exclusively buy groceries in-store, are being charged extra to offset the cost of providing online grocery services to others.
“In the long run, the service cost of home delivery will need to be better covered if this growing channel is not going to deplete returns and penalize the poor,” Black says.
Demand for online shopping is surging in the U.K., with grocery chain Waitrose reporting a 50 per cent increase in online sales for the 6-month period ended July 28. But in an interview with U.K.’s The Grocer magazine, Black notes that online grocery delivery “without proper charging for distribution is not a sustainable model.”
Canada’s online grocery services are still in their infancy. Longo’s-owned Grocery Gateway charges approximately $12 per home delivery.