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App-based services aim to compete with the Big Four supermarkets
Thursday 29 Jul 2021 Author: Tom Sieber

As Winston Churchill famously observed while he was working to form the United Nations after the Second World War, ‘Never let a good crisis go to waste’.

In a similar vein, UK tech entrepreneurs have made full use of the Covid pandemic and the radical shift in peoples’ shopping habits to launch a raft of local on-demand delivery services designed to take on Ocado (OCDO) and the supermarkets’ own delivery models.

We question how much of threat these start-ups pose to the supermarkets and whether they should go down the same road with their own businesses.


Anyone using social media platforms can’t fail to have noticed the explosion in adverts for Beelivery, Gorillas, Jiffy, Weezy, Zapp and any number of other whackily-named  delivery firms.

Altogether more than a dozen new companies have sprung up across the country offering hyper-local delivery from ‘dark stores’ in as little as a quarter of an hour.

What’s more, unlike the supermarket offerings many of these new services have no minimum spend, a low or no delivery fee, and there is no need to book in advance.

Need nappies urgently, or run out of wine and don’t fancy leaving your guests and trudging to the shops? Now there’s an app for that.


The big supermarket groups have already responded with their own on-demand delivery services, some better than others. Ocado offers a ‘Zoom’ delivery service for any of over 10,000 items but customers have to book a time slot and the minimum spend is £15.
As well as same-day delivery for orders placed before 1pm and its same-day Click+Collect service, market leader Tesco (TSCO) offers Whoosh, a ‘superfast’ service promising delivery ‘from store to door within 60 minutes’. Customers are charged £5 per delivery and can track the service using the Tesco app.

For now, Whoosh is only available in 20 stores in and around London and Bristol, and delivery is by electric bike which means there are size and weight restrictions. Blueberries can be had in a jiffy, but six slabs of beer is a no-no.

Sainsbury’s (SBRY) introduced its on-demand delivery app called Chop Chop last year, enabling customers to order up to 20 items and have them delivered by electric bike within an hour for £4.99, more or less the same as Tesco, although the service is only available in central London.

In both cases, once an order is received a ‘shopper’ runs around the store grabbing goods off the shelf. If a product isn’t in stock the shopper calls the customer to ask if they want a substitute item.

Asda finally launched its on-demand service at the end of June, albeit just for customers with a three-mile range of its Halifax, Rotherham and Poole stores, while bid target Morrisons (MRW) has sub-contracted on-demand delivery to Deliveroo (ROO), which promises to supply customers with a range of 70 ‘essential’ items within 30 minutes.


Even though their costs are a fraction of those of the supermarkets, as they operate from back-street ‘dark stores’, given the big incentives they offer to gain customers and the fact they employ workers, these new delivery businesses are clearly losing money just to create a market for their services.

Yet German firm Gorillas was valued at $1 billion in its last funding round and Turkish-based Getir was valued at $7.5 billion. Presumably their backers are hoping that the firms can reach critical mass and ‘unicorn’ status in short order so they can monetise their stake through stock market listing or a sale to a special-purpose vehicle.

Whether there is enough demand for these firms in a post-pandemic world is debatable. Furloughed, convenience-hungry Millennials and the ‘laziness economy’ may have been a fertile breeding ground, but to pose a serious threat to the established grocery chains these newcomers need to succeed with the mainstream.


The snappily-named apps may be new, but bike delivery was standard a hundred years ago and was still ‘a thing’ in the 1970s. Some readers will no doubt recall the Hovis ad with the young lad pushing his two-wheeler up Gold Hill, in Shaftesbury.

During the pandemic, when people were physically confined to their homes and going to the supermarket meant queuing outside for up to an hour to be let in – another, less rose-tinted, reminder of the 1970s – there was clearly a market for on-demand delivery.

However, with restrictions having been lifted, we can’t see the newcomers presenting much of a threat to the big supermarkets.

In a case of ‘disruptors’ being disrupted, the supermarkets will continue to tweak their offerings to stay competitive.

The operators which may suffer include independent corner shops and the national convenience chain McColl’s (MCLS).

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