(In October 2018), Uber’s CEO mentioned grocery delivery as a possible area of expansion in the Pay Think Supermarkets. Its during a talk at Vanity Fair’s New Establishment Summit 2018 where he addressed. In theory, Uber is well positioned for this and its Uber Eats business is strong. Furthermore, it has a huge number of drivers and cars, with capacity in its network. But Uber Eats works well because restaurants have the operational efficiency to assemble meals quickly and Pay Think for faster payments. Amazingly, this is usually within 10 minutes. Hence, get them out to the curb to waiting Uber vehicles in another one to two minutes. A huge question mark being the Pay think Supermarkets that are still not ready for Uber’s Grocery Service (UGS).
Grocers simply can’t do that. Why? There are two main reasons:
Grocers aren’t organised for e-commerce delivery
Traditional grocery formats rely on large stores laid out. This is in a way that increases the number of items customers put into their shopping cart. Hence, at the expense of customers’ speedy experience at the store. Over time, grocers built larger and larger stores to attract customers. In addition to this, it refined the economics of their businesses. Mainly, based on the assumption that customers will always be happy to drive to them. Therefore, a critical but nowadays much riskier assumption.
OPERATIONAL STRATEGY OF GROCERS:
Grocers’ operational efficiency is typically low when picking online grocery orders
Focused on keeping the shelves full is the aim of the grocery store staff. However, the grocers are more focused on merchandising. They also make sure customers can find what they need. Therefore, they also focus on pushing high-margin products such as prepared foods. That’s why traditional grocers have partnered with companies like Instacart, a Pay Think technology, which specialise in grocery picking using outside staff. A smart pay think option making it highly convenient and less time consuming. Of course, the problem with that model is that the labour has to be factored into the prices customers pay for those groceries, pricing many customers out of the delivery market.
In our on-demand, instant-gratification society, consumers want rapid delivery, which requires rapid picking. Virtually no traditional grocer could meet Uber’s high bar of perfectly packing orders within 10-15 minutes, and then getting them into waiting Uber vehicles within another one or two minutes.
UBER EATS & THEIR PROMO STRATEGY:
Uber Eats promotes restaurants that are closer to you with deep cuts in delivery fees, because they know they can deliver it fast and keep you happy, and also because their contractor drivers’ income is entirely contingent on utilising every minute of their drive time effectively. Waiting time is not calculated as compensations that are made per trip or per delivery for the drivers in Pay Think. The longer they have to wait, can make the driver more frustrated. It take minutes for an order to be ready as the traditional holds for the restaurants. Therefore, the problem is not for the restaurants. However, it is extremely problematic for traditional grocers operating delivery out of storefronts. Since, their staff finds it challenging to accurately pick orders at that speed.
And that’s why we won’t see Uber delivering for traditional grocers anytime soon.