Co-op quits online grocery service
A year ago the Co-op announced plans to launch an online grocery shopping service. Now, today’s Evening Standard reports that they’ve quietly dumped the attempt having found that it merely cannibalises instore spending.
According to the Standard, the Co-op will now focus on revamping their smaller stores aiming to win market share from Tesco Express and Sainsbury’s Local. However don’t think that the Co-op are ignoring the Internet entirely, they still have their banking and funerals as well as their insurance travel and Electrical stores online and of course they still have the Co-operative Food website, it’s just not transactional.
The Co-op are also hosting Amazon Lockers in many of their local stores which must increase footfall and they don’t ignore eBay either. Although you won’t find a Co-op branded shop, they trade as aff_link("http://stores.ebay.co.uk/Electrical-123-Shop","Electrical 123","","UK"); ?> on eBay and since July 2012 have amassed almost 50,000 feedback.
Having trialled click and collect, the Co-op still have their “Spend £25 in-store and get free home delivery at a time of your choice” service running.
The Co-op may attempt to launch a click and collect grocery service again at some point in the future, but for the moment, for one business at least, the Internet would appear not to be the cash cow everyone assumes it always is.
If the article below is anything to go by it’s no wonder they have decided not to bother, if the big 4 supermarkets can’t make any money from it what chance has the coop, they are already losing enough money.
There is another problem with Supermarket Home Deliveries. In the early days there was a belief that the Home Delivery Market was used as a way of dumping short dated stock. So many tried it and found that instead of getting the product with a long shelf life they instead got the product that only had a day or two left before its Best Before or Use By dates.
So having tried the service once, or twice, the Customer determined never to use it again.
I have seen the £20 per delivery cost before and it does make a lot of sense. However whenever I go into a Supermarket Car Park the Delivery Trucks seem to spend at least a part of the day parked up. Meaning Low Utilisation Rates. If they were busy all day it is likely that the Cost Per Delivery would come down.
But of course Such a Lidl does not do home deliveries and they are generally the cheapest and at present are dramatically increasing their Market Share. So is Home Delivery other than a very expensive Luxury for the other Supermarkets.
I didn’t know that about the stock Chris T, I have to admit I have never used it once, when it first came out a few years back it cost £5 per delivery and you had to spend a minimum of £40+ at that time with me being a single person I decided it was easier and cheaper just to go there with my car and I have done that ever since.
I have read of people complaining that half the time they get substitute items that they don’t want and have to be reimbursed onto their card if sent back which is another reason I have never bothered.
Having said that my local Tesco’s is only 5 minutes from my house by car.
PS Although the trucks are stood down the staff will be busy working inside the store, it’s not like they have dedicated drivers doing nothing as far as I know.
You may very well be right. A driver when not driving his delivery truck is likely to be inside the Supermarket doing other jobs…Shelf Filling perhaps. I wonder what the Wage Rate of a Driver is compared with the Wage Rate of a Shelf Filler?
The fact is that a Delivery Truck that is sitting in the Car Park not being used as a Delivery Truck is still costing. Maybe not as much but it is still costing.
I also thought about using a delivery service and decided against it. In my case it was because I rarely if ever come back with what I set out for…
Why? Well that is very easy. As I go around Tesco or whatever I am looking for what looks nice this week..What catches my eye…What is on special offer…Perhaps a New Product that I have not tried before etc.
So while I may set out for this or that I probably come home with something else. Usually about the only common things on the list of what I set out for and what I came home with are such as 6 pint bottles of Milk and tomatoes.
So a delivery service where you have to specify exactly what you want would not be a lot of good for me.
You sound like their perfect customer Chris T. ;-)
I like to think myself as being ‘Perfect’ but I would suggest that you might be hard pressed to find anybody who would agree with you.
I saw an item a while ago that said that the average Housewife cooked only a limited number of meals. So it could be that literally Wednesday might always be mince and each of the other days whatever in the regular menu.
I cook for myself, being divorced. I do have a few ‘regular’ meals but they certainly do not turn up each week. I often do not know what I am going to have that night until I look in the fridge to see what I have in stock.
I saw an interview with a Small Village Grocer a year or so ago. He was asked how he decided what he was going to have that night and his answer? “Whatever had gone out of date that day”. I thought that was a very sensible answer.
I’m not sure what the situation is in Cornwall but normally the delivery operations are not run from shops but from distribution centres.
I am not certain how many ‘Distribution Centres’ the various Supermarkets have. But when I go to Tesco in Truro there are invariable staff wheeling around a trolley(not like the ones available for the paying customers to use but seemingly specific for At Home Customers Orders}.
The staff have a list and are going around the store picking off the shelf. If you regularly go to such as Tesco you know that the Shelf Fillers rear load the shelves. So the shortest dated stock is at the front. So if you are like me you take your stock from the back or compare the Use By or Sell By dates of the stock on the shelf.
The staff picking for the Home Delivery seem always to take from the front of the shelf. The dates can be several days different.
If I was employed by a Supermarket Group at a sufficiently high level I would be certainly questioning the whole of the Home Delivery System. It seems to me that it was an idea that while attractive in theory has really been a failure in practice. If you go to almost any housing estate in any town there are a regular procession of Delivery Trucks emblazioned with the colours and logo of one or other of the Supermarket Chains each seemingly delivering one or two orders before disappearing. This cannot be cost effective.
Hi Chris T.
Your point on the substitute items is a good one. We often do online orders for our offices. We are based in central London and even though the Tesco’s is located 10 mins walk from the office, it takes longer to receive the stock, and we often get substitutes. It happened over Easter, which didn’t please the Easter bunnies in our office. But your point really hit the spot!
Online grocery shopping is a good theory idea, and I would love to see it work! But I do have a hard time believing in how well it will work going forward.
In my day as an Accountant in Industry the responsibility for getting the stores for the Offices(or indeed the Factory) was either the Odd Job Man(every Factory had one) or in the Offices the Office Junior.
I remember getting a very loud telling off(I would have used a much stronger term but this is a family site).
I had an Office Junior in the Office and she was particularly bright(not like the average Office Junior from the Job Centre). We used a Burroughs L5 Accountancy Computer( if there are any left they are now long since in a Museum). But at the time in the 1970’s they were cutting edge.
She wanted to be trained on the computer so I tried her out on the simplest programme(parts invoices). and she was a naturel. Today of course every child from about the age of 5 onwards is proficient on a computer but not in the 1970’s.
Then my Boss, the Group Chief Accountant, walked into the Office and she was on the Computer. I had not asked permission to train her and my boss was not amused. So I got a king sized and very loud telling off. But it all ended up well in the end she was so good and naturel that her training was made Official by the Company although I was still told that I had to get any further training approved.
Interesting article about this which confirms my suspicions – thank you Peter.
Unfortunately the Co-Op is atypical and all the big players are making losses & hurting but they have deep cash pockets so can burn money for a very long time.
The almost complete failure of Ocado however rather proves the point.
It really is a question of which of the big boys will blink first and either stop or seriously shift the direct costs back onto the home delivery customer where they properly belong.
Typical McKinsey by the way who believe this can simply be fixed by an Amazon like approach to working conditions (pick more and faster as the machine tells you too).
I can’t see how picking three times quicker can fix this given the overall cost profile with home deliveries but I would love to see the detail behind that.
Switching their efforts to providing more value added services (e.g. parcel collection and deposit) as others have said would seem much more sensible if their estate allows.
I almost agree with Cambridge_Blue but not quite. The Big Supermarket Companies certainly have deep pockets but even they are hurting. We have just seem Tesco dump its boss and I suspect that there are other earthquakes in the near future.
The problem is that they are all watching money disappear in all directions while most of them are either not seeing any growth in sales or in some cases even reductions in sales.
So something has to give Sainsburys has just announced in Exeter that it has abandoned plans for a big Distribution Centre and is going to sell off the land. Tesco has announced that it has abandoned plans for some future Superstores. The days of mad expansion is over. They are under pressure and when the Directors face the Shareholders they are facing a baying mob.
So I expect Home Delivery to be an early victim. After all if it is costing you tens of millions per annum with no sign of it ever changing wouldn’t you kill it?
And my local Co-op is my MyHermes drop off…. so they still get some footfall from that.
To me co-op (most run by Scotmid) are only useful for small shops (when passing). The range and pricing is not good enough to make me go out of my way to shop with them.
Most people will have a choice of online supermarkets and are less tied to a supermarket that has a local store to them.
Go back to when I was a child in the 1950’s and 60’s. The Co-op was a highly respected, much loved and well used organisation. There was it and Liptons and Sainsburys. That was about it. Tesco existed but it was still very small.
Sainsburys are still there but no longer the largest. Liptons name has disappeared and Co-op because of the clowns and idiots that have run it at the top has lost a great deal of the respect and much of its business.
My parents were ultra right wing Conservatives yet they regularly used the Co-op and didn’t think at all about it being affiliated to the Labour Party. Indeed there were several Labour M.P’s who were sponsored by the Co-op Movement.
Instead of concentrating on their business they seem to have been taken over by Left Wing Political Placemen who knew little and cared less about the business. So it has declined to what it is now.
Ah the good old Co-op….
I am now 65 and when i was a youngster they were everywhere in East London. Department stores, food stores, funeral directors & so many different businesses & a Bank. Stratford East had them all
At some point in the mid 80’s they subtracted back up north & now just a few small food stores remain.
Somehow they just didn’t stand & fight the likes of Tesco’s.
I find it sad that their current situation is all about the take over of a debt ridden building Society, that bought this once great institution to it’s knees.
They even owned a fair acreage of British Farmland. I understand that this week the Co-op Farms were sold off in part because they need the money because of the massive losses they have managed to incur.
Part of the massive losses is because of the Britannia Building Society that they bought.
I have been involved(in a very minor role) within the purchase of one business by another. There is really only one rule when buying out another business. That is that if there is something dodgy in the business the sellers will have tried very very hard to hide it. So those working for the buyers have to look very very hard to find it and expose it.
It does seem to me that these days the Accountants, Bankers and others advising the buyers seem very happy to accept whatever load of old flannel the sellers tell them. Then after the purchase has gone through and the sellers are heading off into the countryside(or more likely retirement in some warm(hot) foreign land with their ill gotten gains. It is only at that time that the load of old flannel turns up. It does seem as if Britannia Building Society and its hundreds of millions of pounds of dodgy loans falls into that category.
In summary then – seller beware!
As for the poor Co-Op it has no choice but to review all its operations but it’s problems stem from a toxic combination of really poor senior management, amateur governance & lack of proper oversight and regulatory incompetence.
It is a sorry tale for a once great institution it must be said.
Surely its Buyer Beware?
Let us look at an average Company Buy-out
(including the Britannia Building Society by the Co-op). Those advising the Co-op have a duty to check everything about the Britannia. Every asset and liability has to be checked in great detail. Nothing can be accepted at face value. After all hiding in amongst genuine loans can be all sorts of land-mines.
That is what happened in the case of the Co-op they accepted the figures and found that there were a lot of totally worthless loans hidden in amongst the genuine ones. Even such as Property Valuations can hit you hard. Is the Property at such and such address really worth what it appears in the Books? Over the years dodgy valuations have been done and they could be in the accounts of the company being bought out.
Nothing can be accepted at face value. Yet that is what the Co-op and its advisers did and it has contributed in very large part to the £2.5Billion loss the Co-op made this year.
I remember many years ago I had a difference of £1 in some accounts. I had searched and searched for it. Finally I went to my Boss and asked to be given permission to write it off. His answer(after he calmed down) was that it could be £100,000 one way and £100,001 the other. So I had to go back and find it.
In the event I found it and no it was just a simple £1. But I get the impression that today they just write it off and accept whatever they are told. Yet they all expect(Demand) huge Salaries and Bonuses while not really being up to the job.
agree with the comments on recieving front of shelf items – with short dates on them, so much so that i have ordered in “meals”, or ingredients for meals for that day and the next couple, and they have all had to be used on one of the days. good job with some items you can stretch it a day or two.
mainly use them for bulky items now, such as cases of things, and the other half gets fresh fruit and veg from lidl and aldi, we have used them lately and they have a place for us alongside the big weekly shop with the big 4.
i think they may be loosing business as a whole on the delivery front, or it may be competition, but i have seen a lot of emails offering me free delivery (can cost from £2-8 depending on times of day i could get delivered), and also lots of promos for buying a yearly or monthly delivery pass, eg £20-50 code that gives “free” delivery.
I can see from the supermarket’s point of view why they would want to offer the monthly / yearly pass for free delivery as it’s like Amazon’s prime, they are thinking you will do most if not all of your shopping on their site rather than go to the competition because you have already paid for the delivery in advance.
I would think free delivery for just the single shop would be a bad idea for them though.
oh yea i can see that too, im a prime member and love it, but amazon also tend to be cheaper as well.
i have figured out how many products a year i would need to have “primed” to me to make it worthwhile, but thats not the only point that makes it worth my while.
as i said amazon is competitive on price, and if not the best priced, when taking into account the free prime, its usually worth it anyway. but if the gap in price was large enough, i wouldnt have loyalty ot amazon just because of the prime paid for up front.
In a way it’s a shame it’s gone down this road but I guess the online market is so competitive these days, even the big players can’t compete!
The trial was run from my local Coop store, the staff are terrible and the area really wasn’t suited to the trial. The majority of people, 60% are over 60 years old, and I know many of them will be used to internet shopping, but when its only 2 minutes to the Coop with a big free car park then there really is no point, its open from 7am til 10pm every day. Seemed completely pointless. Coop have now sold this store to Asda :(