The jury is out on how to win at delivery

At first glance, it looks like a no-brainer for a local store owner to link up with Uber Eats to offer convenience product deliveries. Symbol group Costcutter’s recent announcement of a “superior” deal is a step in the right direction. Its test stores grew sales by £1,500 a week.

Costcutter’s move is being driven by strong consumer demand for delivery, says marketing director Sean Russell. The consumer demand is being fanned by marketing campaigns that show Just Eat delivering a Big Max into the hands of a consumer who has not left the comfort of his sofa.

A bad idea say the economists

The idea of all this provokes a strong response from people with their heads screwed on like Patrick Collinson, editor of Guardian Money. He observes that spending £3.50 on having a Big Mac delivered to your home does not “add up financially, nutritionally, environmentally and economically”.

For him the sums were:

  • pay £10 for a pizza and £2.99 for delivery
  • or walk for 10 minutes, buy a £3 pizza at Tesco Express, take it home, and cook it yourself.

Collinson contrasts the enormous multi-billion pound valuations that the delivery companies command with the low way, minimum added value workers who work the streets.

Time to take a lead

While Collinson is entitled to his point of view, his analysis falls because consumers do not behave rationally. On the one hand, the shopper will haggle to avoid paying to have their weekly shop delivered. On the other, they are more than happy to pay for a treat to be delivered now.

Delivery is here to stay and Costcutter is right to allow its retailers to take part in this market.

But before signing on the dotted line the retail owner should pause and consider the low rates on offer to deliverers. If at some point Uber Eats determines it can reach its customers without you, what is going to happen to your margins? History suggests that most networks look to chisel their partners at some point.

If as a retail owner, you believe this is the only way you can develop a delivery option, then it may be a good deal. But there are other options. One is the ZeusLabs platform that allows you to sell directly to local people through social media and the internet.

Big profit opportunity

One retail ZeusLabs user says that he is making more than £60,000 gross profit out of his add on home and office delivery business. Setting up was easy and he quickly learned social media marketing skills.

“My customers like to treat themselves. And this is a convenience sale, they are not worried about the price,” he says.

So far, plenty of retail owners have talked to him about following in his footsteps. But few have done it, he says.

The choice is between being a big fish in the local pond you own or a small fish in a giant pond filled with lots of fish. You must decide which model fits with your business objectives.

Don’t wait too long. Uber Eats is testing a drone next summer that can deliver a meal for two over a distance of one mile. Consumers are going to be spoilt for choice.

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