The online grocery shopping market appears to be the new darling of tech entrepreneurs in Australia.
On Friday, serial Australian entrepreneur Ruslan Kogan announced his company Kogan is launching a home delivery grocery service called Kogan Pantry. It follows an announcement on Jan. 26, by the Berlin startup company, Rocket Internet, that it is also branching into non-perishable goods Down Under, with a service called ShopWings.
It makes sense startups are looking to the online grocery market, which remains relatively untapped, and is forecast to grow globally from US$36 billion in 2013 to US$100 billion in 2018, according to predictions by consulting firm The Boston Consulting Group (BCG).
David Shafer, executive director of Kogan, said Australians have put up with the supermarket duopoly “for far too long.”
“In 1975, Coles and Woolworths accounted for just 34 percent of the market, by 2009 that share was up to 78 percent,” Shafer said. “While Coles and Woolies certainly offer a fantastic selection of products, and are an important part of the Australian economy, the Aussie duopoly also has some of the highest profit margins of any supermarkets in the world.”
“The Aussie supermarket duopoly has double or triple the margins of international peers like Tesco, Costco and Carrefour,” he added.
Kogan Pantry offers only a selection of items that are needed in a weekly shop but competes with a competitive delivery fee capped at $9.95. The major point of difference in Kogan’s service is the heavily discounted goods, allowing a savvy shopper to not just save time but to get to the check out with pretty hefty savings.
The delivery times are a stretch at the moment, with Shafer saying: “At this stage, we are advertising 1-2 week dispatch. We prefer to under promise and over deliver. As the business expands, we expect to have dispatch times down to our usual 1-2 days.”
ShopWings is taking a different approach with their entry to the booming market: delivering groceries from the larger supermarket chains — Coles, Harris Farm and Aldi — directly to your door using a personal shopper. The service offers a two-hour delivery time, and a one-hour delivery window, while the delivery fee is set at A$8.90.
Florian Jaeger, co-founder of ShopWings, which launched in Germany last year, said the service exists to replace the hassle of traditional shopping, which Australians leave the house 2.5 days a week for.
“We believe people are busy, and busy people seek modern solutions that save time,” Jaeger said. “It therefore seems obvious to us that online shopping will expand a lot in the next few years.”
The company uses personal shoppers to increase the emotional connection while using an online service — and a shopper is chosen based on an algorithm using the customer’s address and required delivery slot.
In a similar fashion, the website Grocery Butler kicked off its Australian grocery delivery service in 2014. It tries to stand out from the market with an under 90-minute delivery time, a 30-minute delivery window and a set $10 fee. You need to spend $25 for the service to work and if you like to see a picture of your product, this isn’t the site for you.
Supermarket giants Coles and Woolworths both deliver, as does emerging player Harris Farm, but the wait time is generally longer and delivery prices are variable based on the total cost of your order — so if your a basic shopper, the cost can skyrocket.
Either way, the new players are sure to mix up the market and allow us an extra moment on the couch.