Tesco Plans Same-Day Delivery Offer

Move could spark grocery ecommerce gains

Author: Cliff Annicelli

July 24, 2017

By summer's end, UK grocery store leader Tesco plans to become the first of the country's supermarket chains to offer same-day delivery of online orders nationwide. It's a move that could push already sizeable sales and adoption of grocery ecommerce even further.

Consumers in the UK have taken to buying groceries digitally with relative gusto. According to Cowen and Company figures, 34% of internet users polled in January 2017 said they purchase groceries online. By comparison, Cowen found just 12% of US internet users could say the same as of December 2016.

Cowen’s January study found a further 34% of UK respondents were likely to purchase groceries digitally. Tesco's move could speed up that conversion process significantly.

Tesco launched same-day grocery delivery in London and the southeast of England in 2014, and is now extending the service to over 300 stores across the UK—enough to cover "over 99% of households," according to the company. The rollout is expected to be completed by the end of August.

The service promises to deliver orders placed by 1pm Monday through Saturday by that same evening. Delivery is priced between £3 and £8 ($4.05–$10.80), but is free for a limited period to members of Tesco’s online delivery membership plan, Delivery Saver.

According to the retailer, same-day deliveries have been increasingly popular among its customers, with demand for the service seeing 18% growth year to date in 2017.

Rising adoption of buying groceries online is expected to push UK digital grocery sales past £10 billion ($13.50 billion) this year, according to a June forecast by IGD. Moreover, even without Tesco's move, digital sales of groceries were expected to rise faster than any other purchase channel in the country over the next five years.

Tesco's same-day delivery option can not only boost adoption and sales of online grocery buying, it can also help stave off rising competition from pure-play ecommerce retailers like Amazon.

The US ecommerce giant's AmazonFresh grocery service got a limited launch in the UK last year when it debuted to shoppers in certain areas in and around London. But last month, it added an additional 42 post codes north of the city to its delivery range, bringing the total to 302. Further expansion plans have yet to be announced, but it's unlikely the company will stop there.