Tesco Delivery Price Increase

badger09

Not sure if this has already been posted, but from 3 August Tesco are introducing flat rate Click & Collect and Home Delivery charges

"For deliveries, the price is £4.50, or £5.50 if your shopping comes from one of our customer fulfillment centres. We call this a ‘pick, pack and deliver’ charge.

For Click+Collect, it’s just £1.50 to cover the 'pick and pack' charge.

To start saving on your online deliveries, why not sign up to one of our Delivery Saver plans?"

Although they suggest signing up to a Delivery Saver Plan, they're not currently accepting new sign ups!

Bacman

Yes, they are expensive for home deliveries, you could get cheaper slots before but now they seem to be doing a one-price-for-all-slots scheme, and as the prices you posted above, that is expensive too. When customers vote with their feet and go elsewhere, i'm sure Tesco will have to reduce the delivery price to a sensible level. Charge for click and collect - why - no other supermarket does!

pumpkin89

Bacman said:

When customers vote with their feet and go elsewhere, i'm sure Tesco will have to reduce the delivery price to a sensible level. Charge for click and collect - why - no other supermarket does!

It depends what you mean by sensible.  It costs Tesco at least £12 to pick, pack and deliver an order.  Click and collect obviously still costs them quite a bit as they're paying for a member of staff to pick and pack your shopping.

People voted with their feet in 1993 when Tesco Value baked beans were 4p and Aldi's were only 3p - doesn't mean either of those prices was sensible or sustainable.

A._Badger

pumpkin89 said:

Bacman said:

When customers vote with their feet and go elsewhere, i'm sure Tesco will have to reduce the delivery price to a sensible level. Charge for click and collect - why - no other supermarket does!

It depends what you mean by sensible.  It costs Tesco at least £12 to pick, pack and deliver an order.  Click and collect obviously still costs them quite a bit as they're paying for a member of staff to pick and pack your shopping.

People voted with their feet in 1993 when Tesco Value baked beans were 4p and Aldi's were only 3p - doesn't mean either of those prices was sensible or sustainable.

I am very far from convinced that it costs Tesco £12 to pack and deliver an order. Experience has taught me to treat anything that company claims with caution. 

pumpkin89

A._Badger said:

I am very far from convinced that it costs Tesco £12 to pack and deliver an order. Experience has taught me to treat anything that company claims with caution. 

That number doesn't come from Tesco - I have some professional knowledge of the industry and the figure that's generally used is £18.  I've assumed Tesco might be able to do it cheaper because of their scale.

You have to factor in that they are paying a member of staff to walk around the store and select products; they are paying a driver; they have all the overheads of the delivery vans, plus fuel; the handset scanners that the pickers use.  And all of that is incremental to the overheads of operating the store in the first place.  It's an extremely expensive way to sell groceries, but if one supermarket offers it then they all have to, in order to maintain market share.

KxMx

If I couldn't shop online with Tesco then my money would be going to another supermarket.
So maybe in that context the cost to them becomes more worthwhile. 
Some do tend to assume an online shopper would be an in store shopper with the same brand which isn't always necessarily true. 

A._Badger

pumpkin89 said:

A._Badger said:

I am very far from convinced that it costs Tesco £12 to pack and deliver an order. Experience has taught me to treat anything that company claims with caution. 

That number doesn't come from Tesco - I have some professional knowledge of the industry and the figure that's generally used is £18.  I've assumed Tesco might be able to do it cheaper because of their scale.

You have to factor in that they are paying a member of staff to walk around the store and select products; they are paying a driver; they have all the overheads of the delivery vans, plus fuel; the handset scanners that the pickers use.  And all of that is incremental to the overheads of operating the store in the first place.  It's an extremely expensive way to sell groceries, but if one supermarket offers it then they all have to, in order to maintain market share.

Unless it were a figure arrived at by independent analysis (ie not from the industry itself) I'm still unconvinced - and even less so by a claim of £18 per order. There are online retailers and delivery services of all kinds who manage to make a profit despite the challenges. With such a high investment in potentially redundant real estate, I would expect the supermarkets to make worried noises - they've had a pretty good time in the past few decades. They won't enjoy a change in the way people shop.        

BooJewels

The way I think of it is, would I be prepared to go round the supermarket with someone else's shopping list, put it all in a trolley - make decisions when I encounter an item short etc., pack it all into bags, then trays, then into my car (that I pay to run and maintain), deliver it to them within a one hour window and empty it out of the car onto their doorstep (and this might be an internal apartment with stairs etc. to negotiate - and they might be 15 miles or more from the store) and not get any help from them - for £4.50!  No I wouldn't.   

I have no difficulty whatsoever in believing the actual cost is significantly higher than that - my husband used to price staffed jobs and the employee wages are only one number of probably over 20 that have to be costed into a service.

And at the moment, as my husband is Shielding, I'm getting free deliveries from both Asda (I think the Government paid for their delivery pass) and Iceland and will happily pay in future to redress the balance a little.

GaleSF63

BooJewels said:

The way I think of it is, would I be prepared to go round the supermarket with someone else's shopping list, put it all in a trolley - make decisions when I encounter an item short etc., pack it all into bags, then trays, then into my car (that I pay to run and maintain), deliver it to them within a one hour window and empty it out of the car onto their doorstep (and this might be an internal apartment with stairs etc. to negotiate - and they might be 15 miles or more from the store) and not get any help from them - for £4.50!  No I wouldn't.   

I have no difficulty whatsoever in believing the actual cost is significantly higher than that - my husband used to price staffed jobs and the employee wages are only one number of probably over 20 that have to be costed into a service.

And at the moment, as my husband is Shielding, I'm getting free deliveries from both Asda (I think the Government paid for their delivery pass) and Iceland and will happily pay in future to redress the balance a little.

Looking at it from 2 different points of view....  £4.50 on the price of my groceries seems a lot. However £4.50 for a service which involves people's time (and saves mine), and vehicles and fuel seems pretty good! - especially for something I can no longer do myself.
I wonder what the thinking is behind the decision - will it make much difference to Tesco's costs? At the moment they have slots varying from £2 to £7; the average of these 2 is £4.50.

KxMx

I'm going back a few years now, when Tesco had a catalogue business they started charging for click and collect at Tesco stores.

A few months later this was reversed... Presumably they lost too much custom and the figures didn't stack up against revenue from the charge. 

I don't think £4.50 is unreasonable but will it be competitive enough when stood against the other supermarkets? Iceland will deliver free over £35, other supermarkets will now have cheaper slots when stood against this flat rate charge.

Sometimes what a business wants us to pay and what we are willing to pay are different things. 

BooJewels

@GaleSF63 - If you asked 100 people about this, there would probably be 100 differing opinions, as your personal perspective invariably colours your thoughts.  I suppose if you're not buying much each week and have plenty of time on your hands to do your own shopping, the idea of paying someone else £4.50 to do it for you might seem preposterous. 

For us, I get a delivery once a fortnight (from Asda, they happened to offer me a guaranteed slot slightly before Tesco, but they did offer one FOC too) - to free up another slot for someone else - which means that I get quite a lot at once and the time saving alone for me is certainly worth it - even putting aside the current safety/Shielding considerations.  Plus I'm not actually paying for it just now, but would certainly be prepared to.  I've used the service routinely in the past from both Tesco and Asda and will continue to do so.

Perhaps the advantage to Tesco isn't even financial - it might just even out the demand for slots and be logistical rather than fiscal.