Waitrose introducing charges for home deliveries

stig

Can ask some of you who won’t pay for delivery, as I’m genuinely baffled.

why do you think that it’s reasonable for you to have your shopping picked, packed and delivered to your home for exactly the same price as those who travel to the supermarket, select their own shopping, pack it up and take it home?

I ask because clearly the supermarkets do charge for delivery, they need to pay for the staff time, vans and drivers out of their sales income.  Nothing a business offers is “free” as ultimately it must be funded  by them and so must come from their customers somehow. What “free delivery” means is these delivery costs are split across all customers in their pricing strategy. A delivery charge means the cost is targeted at the actual users of the service.

im genuinely interested to know why you think this service (which as others have explained saves a great deal of time and effort for you) should be built into the costs borne by all customers? If groceries cost the same in store and delivered, why on earth isn’t it reasonable to pay a small fee to get them to you?

Stig

Doc_N

stig said:

Can ask some of you who won’t pay for delivery, as I’m genuinely baffled.

why do you think that it’s reasonable for you to have your shopping picked, packed and delivered to your home for exactly the same price as those who travel to the supermarket, select their own shopping, pack it up and take it home?

I ask because clearly the supermarkets do charge for delivery, they need to pay for the staff time, vans and drivers out of their sales income.  Nothing a business offers is “free” as ultimately it must be funded  by them and so must come from their customers somehow. What “free delivery” means is these delivery costs are split across all customers in their pricing strategy. A delivery charge means the cost is targeted at the actual users of the service.

im genuinely interested to know why you think this service (which as others have explained saves a great deal of time and effort for you) should be built into the costs borne by all customers? If groceries cost the same in store and delivered, why on earth isn’t it reasonable to pay a small fee to get them to you?

Stig

In a sense, I agree with you.  But Waitrose is a little different in that it's the most expensive supermarket, by quite some margin, and the profit margins it works on are such that it can absorb more easily the extra costs of delivery.  It's quite easy for customers to move to another supermarket to get lower prices which will more than cover the cost of the delivery charge there.

There's also the point that customers who have home delivery don't avail themselves of the very costly facilities which have to be provided for stores - toilets, customer service desks, car parks etc etc. It cuts both ways - you could argue that customers having home deliveries are saving stores money by not using the stores.

stig

@Doc_N that’s a really thoughtful and considered response, thank you. I hadn’t thought about the benefit to the store of not having to service physical customers for delivery orders.  I can see how that goes some way to balance up the costs. I still suspect that each delivery order has a net cost to the store, but it’s certainly a factor to consider.

Stig

Mickey666

Doc_N said:

stig said:

Can ask some of you who won’t pay for delivery, as I’m genuinely baffled.

why do you think that it’s reasonable for you to have your shopping picked, packed and delivered to your home for exactly the same price as those who travel to the supermarket, select their own shopping, pack it up and take it home?

I ask because clearly the supermarkets do charge for delivery, they need to pay for the staff time, vans and drivers out of their sales income.  Nothing a business offers is “free” as ultimately it must be funded  by them and so must come from their customers somehow. What “free delivery” means is these delivery costs are split across all customers in their pricing strategy. A delivery charge means the cost is targeted at the actual users of the service.

im genuinely interested to know why you think this service (which as others have explained saves a great deal of time and effort for you) should be built into the costs borne by all customers? If groceries cost the same in store and delivered, why on earth isn’t it reasonable to pay a small fee to get them to you?

Stig

In a sense, I agree with you.  But Waitrose is a little different in that it's the most expensive supermarket, by quite some margin, and the profit margins it works on are such that it can absorb more easily the extra costs of delivery.  It's quite easy for customers to move to another supermarket to get lower prices which will more than cover the cost of the delivery charge there.

There's also the point that customers who have home delivery don't avail themselves of the very costly facilities which have to be provided for stores - toilets, customer service desks, car parks etc etc. It cuts both ways - you could argue that customers having home deliveries are saving stores money by not using the stores.

. . . only if NO customers used the stores.  What would you imagine the cost difference would be for 100% of customers using a store and 80%, or even 50%?  My bet is that there'd be very little cost saving  at all.  Stores would still have to open, be heated, be lit, have customer toilets, have staff on checkouts and filling shelves etc.

The fact that Waitrose is expensive is irrelevant.  It's obviously not too expensive for its existing customers who presumably choose to shop there for their own good reasons, so I'd be really surprised if they suddenly defected just because of a few pounds delivery charge.  As Stig rightly pointed out, delivery is an additional service and it seems reasonable to charge for it.

calleyw

So because a facility is already there but customers don't go to the store that means the customer that has home deliveries is saving the supermarket money, but the toilets are checked and cleaned as often, lights and heating is still on?  Don't think so by having home delivery its adding to costs as there needs to an extra website to be able to deal with orders, staff to pick the orders and vans and drivers to deliver.  As I have mentioned before and been told by posters here its not true as it would not be an offered service, there is a costs/loss to a supermarket on each home delivery is between £3-5 per delivery depending on the supermarket and that was in 2015 according to this FT.com article https://www.ft.com/content/fd88f556-70bc-11e5-9b9e-690fdae72044 and this article yes I know Daily mail from 2014 is suggesting up to £20 its costing a supermarket https://www.dailymail.co.uk/news/article-2707071/Supermarket-giants-lose-100million-year-online-delivery-services-Cost-delivery-means-effectively-paying-customers-shop-them.html. Can't find any newer articles but can only imagine that has gone up as costs have risen. 

Seems waitrose are starting to charge to being them in line with other supermarkets https://www.thegrocer.co.uk/waitrose/waitrose-introduces-online-delivery-fee-to-bring-us-in-line-with-rest-of-market/655940.article

You have a choice go to the supermarket or pay a fee to get someone else to pick and pack and deliver for you.  Not sure why the supermarkets should absorb the cost they are business and not a charity.  Unless posters here think that people should work for free.  Maybe they would like to volunteer to work for nothing so people can get their shopping delivered for free.

Bacman

The situation is no different to how you pay for items. Let's say you want to pay for something that costs £100 in a shop. If you pay by cash, the value of the transaction to the shop is £100, if you pay by credit card then the value is less to the retailer for the charge for that facility - quick Google search shows:

So, on top of 3.5% as maximum fee, there is also a transaction fee which looks like 2p plus a monthly subscription to each card which adds on top; so let's say the shop gets charged (based on above) £1.57 to £3.52 for the transaction, that means an item retailing for £100 is worth about £96.48.  That means the retailer will take a broad estimate on the bottom line and will have probably charged what should be say £98 as £100 to compensate for the chance someone pays on card than cash.

Ok, now that that onto the shopping delivery side - sure, there is the cost of the delivery vans and driver however profits supermarkets make on selling items is quite hefty so is in their interest making a little less profit on those customers than losing them to other stores. I remember articles on retail a while back that suggested the cost of the supplier, distribution, etc makes up about 60% on average of an food item, the retailer makes 40%; so there is plenty of space to make a decent profit even with "free" delivery.

Shops have the decision of offering "free" delivery, or cheap delivery or not at all (eg Lidl and Aldi don't deliver) depends on if it is profitable to do so and how much their market share is worth to them. Also consider why supermarkets can change for delivery £1 (Sainsburys "saver slots"), Asda £1.75 on some slots, Iceland (free), yet others charge up to £7.50 for delivery.

Some people will pay whatever for delivery charges, just don't care how much; some are happy to pay for the convenience, that is fine however there is no reason if on a budget to not want to save the money - I take the view that £7.50 pays for a nice home-cooked meal for 2; i'd rather do that than spend it on a delivery charge!

Same as the cost of paying on a credit card, it can be worth the cost to a supermarket to subsidise their delivery costs to keep customers. It's a bit like for example the "World isle" in Asda - that is there for savvy shoppers who are after bargains, they do that rather than those customers going to other stores...

Doc_N

Mickey666 said:

Doc_N said:

stig said:

Can ask some of you who won’t pay for delivery, as I’m genuinely baffled.

why do you think that it’s reasonable for you to have your shopping picked, packed and delivered to your home for exactly the same price as those who travel to the supermarket, select their own shopping, pack it up and take it home?

I ask because clearly the supermarkets do charge for delivery, they need to pay for the staff time, vans and drivers out of their sales income.  Nothing a business offers is “free” as ultimately it must be funded  by them and so must come from their customers somehow. What “free delivery” means is these delivery costs are split across all customers in their pricing strategy. A delivery charge means the cost is targeted at the actual users of the service.

im genuinely interested to know why you think this service (which as others have explained saves a great deal of time and effort for you) should be built into the costs borne by all customers? If groceries cost the same in store and delivered, why on earth isn’t it reasonable to pay a small fee to get them to you?

Stig

In a sense, I agree with you.  But Waitrose is a little different in that it's the most expensive supermarket, by quite some margin, and the profit margins it works on are such that it can absorb more easily the extra costs of delivery.  It's quite easy for customers to move to another supermarket to get lower prices which will more than cover the cost of the delivery charge there.

There's also the point that customers who have home delivery don't avail themselves of the very costly facilities which have to be provided for stores - toilets, customer service desks, car parks etc etc. It cuts both ways - you could argue that customers having home deliveries are saving stores money by not using the stores.

. . . only if NO customers used the stores.  What would you imagine the cost difference would be for 100% of customers using a store and 80%, or even 50%?  My bet is that there'd be very little cost saving  at all.  Stores would still have to open, be heated, be lit, have customer toilets, have staff on checkouts and filling shelves etc.

The fact that Waitrose is expensive is irrelevant.  It's obviously not too expensive for its existing customers who presumably choose to shop there for their own good reasons, so I'd be really surprised if they suddenly defected just because of a few pounds delivery charge.  As Stig rightly pointed out, delivery is an additional service and it seems reasonable to charge for it.

And the dark stores that Waitrose already operate, serving only delivery customers? No toilets, no customer service desks, no car parks, very low costs - meaning that the additional costs of delivery are minimal, possibly even negative.

And if you look at many of the home deliveries as additional to store sales (that's to say they wouldn't have taken place at all instore) it changes the economics again. The more home deliveries there are, the smaller the stores and car parks need be, so lower costs.

It's not as simple as you think - it all depends how you do the calculations. It's quite easy to show that there are additional costs in home deliveries, but it's just as easy, using different accounting methods, to show there are savings.

[Deleted User]

Mickey666 said:

Doc_N said:

stig said:

Can ask some of you who won’t pay for delivery, as I’m genuinely baffled.

why do you think that it’s reasonable for you to have your shopping picked, packed and delivered to your home for exactly the same price as those who travel to the supermarket, select their own shopping, pack it up and take it home?

I ask because clearly the supermarkets do charge for delivery, they need to pay for the staff time, vans and drivers out of their sales income.  Nothing a business offers is “free” as ultimately it must be funded  by them and so must come from their customers somehow. What “free delivery” means is these delivery costs are split across all customers in their pricing strategy. A delivery charge means the cost is targeted at the actual users of the service.

im genuinely interested to know why you think this service (which as others have explained saves a great deal of time and effort for you) should be built into the costs borne by all customers? If groceries cost the same in store and delivered, why on earth isn’t it reasonable to pay a small fee to get them to you?

Stig

In a sense, I agree with you.  But Waitrose is a little different in that it's the most expensive supermarket, by quite some margin, and the profit margins it works on are such that it can absorb more easily the extra costs of delivery.  It's quite easy for customers to move to another supermarket to get lower prices which will more than cover the cost of the delivery charge there.

There's also the point that customers who have home delivery don't avail themselves of the very costly facilities which have to be provided for stores - toilets, customer service desks, car parks etc etc. It cuts both ways - you could argue that customers having home deliveries are saving stores money by not using the stores.

. . . only if NO customers used the stores.  What would you imagine the cost difference would be for 100% of customers using a store and 80%, or even 50%?  My bet is that there'd be very little cost saving  at all.  Stores would still have to open, be heated, be lit, have customer toilets, have staff on checkouts and filling shelves etc.

The fact that Waitrose is expensive is irrelevant.  It's obviously not too expensive for its existing customers who presumably choose to shop there for their own good reasons, so I'd be really surprised if they suddenly defected just because of a few pounds delivery charge.  As Stig rightly pointed out, delivery is an additional service and it seems reasonable to charge for it.

I understand why people say things like this, but in the long run this is a bit short sighted. If 50% of people switched to online then it would have a massive difference on how supermarkets operate - they'd switch to a hub delivery model, they would shut a certain percentage of stores, they would cut store staff, and so on.

Also people often talk about these issues as if they're a question of fairness. In reality, it's completely irrelevant whether people "should" have to pay delivery charges, it's a business decision. If the delivery charge causes supermarkets to lose out on customers (i.e. to supermarkets that have cheaper delivery services) then they'll change the price.

Mickey666

Bacman said:

The situation is no different to how you pay for items. Let's say you want to pay for something that costs £100 in a shop. If you pay by cash, the value of the transaction to the shop is £100, if you pay by credit card then the value is less to the retailer for the charge for that facility - quick Google search shows:

So, on top of 3.5% as maximum fee, there is also a transaction fee which looks like 2p plus a monthly subscription to each card which adds on top; so let's say the shop gets charged (based on above) £1.57 to £3.52 for the transaction, that means an item retailing for £100 is worth about £96.48.  That means the retailer will take a broad estimate on the bottom line and will have probably charged what should be say £98 as £100 to compensate for the chance someone pays on card than cash.

If you're going to do a comparison between cash and credit card payments, at least do a full and proper comparison.

Consider what actually happens to that £100 cash handed over at the checkout.
- has to be counted at the end of the shift
- cash from all the checkouts has to be collected throughout the day as it builds up
- suitable security measures need to be put in place to handle and store all the cash received
- Secure transport needs to be arranged to move the cash to a bank

Put a cost on all of that and you'll probably find that cash is not as 'valuable' as credit/debit card payments, especially for all the additional time and trouble needed to deal with it.

KxMx

Doc_N said:

Mickey666 said:

Doc_N said:

stig said:

Can ask some of you who won’t pay for delivery, as I’m genuinely baffled.

why do you think that it’s reasonable for you to have your shopping picked, packed and delivered to your home for exactly the same price as those who travel to the supermarket, select their own shopping, pack it up and take it home?

I ask because clearly the supermarkets do charge for delivery, they need to pay for the staff time, vans and drivers out of their sales income.  Nothing a business offers is “free” as ultimately it must be funded  by them and so must come from their customers somehow. What “free delivery” means is these delivery costs are split across all customers in their pricing strategy. A delivery charge means the cost is targeted at the actual users of the service.

im genuinely interested to know why you think this service (which as others have explained saves a great deal of time and effort for you) should be built into the costs borne by all customers? If groceries cost the same in store and delivered, why on earth isn’t it reasonable to pay a small fee to get them to you?

Stig

In a sense, I agree with you.  But Waitrose is a little different in that it's the most expensive supermarket, by quite some margin, and the profit margins it works on are such that it can absorb more easily the extra costs of delivery.  It's quite easy for customers to move to another supermarket to get lower prices which will more than cover the cost of the delivery charge there.

There's also the point that customers who have home delivery don't avail themselves of the very costly facilities which have to be provided for stores - toilets, customer service desks, car parks etc etc. It cuts both ways - you could argue that customers having home deliveries are saving stores money by not using the stores.

. . . only if NO customers used the stores.  What would you imagine the cost difference would be for 100% of customers using a store and 80%, or even 50%?  My bet is that there'd be very little cost saving  at all.  Stores would still have to open, be heated, be lit, have customer toilets, have staff on checkouts and filling shelves etc.

The fact that Waitrose is expensive is irrelevant.  It's obviously not too expensive for its existing customers who presumably choose to shop there for their own good reasons, so I'd be really surprised if they suddenly defected just because of a few pounds delivery charge.  As Stig rightly pointed out, delivery is an additional service and it seems reasonable to charge for it.

And the dark stores that Waitrose already operate, serving only delivery customers? No toilets, no customer service desks, no car parks, very low costs - meaning that the additional costs of delivery are minimal, possibly even negative.

And if you look at many of the home deliveries as additional to store sales (that's to say they wouldn't have taken place at all instore) it changes the economics again. The more home deliveries there are, the smaller the stores and car parks need be, so lower costs.

It's not as simple as you think - it all depends how you do the calculations. It's quite easy to show that there are additional costs in home deliveries, but it's just as easy, using different accounting methods, to show there are savings.

Exactly - I have nearer supermarkets than the one I chose for home delivery ordered online. 
So if there was no or more expensive home delivery my money would not be going to that same supermarket.