The new shopping culture
Super speedy grocery deliveries took the lockdown world by storm. In February 2020, the share of online food shopping was just 5.4% in the UK: by the same period in 2021, it had grown to 14.7%. Not only has online shopping increased for consumers’ weekly shops, but small top-up shops and single items can now be bought and delivered with ease in urban centres.
Supermarkets have started offering new speedy delivery services, such as Ocado Zoom and Sainsbury’s Chop Chop. Autonomous deliveries have made their mark too, with Serve Robotics deploying self-driving robots that carry deliveries to their customers. Meanwhile, apps that provide rapid, small-batch grocery deliveries, such as Getir, Gorillas, Zapp, Yango, Dija and Deliveroo are becoming more and more popular.
The psychology of rapid delivery
Phillip Adcock, a consumer behaviour specialist, spoke about the psychology of these new shopping apps in the context of the pandemic:
“Loss aversion” is one of “over 100 cognitive biases in the brain” and one of the “biggest drivers of human behaviour. In our heads, losses hurt twice as much as gains. If I go and buy a few things in Waitrose I gain a nice experience, because we are a species that needs social interaction and during lockdown lots of people are going shopping just for something to do. But the new loss on the block is the potential loss of my health or life.
Coronavirus has caused this gain to become completely worthless. Loss aversion is behind all this, because people are now thinking ‘I’m going to get stuff delivered, because it’s safer’. The same loss aversion logic applies, would you pay three quid to stay safe? In the days before COVID you could go to any supermarket and get deals here and there. We don’t want that now. My life is worth more than three quid.”
The way we perceive price influences our willingness to purchase beyond simply the total amount. By separating the price of delivery from the price of the product, more consumers are willing to pay the extra money, according to Mr Adcock.
“If I said to you a bag of sugar is a fiver, you might say p*** off, excuse my language. Fair enough. But if it’s split into lots of little bits, psychologically that reduces the pain of paying.
“Say instead I said a bag of sugar is £2.99. Then there’s a 10p packing fee, £1.50 for delivery and a 40p service charge. You’d say, ‘That’s fine’. Split it up and you still end up with two quid more, but people don’t feel the pain psychologically. If you put it all in a single price, people would get cross.”
Sending a stranger across a city to bring you a pint of milk feels ridiculous on many levels. Equally, having a delivery truck turn up to drop off a top-up shop would turn your average Brit red with embarrassment. Rapid delivery services have attempted to overcome this psychological barrier that is present in so many consumers. As Mr Adcock puts it:
“People have top-up needs, but psychologically you get people feeling guilty and almost feel like they have to buy a lot to justify getting a big supermarket van to trundle along. So the whole Deliveroo thing allows you to do a top-up shop without the guilt, or the fear of ‘I don’t think I’m buying enough, I’m wasting their time’. In fact they think ‘I’m allowed to buy just a little bit using this app’. So they feel they are being given permission, because the apps are saying: ’Just order a McDonalds or a bottle of wine, we will deliver it’”.
Loyalty and data
Despite a boom in rapid deliveries, these business models have not yet proven to be profitable. Deliveroo, for instance, posted a pre-tax loss of £105m in the first half of 2021, despite a boom in sales of 82%. In the face of high costs, customer loyalty will be key to sustaining these businesses, which is mainly secured by data.
The more that these apps pick up on consumer habits and tastes, the more tailored they will become to individual consumers. If you have fish and chips every Friday, or pizza on a Sunday, or always want a Fanta when you’re hungover, this data is saved; the app gets to know you. Moving from in-store shopping to online shopping creates a whole new host of data for these companies to capitalise on. It just depends on how much information consumers are willing to hand over in exchange for convenience.