Deliveroo is taking its first step into “rapid” grocery deliveries, opening its own “dark store” in London in partnership with supermarket chain Wm Morrison.
The new service, called Deliveroo Hop, will be available to residents in and around Vauxhall and Battersea in South-West London within 10 to 15 minutes.
It will compete with the new breed of grocery delivery start-ups including Getir, Gorillas and Zapp, which have proliferated across the UK this year after raising hundreds of millions of dollars in venture capital.
“Deliveroo Hop will enhance our on-demand grocery offering for both consumers and our grocery partners,” said Will Shu, Deliveroo chief executive.
Grocery and supermarket deliveries are becoming increasingly important to Deliveroo, making up 7 per cent of customers’ total spending in the first half of 2021, up from 5 per cent a year earlier.
It delivers from 4,600 supermarkets and convenience stores across the UK, including Waitrose, Sainsbury’s and Aldi, in addition to hundreds more in France, Italy and Hong Kong.
Shu hopes to expand the Hop service to more locations soon, potentially working with other supermarket partners as it does so.
“There is an ambition to grow this model quickly,” said James Badger, Morrison’s online and wholesale director. “Society is moving in many ways to instant gratification . . . We want to make our Morrisons product available to as many customers as possible.”
Morrisons also works with Amazon on its Fresh grocery service, as well as offering its own online service, which delivers from its own supermarkets and Ocado’s facility in Erith, south-east London.
Morrisons and Deliveroo first began working together early in the UK’s pandemic lockdowns last year. This year they have more than doubled their footprint to 327 Morrisons supermarkets across the country.
Unlike that partnership, where Deliveroo’s couriers pick from the same Morrisons stores used by traditional customers, Hop’s dedicated warehouse will give the companies greater visibility into stock levels. Shu hopes that will make for a more reliable service for consumers, resulting in fewer missed or substituted items in each delivery, as well as arriving faster than its current 20-30 minute service.
Hop will also mark Deliveroo’s first move into becoming a retailer itself, with Morrisons acting as wholesaler and Deliveroo setting customer pricing. In their existing supermarket-delivery partnership, Morrisons pays Deliveroo a commission for delivery.
But Hop is not Deliveroo’s first move into physical infrastructure to facilitate its services. The company has invested for several years in its Editions network of “dark kitchens”, dedicated facilities preparing takeaway meals only for delivery. It operates more than 250 Editions kitchens globally.
The London-based company’s existing fleet of couriers will pick up Hop orders from the Vauxhall warehouse, continuing its gig-worker model, in contrast to instant grocery apps such as Gorillas and Zapp which typically employ their delivery staff.
Deliveroo has been able to step up its investment in new products and services since March’s initial public offering, which raised gross proceeds for the company of about £1bn, after being capital constrained for much of 2020, as competition regulators delayed funding from Amazon.
Last month, Deliveroo launched on-demand deliveries from Boots, the pharmacy chain, in its first big push beyond food and drink into other retail categories.