Coles expands partnership with startup Deliveroo, as Australia prepares for a grocery delivery boom

Australia’s supermarket sector is gearing up to take on grocery delivery in a big way, with those in the space saying Coles’ expansion of its partnership with food delivery startup Deliveroo is just a sign of things to come.

Fairfax reports the supermarket giant has been in partnership with Deliveroo since the beginning of the year, running a service delivering food packs of entertainment items and barbeque selections. However, the partnership has reportedly now expanded into general groceries.

This includes milk, bread, cheese, and general fruits and vegetables, all offered by Coles as 30-minute home deliveries facilitated by the Deliveroo rider network, reports Fairfax.

Speaking to SmartCompany, Morgan Ranieri, co-founder of grocery delivery startup YourGrocer, says the partnerships instigated in the delivery space over the past 12 months are just “scratching the surface” of what’s to come.

“Grocery delivery is quite tough, especially for fresh food. It’s a lot more challenging than delivering a box of iPhone cases – there are a lot of nuances involved with the delivery system,” he says.

“But we’re starting to see companies like Uber and Deliveroo – along with a number of small courier companies – make it possible.”

Deliveroo is not the first of the gig economy startups the grocery giant has partnered with, with Coles enlisting ridesharing company Uber to help out with home deliveries out of the company’s “dark” store in Richmond.

However, the Uber partnership is of a different nature to the Deliveroo partnership, with the Uber deal designed to focus more on get items to customers if they are missing from initial orders.

“They’ll send the Uber driver to drop off the milk, and while it’s expensive, they’re less likely to lose a customer,” Ranieri says.

Grocery delivery to boom over next five years

Looking five years down the track, Ranieri believes players like Coles and Woolworths will have access to a huge range of delivery services that will “enable convenience in a way never seen before”.

“Convenience is going to be a commodity, and any business will be able to plug into something like UberRUSH or any other company offering the services and deliver their items,” he says.

“Delivering through one big homogenous fleet will become less common, but it’s still hard to envisage a company relying entirely on outsourced offerings. There are too many moving parts.

“That being said, anyone who said anything like that ten years ago was probably wrong.”

Ranieri says he’s seen Australia’s online grocery sector grow “incredibly fast” since starting YourGrocer in 2013, but believes the country is still five years behind other parts of the world, such as the UK.

Speaking to SmartCompany about the general growth in partnerships with on-demand economy businesses, Deliveroo Australia country manager Levi Aron said “it’s only natural that we draw attention from the bigger end of town”.

“Our creativity and agility means we can be great partners to bring new food delivery ideas to life,” Aron said.

“We’re on the forefront of intuitive technology, and they can leverage that to test concepts they may not be able to facilitate on their own, just like our restaurant partners do.”

At the time of Coles’ partnership with Uber, retail expert and Queensland’s University of Technology lecturer Gary Mortimer said Australian supermarkets were moving away from price wars and into “delivery wars”, and Ranieri agrees.

“When people are buying online, they’re thinking more about convenience rather than price, so it’s not a race to the bottom for online grocery,” he says.

SmartCompany contacted Coles but the company had nothing further to add.

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