Charging for picking. New entrants dare
Betting on e-commerce is fine, but at what price? For many retailers, answers are not easy. Whist Covid-19 restrictions boosted hypermarkets’ sales, many retailers replaced profitable turnover by unprofitable business. Players like Aldi and Costco are expanding their digital offerings, but in their own colors. In the U.K., Scotland and Ireland, Aldi (operated by Aldi Süd) is offering a new click & collect service.
At the end of January 2021, 200 stores were fitted out with a paid “drive-through” service. Orders are collected by customers at Aldi’s stores. The service costs £4.99 (€5.7) in the U.K. and €4.99 in Ireland. Customers order on the Groceries.aldi.co.uk website. When they arrive at their Aldi store at a reserved time, they send an SMS to alert sales staff to delivery items to a car. Aldi created a new website dedicated to this “drive-through” service, which offers almost all of the 1,800 items in a store. Aldi aims to use e-commerce as a major recruitment tool. “By extending this test to hundreds of shops, we are making Aldi accessible to thousands of potential customers who may never have visited our shops before,” said Giles Hurley, President of Aldi UK and Ireland.
In the wholesale industry, e-commerce highlights other strategic choices. In the financial year ending August 2020, e-commerce generated only 7% of Costco‘s turnover (which totaled US$163 billion, a rise of 9.3%) but grew by 50% year-on-year. At Costco Wholesale, membership tariffs depend on the business model. In the U.K., fees start at £15 for the “online only” subscription. In France, where no online shopping is available yet, the annual fee is of €36 for individuals and companies. Globally, the 105,500 members generated US$3.4 billion in subscription revenues last year, with 88% renewing worldwide. At Costco, the product mix is firstly non-food (household appliances, furniture) and secondly food, earing 38% of sales. This gives Costco a unique positioning that is not easily duplicated by an online platform. Walmart, Carrefour and Amazon are not competitive in these two merged categories.