Deliveroo is Testing Rapid Grocery Delivery in London

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Deliveroo plans to trial its “Deliveroo Hop” rapid grocery service with supermarket chain Waitrose.

Later this month, Waitrose is opening a delivery-only store in Bermondsey, London, which will be the first location that the service is offered from.

For those living around the dark store location, the Hop service will cut delivery times to around 10 minutes — half of the time that traditional Waitrose deliveries take. Waitrose also has an existing partnership with Deliveroo, which allows for food delivery from 150 Waitrose shops across Britain.

Deliveroo has been using grocery delivery to get to the scale to justify its model, PYMNTS reported last month.

On an earnings call, Deliveroo Chief Financial Officer Adam Miller said the company wanted to “give a sense of the relative unit economics on grocery versus restaurant — not quite as good as restaurant economics.”

When discussing the fourth quarter results, Miller said there were “differences” in the commission and higher consumer fees.

“Grocery’s nearly 100% incremental to our restaurant business, so customers that are ordering groceries — they’re doing that on top of their existing restaurant volume, and it also has benefits on the overall density of the network and smoothing out the work for riders across the day,” he said, per the report.

The U.K. grocery market is different than that in the U.S., according to data from PYMNTS’ study, “What U.K. Consumers Expect From Their Grocery Shopping Experiences,” created in collaboration with ACI Worldwide.

The report looked into 2,500 U.K. adults’ grocery experiences, finding that over twice as many British residents buy groceries online when compared to Americans, at 32% and 15%, respectively.

In addition, Deliveroo plans to do more work with ghost kitchens, which it has termed “Editions,” which goes against what some restaurants on the marketplace want. The virtual locations will be a big part of the international expansion efforts in France and Hong Kong, per the report.