When it comes to on-demand grocery delivery, there's one clear leader

By Simon Anderssen, head of 22seven Insights

In a recent?article, we revealed how online juggernaut Takealot has changed the game when it comes to mass-market retail in South Africa. A similar story is playing out in the grocery space, where on-demand delivery services continue to grow in popularity.

Before Covid, we would have thought it ludicrous to order a bag of groceries to be delivered by motorbike, but now we do it without a second thought. In the last three months of 2021, on-demand delivery services accounted for more than 6% of all 22seven user spending at South Africa’s major supermarkets. (Spar is the notable exception. At the time of writing, they did not offer a delivery service, although there are?plans?to launch one.)??

There are three main players when it comes to grocery delivery: Checkers Sixty60, Woolies Dash and PnP asap! In the final quarter of 2021, 19% of shoppers enlisted the service of one of these at least once, and a fifth of those who used grocery delivery services used them more than 10 times in the same period. The median transaction value for an on-demand order across all services in 4Q21 was R484.

Checkers is king

Checkers’ delivery service, Sixty60, was the first to gain significant market share thanks to the exemplary timing of its launch, right at the beginning of South Africa’s successive lockdowns. Significantly, it has held onto that market share and even grown its slice, thanks to many factors including superior brand awareness, the efficiency of its app and the areas it services.?

So dominant is Sixty60 that it made up 75% of all on-demand grocery delivery spend in the final quarter of 2021.

How much do shoppers spend?

Sixty60 might dominate overall spend, but Checkers lags behind Woolworths by a fair margin when it comes to the median transaction value for an on-demand order. Maybe this is to be expected, considering Woolworths’ premium pricing, and one should rather compare Sixty60 to asap!, which targets similar income groups. In this regard, Sixty60 is ahead of PnP asap! by more than R40 when it comes to median transaction value.?

What about tips?

As on-demand shopping has surged, so has the food courier industry. Delivery bikes zoom all over the streets of South Africa’s cities, getting your order to your front door.

So, how much do shoppers tip these riders? Our data shows that roughly half (45%) of the people who use delivery services tip their couriers, and those who do tip an average of R10-14.

What's next for on-demand delivery services?

Insights’ unique data provides a rare view into the actual purchasing behaviour of a large group of real consumers in South Africa, in real time. This data is particularly relevant when tracking trends in online and digital services. We will continue to follow the money as new delivery services become more established.?

Get in touch and find out how we’re using data to help our partners evaluate the profitability of these new services. Want to understand your customers better? We can help with that, too.?

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22seven?is a safe and secure digital service that allows you to see all your money in one place and get a personalised budget, automatically. Our goal is to help South Africans take control of their finances.