Morrisons may be late to the party but it is planning to make quite an entrance, chief executive Dalton Philips promised yesterday.
The supermarket unveiled plans for its online delivery service to City analysts and journalists in east London and is certainly not making life easy for itself.
As one analyst pointed out, the delivery service's start-up losses don't really bear thinking about with a £216 million 25-year contract signed with Ocado and a brand new hi-tech delivery centre currently sparking into activity somewhere in the Warwickshire countryside (Dordon to be exact).
But Morrisons seems keen to justify its spending beyond the mere desire to catch up with rivals. Tesco controls about 50 per cent of the online delivery market and Asda and Sainsbury's have both said this year they have surpassed the £1 billion online sales figure as demand grows.
But there is no denying that, when it works, Morrisons partner Ocado does a more efficient job than the others. Less clunky, fewer complaints, not reliant on individuals picking food that customers may not actually want because its bruised or out of date.
We'll leave aside, for now, our suspicion that when things go wrong at Ocado they go spectacularly wrong (We have heard of some huge delays historically. Such as, when articulated lorries full of orders get stuck in traffic on the M25 en route from its main centre in Hatfield to its Wimbledon hub leaving scores of shoppers in South London waiting late into the evening. The model does seem prone to such problems).
So, in order to drive to the heart of customer concerns about online shopping, Morrisons is making some promises. Special packaging to prevent bruising and damage, the 'doorstep check' option to return goods and receive money-off vouchers for the inconvenience, quality ratings on products, steaks cut to the customer's requested thickness, and bread and cakes baked fresh in stores.
Doing this will allow Morrisons to sell a broader range of more profitable products such as fresh meat, fruit and vegetables rather than just delivering bulky items like cereals and washing powder which are less profitable for delivery.
Philips admitted yesterday he was playing 'catch-up ' but said that he reckons, with Morrisons 'fresh' credentials and Ocado's efficiency, he can make the economics work. He said a third of Morrisons shoppers use online services operated by rivals.
Apart from the very high bar it has set itself, there appear to be some other issues. It is asking customers to spend a minimum of £40 per shop compared to Sainsbury's and Asda at £25 and Tesco which has no limit. It will also initially offer 12,000 products online compared to 20,000 at the other major grocers. We're not sure what products it will exclude or why - perhaps it it operationally related to the gearing up of the new Dordon distribution centre - but that certainly seems to lay it open to disappointing customers from the outset.
The service officially launches in the Midlands on January 10 (Morrisons chief executive has promised to make the first delivery) and then it plans to introduce the service to West Yorkshire in February operating from Ocado's Leeds hub. South Yorkshire and London will follow by summer and it hopes to have 50 per cent coverage across the country by the end of next year.
Morrisons has already promised to reverse its sales decline this Christmas and it hopes that its convenience store and online delivery plan will do the same for its loss in market share next year.
We can't helping thinking Dalton Philips has offered himself as a hostage to fortune with levels of publicity for this venture (not to mention the cost) going stratospheric. But with so much riding on it for both Morrisons and Ocado, it would be good to see it a success and it would certainly shake up a market which still continues to disappoint more than it should.
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