“Discount will dominate the field”
Aldi delivers to your home in three cities
By Christina Lohner
08/29/2023, 2:09 p.m
Aldi Süd is the first discounter to test its own online grocery store. So far it has not been possible to make money with it. Trade expert Rüschen trusts the discounter to be the market leader.
Although the online grocery trade is far from profitable, Aldi Süd goes under the delivery services. Customers in three cities in the Ruhr area can now order from the discounter and have groceries delivered to their homes. According to the “Handelsblatt”, the range includes 1300 products, delivered by electric vehicle. Grocery retail expert Stephan Rüschen thinks the latter is a good idea, the former a bad one, as he explains in an interview with ntv.de.
“Electric vehicles make the delivery service more likeable,” says the professor for food trade at the Baden-Württemberg Cooperative State University. “However, the fact that only some of the 2,500 items in the store are available online, especially non-food items such as textiles, makes it complicated for customers.” And that, although Aldi’s concept is actually “simple”. Nevertheless, Rüschen trusts the discounter, the online grocery store in Germany in the future – if the current test phase proves to be successful.
The test among employees around the company headquarters in Mühlheim an der Ruhr was apparently very promising. There, as well as in Duisburg and Oberhausen, all customers can now order online. In the medium term, it should also be possible to pick up the order in the supermarket. Because the crux of the matter is what delivery fees the customers are willing to pay – without the offer will hardly be worthwhile, at most over a high minimum order value. Delivery is currently free from 50 euros, the minimum order value is 20 euros.
Discounter could gain market share
According to Rüschen’s calculations, delivery should only be free from 100 euros. In order for the business to make a profit, customers would also have to order for an average of 80 to 100 euros – difficult with a range of 1,300 products, plus discount items. However, the expert thinks it is correct that these cost the same online.
Earning money in online trading will also be difficult for Aldi. On the other hand, the discounter can still increase its market share in the food trade with the delivery service, as other cases have shown according to Rüschen – sales are not only shifted from the branches to the Internet, but also generated. Especially if Aldi becomes the first discounter with its own delivery service. The test phase will now show whether the business is worth it in the end.
“Aldi can now try that without much risk,” says Rüschen. The expert believes that a profitable business is possible if the discounter expands its online range to include non-food products. “Then the orders would quickly reach high purchase values.” On the other hand, Aldi could fear that customer frequency in the branches would drop too much.
Possible competitor would be Lidl
When it comes to delivery, “Mein Aldi” is based on the Dutch startup Picnic, which is delivering to more and more German cities. “Like the milkman back then,” the suppliers of the online supermarket, which cooperates with Edeka, drive fixed routes. This means that customers are not free to choose the delivery time like with other providers, but Picnic can plan the routes so efficiently that, according to the company, it is worth it – the delivery is free. However, Rüschen emphasizes that Picnic is still making losses in the hundreds of millions.
Despite the lack of profitability, according to information from the “Handelsblatt”, Aldi’s top management believes that they can’t wait any longer. In view of the changing customer expectations, the company must be prepared for future developments, an insider is quoted as saying. At least in the south – Aldi Nord was too hesitant for the sister on the subject.
A possible competitor would be Lidl, the discounter is also experimenting abroad, as is its sister company Kaufland, which discontinued its own service in Berlin years ago after a short time. Aldi has also been rehearsing in other countries for some time, for example in Switzerland or Great Britain. In the USA, the discounter works with delivery startups on its online shop.
Nationwide offer in conurbations conceivable
According to the company, the offer should not be available nationwide in Germany, Aldi itself refers to the lack of profitability. Especially in rural areas, the business is not worth it at all. However, Rüschen can imagine a nationwide expansion to the metropolitan areas, which would mean that around half of the population could use the delivery service. So far, according to Rüschen, the online business in the food trade has had a three percent share of sales, by 2030 the expert expects ten percent, i.e. a significant part. “For many, delivery services will be part of everyday life.”
Aldi could then be the market leader. Amazon Fresh was not able to establish itself on the market. At the start-up Flaschenpost, which was led by Dr. Oetker was swallowed has ruffles still doubts. “Rewe’s delivery service and picnic are set,” says the expert. “But the discounter will also serve the field – and then dominate it,” predicts Rüschen. “Whether Aldi or Lidl.” Lidl should take a close look at whether Aldi manages to make money with it. “The discounter has its chance. And when it does something, it’s usually very, very consistent.”