Big brands onboard with cheaper groceries service
A new online service, developed by INS, founders of Instamart, could cut the cost of groceries by as much as 30%. It is set to pilot in 2018 and has signed up such major suppliers as Unilever, Mars and Reckitt Benckiser, bringing into play household favourites like Weetabix, Walls ice cream, Dettol and Dolmio sauces.
Whereas supermarkets negotiate the price of goods with manufacturers, the service will let brands decide their own prices. Grocery retailers mark up manufacturer prices by at least 30-50%, claims INS, adding that they stock items that maximise profit, not those that consumers want, whilst manufacturers are forced to optimise for retail supply chain, not quality.
To address this, the initiative is building a decentralised shopping ecosystem based on blockchain technology, which will directly connect consumers and manufacturers. So, should Tesco et al be worried? “This new platform has essentially been developed to attempt to bypass the retailer, to provide a direct to shopper proposition, with the assumed cost reduction benefits that would bring,” says David Buckingham, CEO at Ecrebo. “While this may appeal to shoppers, it will not bring the downfall of supermarkets. However, if successful, it may mean that retailers will need to try that much harder to compete and keep their customers loyal. Creative pricing strategies will certainly play a role here, but more so, the idea of personalisation will perhaps be the deciding factor.”
Further details on the new service here.