Is Online Grocery Delivery Worth the Cost?

Is Grocery Delivery Worth the Cost?

Online delivery is certainly convenient, especially for busy households and people who have difficulty leaving the house. However, those not meeting the minimum order values for free delivery will end up paying up to £7, or more in some circumstances, to have their groceries delivered to their door. Is it worth spending an extra few quid on your weekly shop to have your groceries delivered?

We think grocery delivery can offer great value to the average consumer due to the amount of time they save. To quantify this, we compared grocery delivery costs to the value of an hour of a shopper's time, which we estimated using income and work data from the Office of National Statistics (ONS).

According to the most recent data available, we calculated the value of an hour of time to be £15.18. First, we divided the total gross household disposable income (GDHI) in the UK (£1,275,698 million) by the number of people aged 20 or older (50.5 million) to get an estimate for the GDHI per adult of £25,254. GDHI represents after-tax income per year—the amount of money available to spend on living expenses, saving, etc. Dividing the GDHI per adult by the average number of hours worked gave an estimate of the value of an hour of time: £15.18. Even if grocery shopping takes you less than an hour, many delivery services offer good value for your time.

Another way to consider the value of grocery delivery is to compare the cost of an annual delivery pass to the amount we spend on groceries each year. Does the delivery pass add considerably to the amount spent on groceries? We found that the average household spends £3,150 on groceries each year. Compared to this, buying an annual delivery pass for under £100 adds anywhere from 0.8% up to 3.2% to the average household's shopping budget, depending on the provider and the type of delivery pass (i.e., anytime or midweek deliveries only).

Those able to work with midweek deliveries can reduce the cost of an annual delivery pass by around 50% compared to an anytime pass. Midweek passes add 0.8% up to 2.2% to the average household shopping budget, depending on which company you choose. Depending on where you shop, you may be able to partially offset the cost of a delivery pass by signing up to a grocery credit card, which can earn you around 1% to 2% cash back on your food shopping.

How to Get Free Online Grocery Delivery

Shoppers can get free grocery delivery for one-off online orders from Iceland, M&S, Waitrose, Ocado and Sainsbury's by spending enough money—making grocery delivery an economical choice for families and people with big grocery bills. In the chart below we show the minimum order size for free delivery.

In some cases, free delivery gives you less choice of delivery day/time. For example, you can get free delivery from M&S for orders over £50, but delivery takes 3 - 5 working days and you can't choose your day or time slot. Free deliveries from Waitrose and Ocado can be booked in any available one-hour time slot. Sainsbury's free deliveries are limited to those arriving Monday to Thursday after 2pm.

Comparing Online Grocery Delivery Fees

We've gathered pricing for the top online grocery delivery services to see how they compare. Most services offer one-off delivery for a fee as well as delivery passes that operate like a membership, giving you deliveries for a recurring (e.g., monthly) or annual charge. For those who would rather not commit to a delivery pass, one-off delivery charges and minimum order requirements are compared in the table below.

Those looking to buy a delivery pass will pay anywhere from £24/year up to £109.99/year depending on the company, the type of plan (e.g., anytime vs. midweek only deliveries) and how frequently you opt to pay. The cheapest any day, anytime delivery pass is offered by Asda. Asda's Anytime 12 Month Pass requires a minimum £40 order for delivery, provides 2-hour delivery slots and will cost you £55 per year when you pay annually—the equivalent of £1.06 per delivery if you order once a week or 53p if you order twice a week.

Not for Everyone

While grocery delivery can help people save time and compare prices to find good deals, grocery delivery doesn't suit everyone. For example, those living close to a local shop might find it more convenient to quickly pop in for groceries on their own time. Or those who prefer to choose their own produce or be inspired while walking down aisles may also like to do their own shopping. Finally, those living alone and on a tight budget may find they don't spend enough on each shop to justify the costs of grocery delivery, or may not meet the minimum order requirements from their preferred grocer.

However, taking into account the value and convenience offered by grocery delivery services, we're not surprised to hear that online shopping is predicted to be the fastest growing grocery channel in the UK between 2018 and 2023.

Here are the grocery delivery services analysed as part of this article: