News & Analysis

Obviously the grocery sector is the cool place to be right now

- February 2, 2015 2 MIN READ

Last week I wrote about two new startups which allow users to buy groceries online and have them delivered in just two hours by a personal shopper. The Australian grocery space is evidently the cool place to be, because online retailer Kogan has now launched a grocery division called Kogan Pantry.

The new online store is selling almost 600 non-perishable items like cleaning products and packaged foods at discounted prices, which the company says they have made possible through “smart sourcing and efficient online retailing.” Each delivery is capped at $9.99.

“Kogan is famous for quality products at massive discounts and our aim is to bring those same savings to a core range of everyday household items and non-perishable groceries,” says David Shafer, executive director of kogan.com.

“We are bringing our years of experience in online shopping to grocery and pantry items, delivering Australians amazing prices well below average retail prices…for far too long Australia has had to put up with a supermarket duopoly.”

Of course, the online retailer will be facing a lot of competition both online and off.

As we all know, the Australian grocery market is incredibly difficult to break into thanks to the dominance of the two main players. The Coles vs Woolworths supermarket wars have been well documented over the years, with the duopoly the two hold in the market leading to a surge in prices that no other competitor has truly been able to combat. Partnerships with fuel companies, rewards cards, and new products like car and home insurance have only helped foster brand loyalty for the two among consumers.

Relatively new player Aldi has been working steadily to unseat the big two. Since first launching in Australia in 2001, the German supermarket chain has been clawing its way up the ladder to join the big guys through the use of small or unknown brands. It now has 300 stores on the east coast and is planning expansion into Western Australia and South Australia over the next few years.

While the number of bricks and mortar grocery stores continues to increase, so does each chain’s spending on its online shopping services as they acknowledge that consumers like the ease and convenience of buying online. In other words, Kogan Pantry has its work cut out for it.

As well as Coles, Woolies, and Aldi, Kogan Pantry also faces competition from smaller online grocery retailers and services. Startups like YourFork and ShopWings, which I wrote about last week, are trying to get consumers on board through quick delivery from the major supermarkets. Perhaps a more direct competitor to Kogan Pantry is Grocery Run, which also offers big savings on big brands and boasts 1.4 million members to boot.

Despite the competition, Kogan Pantry could make a mark. Having launched in 2006, Kogan is now an established name in the online retail space and consumers trust the store when it comes to electronics, so there’s no reason why the site’s subscribers – or even just users who have bought from Kogan once or twice before and know the name – wouldn’t try shopping for groceries from Kogan Pantry when they hear of it. After all, one quick scroll through the site shows there are definitely savings to be found.