Coles is teaming up with Uber for home delivery

Photo: Quinn Rooney/ Getty Images.

Faced with the arrival of one American tech giant, Coles is looking for help from another.

Australia’s second largest supermarket has quietly started a home delivery trial with the hi-tech taxi service Uber, as it and other retailers try to beef up their online offerings before ecommerce juggernaut Amazon opens its first local distribution centre sometime next year.

Uber is best know for its “ride-sharing” app which operates as an alternative to taxis, and more recently has launched its UberEATS service in Australia, which lets restaurants tap into a fleet of drivers for home deliveries.

Under the Coles trial, which started in early August and will run until September out of Coles’ online only “dark store” in Richmond South, Coles is using Uber drivers to augment its own network of delivery vans to make same-day deliveries of items that were missing from online orders or which need to be replaced.

The two companies were giving away few details about what they hoped the trail would achieve, with a Coles spokesman stressing that it was “short and limited”.

An Uber spokesperson said there were “no current plans for a broader roll-out or extension of the trial”.

Uber is operating the service under its UberRUSH brand, a courier and delivery service it runs in several US cities that has been touted as a solution to the “last mile problem” facing online retailers and logistics companies.

Australia’s online grocery market is worth $2.7 billion a year, according to IBISWorld, but some market analysts have suggest it has failed to take off here because our low population density and high wages make cost-effective delivery challenging.

Photo: David Ramos/ Getty Images.

Danny Samson, Professor of Management at the University of Melbourne, said companies around the world were looking for ways to overcome the fact that the “last mile” a products travels to a customers’ house was often the most expensive and least efficient leg in the online supply chain.

“Coles has been doing it themselves with their own trucks and I suggest that they might be able achieve what they want at a lower cost with existing Uber infrastructure – which is just a bunch of drivers driving their own cars – instead of Coles having its own dedicated fleet of vans,” Professor Samson said.

UberRUSH is running delivery trails with several major American retailers, including Walmart, Nordstorm, T-Mobile, CVS pharmacies and 1800flowers, and has teamed up with logistics companies including SAP and Trade Global.

Coles has previously said it was preparing to do battle with American ecommerce giant Amazon, which is building a distribution centre in Melbourne’s southeast and is expected to start trading some time next year.

Richard Goyder, managing director of Coles’ conglomerate owner Wesfarmers, has said the supermarket needed to have “lower distribution costs than anyone” and that Amazon would “eat all our breakfasts, lunches and dinners” if local retailers did not become more innovative.

It is not known exactly what Amazon’s local offering will look like but it could include its grocery service Amazon Fresh, and the company has signalled its intention to become a bigger player in the supermarket space with its $18 billion aquisition of Whole Foods.

While Coles doesn’t reveal its online revenue some analysts have predicted it makes up about 2 per cent of all sales, and the supermarket said earlier this month that it had “double-digit” online transaction growth in 2017.

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This article was originally published on the Sydney Morning Herald’s Business Day. Read the original here, or follow Business Day on Facebook.

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