The Citizen (KZN)

Sixty60 is on the up



Pickers busy with orders at Checkers stores indicates that it is profitable.

The Checkers Sixty60 on-demand grocery delivery service continues, with sales up nearly eleven-fold in the latter half of last year versus the last six months of 2020, which is when the service began ramping up.

Sales growth has been moderating. It was up 63% in the last six months of 2023, 87% in 2022 and 250% in 2021. This was predictabl­e as volumes became larger.

The Shoprite Group says the service has created 9 903 new jobs since its launch. Most of these would be drivers (over 5 000), but there will be a significan­t number of in-store pickers in this number.

At the end of 2023, Sixty60 was available at 505 locations. This includes “double counting” as the group counts its supermarke­t and Liquorshop outlets separately. In many markets, these are located alongside one another.

Group CEO Pieter Engelbrech­t says many predicted that sales growth would “fall off a cliff” after Covid. “That didn’t happen at all.”

Sixty60 now offers shoppers 18 000 products with real-time pricing and promotion. It also shows users personalis­ed offers, prompts (suggested products to complement others in the basket) and alternativ­es if items they have selected are out of stock. The group says there are 15 million search queries a week on the app.

The billion-rand question is whether Sixty60 is profitable for the group. As the service scaled, there was speculatio­n in the retail sector that the group pushed its suppliers hard on rebates and subsidies to get it to break even.

Engelbrech­t was surprising­ly frank in its recent interim results presentati­on saying that Sixty60 is “very, very profitable”.

Turns out a R35 delivery fee across hundreds of thousands of orders is profitable. There’s a cost of serving a customer in store (the teller and packer). A picker and driver are a neat substitute.

Far more important to Checkers is the underlying sales growth being driven by Sixty60. Some estimates put its share of on-demand delivery services at about 75%. Pick n Pay (asap!) and Woolworths (Woolies Dash) share the remaining chunk.

Checkers (and Checkers Hyper) grew sales by 13.7% in the final six months of last year, and at R38.5 billion, this is no mean feat.

Sixty60 isn’t the only on-demand service that’s profitable.

Woolworths CEO Roy Bagattini says its Woolies Dash on-demand service “is now profitable on a fully costed basis without any supplier funding”. Dash is live in “750+ areas” and is serviced from around 80 stores.

In the last six months of 2023, the group’s online sales grew by 47% and now comprise 5.1% of sales in its food business in South Africa. That’s about R1 billion in six months. It says this growth has been “supported by [the] increased penetratio­n of Dash”.

That Dash is profitable at a far smaller scale than Checkers Sixty60 tells us a fair amount about the economics of delivery services.

As for Pick n Pay’s asap! we may gain some insight into its contributi­on – or otherwise – at the group’s May results presentati­on.

Because of the far larger issues facing Pick n Pay, there will understand­ably be some reservatio­ns about its profitabil­ity.

 ?? Picture: Supplied ?? SPEEDY DELIVERY. A motorbike driver gets ready to deliver an online order to a customer.
Picture: Supplied SPEEDY DELIVERY. A motorbike driver gets ready to deliver an online order to a customer.

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