Can Woolworths (ASX:WOW) win its delivery battle against Coles?

The pricing war has just heated up…

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Coles Woolworths supermarket warA man and a woman line up to race through a supermaket, indicating rivalry between the mangorsupermarket shares

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The Woolworths Group Ltd (ASX: WOW) share price could be a winner as a result of COVID-19. The company’s flourishing online shopping service has been a massive hit with consumers opting for convenience. However, a pricing war with Coles Group Ltd (ASX: COL) looks to intensify as the supermarket giant looks to win market share.

At Monday’s closing bell, Woolworths shares ended the day down 0.33% to $39.50.

Woolworths cuts delivery costs

In a bid to entice consumers in the online shopping scene, Woolworths revealed that it is reducing the delivery fees.

For all orders $50 and over, customers who are signed up to the company’s subscription service will receive free deliveries. Normally, this fee charges up to $15 per delivery depending on the shorter same-day or next-day delivery options.

Woolworths is seeking to retain customers but also bring new shoppers by offering a free 30-day trial of Delivery Unlimited. The service costs $119 for an annual subscription, which is 34% lower than previously advertised. Customers pay month-to-month and can cancel anytime.

In addition, using Delivery Unlimited will collect double everyday reward points with every online shop. These points can be redeemed for credit to use on Woolworths products or converted into Qantas frequent flyer points.

On the other hand, Coles offers a free delivery service on purchases of $250 or more. Although, between Tuesday and Thursday, delivery costs can be as little as $2 depending on spend amount.

Both Woolworths and Coles are fighting for market share as the demand of ‘click and collect’ means significant e-commerce sales. Shopping habits have completely changed as a result of the pandemic.

Woolworths share price summary

It’s been a fantastic year for Woolworths shareholders, with the company’s shares accelerating to new all-time highs. Over the past 12 months, Woolworths shares have pushed 15% higher, mostly coming from year-to-date gains, up 14%.

On valuation grounds, Woolworths commands a market capitalisation of roughly $47.87 billion, with approximately 1.2 billion shares on its books.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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