Gorillas in the fog: Whether food delivery services The ability to change food retailing in Germany in the long term depends on a large number of factors. The business model is difficult and numerous factors of uncertainty remain.
The one belonging to the Oetker Group Delivery service in a bottle has now announced that it will deliver food, initially fresh and frozen goods, in addition to beverages. An initial pilot project was very promising, so that, after Münster, Düsseldorf and Langenfeld have now also been defined as additional pilot zones. While messages in a bottle advertise delivery times of one to two hours depending on the workload, services such as Flink and Gorillas go much further with a delivery promise within ten minutes. And then there is the Amazon delivery service, which recently relaunched in Germany, and the Rewe delivery service, which is a bit more leisurely and in many places does not manage to cope with the demand for delivery slots. But how sensible and economical is such a revenue model that brings groceries into the house, and how risky is the business for the company if it takes place within minutes or hours?
So far, the initiators of such companies have ventures Capital raised in the millions, but produced no significant profit. This is not uncommon, it happens more often in e-commerce and delivery services. Compared to the supermarket, the ten-minute delivery service collects a delivery fee of 1.80 euros, but of course that can only cover the costs when it is very busy. The whole thing is a mixed calculation at supermarket-like prices – the operator collects the trade margin, because you don’t buy in food retailers, but directly from the producer without intermediaries. But this is known to be low in the price-sensitive food trade.
In addition, there are foods that are no longer for sale for reasons of freshness, different levels of utilization in the delivery areas and the differently sized shopping baskets, which, however, mean a natural restriction on the delivery capacity per driver and period . An important asset are the decentralized warehouses of the grocery delivery services, which are already pushing residents on the barricades in Berlin, but will soon also be in other cities. Because whether the grocery delivery services are allowed and able to operate such a warehouse in the middle of the city in a convenient location varies greatly from region to region.
There are still the delivery drivers, whose hourly wage is usually a minimum of 10.50 euros and it pays off for delivery services especially when the drivers deliver orders at a fast pace. If you take into account that the drivers are on the road even in adverse weather conditions and times that are not very attractive, that does not seem very much – but of course only economically feasible.
The signs point to growth at any price
An important factor will be the purpose issue, i.e. the image and perception that services like Flink and, above all, the gorillas have. For this reason alone, the topic of working conditions and employee rights cannot be indifferent to the startups. Bad headlines are not a sustainable solution in the long run and could inhibit growth.
Internal papers and presentations from the company provide an insight into the calculation – and it is extremely tight: With a fictitious shopping cart of 30 euros, you remain after deduction of all costs for goods and delivery only 25 cents left – provided that 1,100 orders are received each day. If, on the other hand, there are 700 further orders per location, the cover amount is at least 3.59 euros. The running costs for the administration, the IT, the advertising also ensure that the Gorilla company pays off the more it scales.
The average shopping cart value is still around 20 euros and the monthly turnover per customer at 115 euros. Ultimately, according to internal documents, the company hopes for an average turnover per customer of 250 euros and at least half of their entire food budget.
Market power creates a negotiating position
The gorillas – and comparable companies that advertise with deliveries within minutes – can be successful – only be if you keep the personnel costs as manageable as possible, utilize the delivery staff well and grow. The number of products available is currently in the low four-digit range; the average discount grocery store has many times that. And the more sales and market power Gorillas achieves, the easier it becomes to negotiate: with suppliers about prices, with advertising partners about advertising within the app (almost the opposite of the rented shelf meters in retail) and with cooperation partners about loyalty programs and affiliates Marketing. And your own data-driven marketing and warehousing become more accurate, the more customers order there or at least look around the app – learning from Amazon and other big players means learning to win.
Delivery services: The customer benefits from the development
That investors invest in the future on a large scale and on a return flow of their investments hope also has to do with the continued good market outlook and the expected potential: total sales of 200 billion euros in the grocery market are offset by between four and six billion euros in sales in e-commerce, depending on what is included. Growth is therefore quite likely – even with European wage costs, which are high by international standards, and the low trade margins for food by international standards.
