This is how messages in a bottle, gorilla glasses and Co. earn their money

Gorillas in the fog: Whether food delivery services in Germany can change food retailing in the long term depends on a number of factors. The business model is difficult and numerous factors of uncertainty remain.

The bottle post delivery service belonging to the Oetker Group has now announced that it intends to deliver food as well as beverages, initially fresh and frozen goods. 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 like good and Gorillas with a delivery promise within ten minutes even further. And then there is that too Amazon delivery service, who recently completed a relaunch in Germany, as well as the Rewe delivery servicewhich, however, 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 home, 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 Venture capital raised in the millions, but do not produce any significant profit. This is not uncommon, it happens more often in e-commerce and delivery services. Compared to Supermarket the ten-minute delivery service collects a delivery fee of 1.80 euros, but of course that can only cover the costs incurred when the workload is high. With prices similar to supermarkets, the whole thing is a mixed calculation – the operator collects the trade margin, as people do not buy in food retailers, but directly from the producer without an intermediary. 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 occupancy in the delivery areas and the differently sized shopping baskets, which, however, mean a natural limitation on the delivery capacity per driver and period. An important asset are the decentralized warehouses of the food delivery services, which are currently already in Berlin, but will soon be driving residents to the barricades in other cities as well. 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 wages are usually around 10.50 euros and pay off for the 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 not very attractive times, that doesn’t seem like much – but of course only economically feasible.

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The signs point to growth at all costs

In order to be able to operate the business successfully, it has to scale – and that means fighting as aggressively as possible for delivery areas and customers, especially in the initial phase – in the truest sense of the word, regardless of losses. Because only if the drivers in the respective delivery area are fully utilized and only if the customers can also be reliably supplied will the bill work for everyone involved and the customers will judge the gorillas positively and order again from them.

That will be an important factor Purpose-Thema be, that is, the image and the perception that services like Flink and above all the gorillas have. Because of that alone, the topic can working conditions and Workers rights the startups don’t care. Bad headlines are not a viable solution in the long run and could stunt 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, after deducting all costs for goods and delivery, only 25 cents are left – provided that 1,100 orders are received per 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 administration, IT and 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 is 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 deliveries within minutes – can only be successful if they keep personnel costs as manageable as possible, utilize the delivery personnel 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 space in retail) and with cooperation partners about loyalty programs and affiliates Marketing. And your own data-driven marketing and warehousing also 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.

So far, the gorillas can be found specifically in large cities – and there above all in the relevant districts where a suitable portfolio of customers can be expected. But that will change. Cities like Augsburg or Heidelberg are already planned for the next openings. And the more markets the grocery suppliers serve, the better the predictions of what will work where and which sales figures can be expected under which circumstances.

Delivery services: The customer benefits from the development

Nevertheless, the success or failure of gorillas, message in a bottle and comparable companies is based primarily on the optimal capacity utilization of the drivers, the logistical availability in the warehouses and the shortest possible routes and the associated low time budget. Already today there is a three-digit number of stores in the cities supplied with the gorillas, by the end of the year there should be 500 internationally. The beneficiary of the battle for cities and market shares is the customer – because in more and more cities outside of the metropolitan regions they receive their goods by express.

The fact that investors are investing in the future on a large scale and are hoping for a return on their investments is also due to that still good market outlook and the expected potential To do: total sales of 200 billion euros in the grocery store are opposed to between four and six billion euros in sales in e-commerce, depending on the reading of what falls under it. Growth is therefore quite likely – even with European labor costs, which are high by international standards, and the low trade margins for food by international standards.

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