Speaking of delivery radius: The latest delivery services such as Gorillas and Flink promise food delivery within ten minutes – but only in selected parts of the city.
This is the third wave of delivery services and not necessarily our core business, just a potential market expansion. It can make sense at certain points. In some countries we already cooperate with supermarkets; in Canada, for example, we deliver for the supermarket chain 7-Eleven. Interestingly, we see that most food orders come in shortly after the food order peak. So people order drinks and snacks again after the main meal.
So a logical and worthwhile business expansion?
I wouldn’t rule it out, but it’s currently not a priority for us as the potential in our core business is still enormous. The question is also: How can groceries be more profitable than delivering a pizza with its high gross profit margin of up to 80 percent? Food has significantly lower margins. I doubt this will work profitably – at least not the way it is currently being done.
Why are you so sure about that?
The average shopping carts are similar to ours, as are the costs for drivers. If the workload is optimal, the drivers will only make two to three trips per hour. The delivery only takes ten minutes, but there is also the time at the customer and you have to go back to the warehouse after each delivery. So a driver should be busy with an order for around 20 minutes and then potentially wait for his next order. And if in doubt, the margin should be below 30 percent. It could work if delivery charges or product prices were raised to cover costs – but more consumers would then be able to pick up such small orders in the supermarket. Alternatively, orders can be pooled, i.e. delivered in bundles. But then delivery times get longer and you need larger vehicles.
If, as you yourself say, the market is overheating, what will the market look like after the bubble has burst?
The stock markets are at an all-time high. There is a lot of money in the market, and not just in our industry. But at some point the money will become scarcer again. At the latest then the question of which business model can really earn money comes to the fore. This question is currently of secondary importance.
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