Is grocery delivery a good startup
Current start-up dates
Sticking points: logistics and costs
And that brings us to the next questions and doubts. Even if consumers want to buy groceries online, even if it is just so-called fast-moving consumer goods: The start-ups cannot develop a viable business model from this, says Heinemann: "The online food trade does not pay off." That is why he gives start-ups Advice to "keep your hands off it". After all, the established retailers would also have beads of sweat on their foreheads. In terms of logistics, no one can compete with Amazon. The retail giant has had its own state-of-the-art logistics for years. The company can therefore deliver better, faster and, above all, cheaper than its competitors. And thus make them look old. Of course, companies are working to keep costs to consumers as low as possible. It's just nearly impossible if you want to make money.
The investments in logistics are high, the delivery costs a lot of money, in contrast to this, the margins in the food retail trade are extremely low. Germany is the country of discounters, more than half of sales are generated in this segment. According to Heinemann, the average shopping cart there is between ten and twelve euros, leaving the retailer with a gross profit of three euros. In order for the delivery to be economically viable, a retailer must set high minimum order quantities and collect high delivery fees. In Switzerland, Coop / Migros is implementing this accordingly: The minimum order value is 200 francs, and delivery is made for a fee of 20 euros. Apart from a few double-income households, nobody in Germany will be willing to accept such conditions. "At five euros shipping costs, it stops with the customer," says Heinemann.
Stumbling block delivery charges
Delivery charges. A tiresome subject. Victoria Doll has to admit that too. Since April of this year she has been delivering salads and other healthy food with her Berlin start-up Doll’s Kitchen. Their main product, the lunch box with three different salads, is available for 6.50 euros and does not charge any delivery charges. After a few months on the market, Doll registered satisfactory demand. It is already clear to the young entrepreneur that she will not be able to keep the low price in the long term. In order for something to get stuck, she will have to charge delivery fees at some point. The only question is whether customers will accept that. “Most of them don't accept it,” says Thomas Goßmann. And he knows what he's talking about.
The Munich based Clever Food founded two years ago. The Munich delivery service offered 27 different dishes, from crunchy salads to rice curries. No later than an hour after the order was placed, the messenger with the box rang at the door of the hungry. With the idea of a healthy delivery service, Clever Food was able to quickly win customers, and sales are developing well. Goßmann therefore had expansion plans and was considering opening further branches in Munich in order to increase the delivery radius. Goßmann buried the plans.
“Our delivery service had great reviews,” says the 29-year-old. “But it didn't count.” The “cost apparatus” was plentiful - “the cars, the gasoline, the wages for the drivers.” But the company was unable to pass the costs on to the customers. "The end customer wants to be supplied quickly, but is not prepared to pay for it properly," says the entrepreneur. The people are spoiled - by the offers of the big players like Lieferando and Co. "The big delivery services dump their prices," he says. They attracted customers with high discounts. In plain language: The players with millions of pounds and with exorbitant marketing budgets dictate the conditions to everyone else. And hope that they won't survive that long.
There is great skepticism
But these are not the founders' only problems. There are a few other open questions, such as the closed cold chain. “What happens to the box of milk and cheese when the customer is not at home but the temperature outside is 30 degrees?” Asks Ziemßen. In addition, trust plays a major role in food. But consumers tend to trust the long-established grocery retailers rather than a start-up. "Pure online retailers can win a maximum of 20 billion euros for themselves," says the EY study. Stationary retail is likely to benefit significantly more, according to the study.
So things are not looking as good in the delivery market as some investors and founders would like. Many young entrepreneurs are already rethinking. They fine-tune their concepts until they have worked out a workable model. According to Heinemann, this is most likely one in the niche, a model as far away as possible from the grocery delivery service that offers the range from the supermarket around the corner. Ziemßen believes that a start-up that wants to succeed needs a certain twist.
Alternative models are in demand
One example of this is Clever Food. Goßmann's story does not end after he has stopped delivering individual lunchtime meals. The founder has modified his business model. Clever Food also offered catering right from the start. For a few weeks now, the company has only been offering catering, deliveries are made from an order value of 100 euros. Customers include companies, but also private individuals, for example when they are celebrating a family celebration. The start-up delivers food to an average of 30 people. “This model pays off,” says the Munich-born enthusiast. You can ask for completely different prices for the catering service. In addition, a few euros in fuel costs hardly add to the book when the car is fully loaded.
Mohammed Chahin also had to gain negative experience in the delivery business to realize that it is hardly possible in this segment to exist alongside Lieferheld and Lieferando. “The big ones are fighting a marketing battle, the customers are buying them expensive,” he says. As a newcomer, however, you have no chance. "How are you supposed to make people understand that they should order from us." Chahin has given up his first company. “It didn't work,” he says. But he didn’t give up completely, but thought about what could work. And when you talk to him today, two years later, it becomes clear that he has developed an innovative business concept with great potential: “We're growing by 25 percent a month,” says Chahin.
The secret of the delivery service for healthy fast food founded by Mohammed Chahin, Robin Himmels and Marco Langhoff: Eatclever does not deliver the dishes itself. “That would be the more expensive model,” says Chahin. They leave the delivery to the restaurants they cooperate with. “At least 90 percent of the restaurants are underutilized,” says Chahin, explaining his concept. "Since they still have to pay the rent and the staff, they are happy about additional orders." Eatclever generates exactly that. The founders have developed around 30 healthy dishes and taught them to the chefs of the cooperating restaurants. If a customer orders a dish from the Hamburg start-up, the order is sent to the on-site restaurant, which freshly prepares the menu and delivers it after an hour at the latest. Two years after its launch, Eatclever is represented in 13 German cities. It employs eleven people and, according to Chahin, is on the verge of becoming profitable. Further expansion is planned.
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