Grocery Retail — Last-Mile and Rapid Delivery Chaos in North America
Opinions expressed are solely my own and do not express the views or opinions of my employer or any other institution.
What is last-mile delivery?
Last-mile delivery, also known as last-mile logistics, is the transportation of goods from a distribution hub (warehouse or storage location) to the final delivery destination — the door of the customer.
What is happening in the startup world with over $5 billion in venture funding?
Typically startups are losing $78-$100 per customer to gain traction —
- Offering free groceries, coupons $
- Micro-fulfillment center (dark stores) $
- Deliveries using employees $
- Average order $33 & expenses -
- $22 to wholesaler
- $2 waste
- $X for payment processing, delivery person, packing, $X warehousing, $70 for advertising/offers
Updates — 2022
- FridgeNoMore — shut down, Russian backed, laid off 600 employees 😱 — source: Bloomberg
- GoPuff — acquired liquor stores to grow their rapid delivery business — Bevmo ($350m) & Liquor Barn — source: Techcrunch
- GoPuff — cuts 1500, 10% of global workforces & closes 76 warehouses — source: Bloomberg
Who is able to win in this space?
Due to their existing economies of scale, large retailers are making similar investments in technology to deliver the service offered by the tech startups above. If these incumbent players are able to bring 5x-10x improvements to their current digital experiences then it is possible for them to win as they already have the infrastructure, resources, and talent in place that startups are trying to build —
- Walmart — US & Canada
- Kroger — US
- Whole Foods — US & Canada
- Loblaws — Canada
- Sobeys — Canada
- Metro — Canada
Who is already winning in this space?
- Doordash — some success
- Uber — some success
- Instacart — enough said…. killin’ it … !!!
