Australian instant delivery contender Milkrun has launched a next-day grocery service, joining other similar apps worldwide in the scramble to tack new revenue streams onto their costly business model.
Milkrun, the last startup standing from Australia’s instant delivery boom, debuted the decidedly non-instant Milkrun Market feature on Tuesday, offering users access to more than 10,000 supermarket and specialty items with advance notice.
Unlike traditional delivery options from supermarket giants Coles and Woolworths, which offer next-day drop-offs, or Woolworths’ Metro60 instant delivery partnership with Uber, which offers a limited selection of items for delivery within an hour, Milkrun Market features products from independent market providers scattered across Sydney.
Milkrun Market will allow users to purchase goods from a variety of vendors for delivery in one order, Milkrun founder Dany Milham told users in an email.
“That means you can now do your full weekly shop while supporting local businesses and saving a huge amount of time,” he said.
Milkrun’s existing near-instant delivery services will remain in effect, Milham added.
“Our core MILKRUN business of delivering the freshest groceries and alcohol in minutes will continue to operate as normal, offering you the great value and service you’re used to.”
Milkrun’s diversion into upmarket, next-day deliveries not only cuts across the business of dedicated market delivery services like new player Field Good, it indicates a tactical shift from a business seeking new pathways to profitability.
While pandemic-era restrictions caused a worldwide boom in instant delivery startups, which used ‘dark’ warehouses dotted across metro regions to facilitate near-immediate grocery deliveries, market conditions have soured in 2022.
First, the end of lockdown restrictions made it easier for Australian shoppers to add supermarket trips back into their schedules. Rising interest rates have also spooked investors, making it harder for instant delivery startups to secure new capital as warehouse and labour costs mount.
Although Milkrun raised $75 million in January this year, the startup dropped its 10-minute delivery pledge in June in response to rising cost pressures, according to leaked investor pitch documents obtained by the Nine papers.
Domestic competitors have not fared as well: Voly announced its closure last month, a week after it ceased deliveries and nearly a year after raising $18 million, with co-founder Thibault Henry saying the company had not secured a viable path to profitability.
Send and Quicko faced similar fates, shutting up shop in May and March, respectively.
The macroeconomic forces dimming investor sentiment are present internationally, putting similar pressure on global instant delivery contenders to cut costs, add new income streams, and even consider selling up to bigger competitors.
Turkish competitor Getir last week bought German giant Gorillas for US$1.2 billion (AU$1.75 billion), further consolidating a European market that previously counted as many as a dozen quick commerce players in the middle of 2021.
US-based GoPuff has experimented with new income streams by launching an ads platform, allowing brands to insert marketing material into the app and pay for preferential ranking in search results.
In January, the company debuted Basically, its own private label line of groceries and pantry essentials.
And in an even clearer parallel to Milkrun, GoPuff also launched scheduled deliveries in November, adding old-school functionality onto the blazingly new promise of instant delivery.
Such add-ons could lend new viability to otherwise costly operations.
In July, online grocery consultant Viv Craske observed that private label ranges, partnerships with bigger supermarket retailers, and even spinning off delivery capabilities as “logistics as a service” could provide new revenue streams for struggling instant delivery startups.
Not everything is so certain in the sector, however. Taking to LinkedIn on Wednesday morning, Craske made his thoughts clear: industry players worldwide are now facing a “food delivery apocalypse”, he said.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
