I was listening to the CEO of Buncha on a podcast recently.
Who made three relevant observations about grocery delivery (my interpretations/summary)
- It has to be affordable to the masses (delivery fee can’t be 20% of the total order value)
- It has to be profitable for the operator/not dilute the margin of the grocery retailer. Pick in bulk, deliver to groups of customers that are close to each other at the same time to keep labour costs and driven miles down (drop density)
- Customers often plan their grocery shopping, they can plan to a fixed delivery time (doesn’t need to be in 15 mins/1 hour/2 hours from ordering)
Well, what do you know: Buncha just rediscovered what UK egrocers have largely been doing for the last 20 years. (and was trialled in the US in the early 2000’s–Groceryworks–but customers weren’t ready for it and never achieved drop density and scale to make this work sustainably (and this was in pre-VC cheap money days, the remaining operations accept margin dilution).
I wish them well in the new sanity of grocery delivery. Buncha claim that they are not VC subsidising, are delivering for fee of circa $2 per order including tip (drop and drive, prearranged time), and are operationally breaking even/profitable (but are still small). Buncha have added a bit of a spin as a multi-retailer platform rather than a single-retailer offer.