The grocery delivery start-ups in New York are in crisis. Most of them promise to deliver the good in 10 or 20 minutes. The wall street Journal reports the vying nature of these start-ups.
Gorillas Technology is one of them. Others, including Jokr SARL Buyk Corp., are all fighting for the market share in the city. The tough competition to retain the shifting customers is becoming a great issue.
The grocery delivery companies want to facilitate speedy deliveries. They function to deliver the good within minutes. They facilitate the transfer of goods via dark stores. The dark store serves as the warehouse for goods. They don’t have a retail storefront. This lets the companies expedite the delivery process.
The start-ups don’t charge any additional cost to the items. The pricing scheme is quite familiar to the stores. Some of the start-ups offer great discounts on occasions. They don’t charge fees or minimum orders.
The discounts and offers raise the sale. Though, it doesn’t account for much of the profit for the start-up as a whole. It leads to heavy losses. The losses even went high upto $20 per order.
The loss is due to the advertising cost. And the money invested in the marketing of the start-up. This increases their sales but not the profit. The start-up to make a profit must reduce the discounts. And, they also need to additionally charge for the delivery.
Many experts also identify the loss will increase the need for investment. The company needs enough cash-inflows to keep running. Also, they may have to acquire it from external sources. Though, if the start-up grows, it holds the potential to make a profit. The numbers will turn more positive and big.
Nazim Salur is the founder of Istanbul’s Getir. He compares the grocery delivery business with plane take-off. The plane tends to consume more gas while taking off. And, similarly to that, this kind of start-up needs a big investment.
The company has the option to combat the losses. They can sell ads for brands or sell their own brands. Driving up the order sizes is another way.