Retail Week

Data: On-demand grocery start-ups face profitability challenge

Data: On-demand grocery start-ups face profitability challenge

Food-delivery services including many start-ups are racing to compete in the on-demand grocery market, but profitability is likely to be some way off

  • novembre 11, 2021
  • Tempo di lettura min.

Retail Week

Data: On-demand grocery start-ups face profitability challenge

Bain & Company retail practice senior partner Jonathon Ringer said: “The economics of online grocery have always been challenging versus store retailing, but the economics of the new ‘on-demand’ models are even more demanding.  

There is a rush to put down capacity and acquire customers at the moment, but the path to profitability is far from clear.

He said target capacity was some way off and observed: “In this growth phase the unit economics are very ugly.

“The market needs to mature for the economics to improve. Customers need to repeat purchase without the same level of offers and deals, order values need to increase, capacity needs to be better utilised and charges probably need to go up. We are not in that phase yet.”

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