15-minutes delivery – is there a business model behind it?
Grocery delivery and e-commerce got a high spike in demand during the pandemic. Many VC funds decided to support the trend and spend billions of dollars to invest in q-commerce, specifically in 15-minutes deliveries. But is there a business model behind it or just hype?
When the COVID situation is stabilized, allowing people to go outside and spend more time in physical stores, the cold shower unexpectedly came and resulted in many delivery startups focused on 15-minutes delivery were closed.
According to Bloomberg, “Venture capitalists poured $9.7 billion into rapid-delivery companies globally in 2021, according to PitchBook. A few months into 2022, that optimism seems like a distant memory.”
The times when investors are eager to invest in stories like Uber or Tesla are gone forever. Everyone expects a sustainable outcome and stable business model that can generate profit, not in 5-10 years but at least within two years.
There is a fundamental problem with 15-minutes rapid-delivery business case calculation, the number of orders and daily revenue per consumer to compensate for all associated delivery costs and become profitable. Also, suppose you try to start charging consumers who appreciate a quick delivery, with additional fees. That does not work out as consumers are not ready to pay if you can wait 2 hours instead of 15 minutes and get the same delivery without extra delivery cost, considering the overall delivery package price.
The hype is almost over, and even the companies who still get injections of fresh money like Gorillas have been already trying to identify new revenue streams revenues that can finally justify the model. It is still an open question, not the market fit but a sustainable business model.
We at VanOnGo have been considering the sustainable business models for last-mile delivery and offer a wide range of solutions starting from the last\first mile consumer-centric SW platform and ending with delivery services with a one-to-many paradigm.
If you want to know more, please get in touch with us: https://vanongo.com/