Consumer Discretionary

The Final Word On Why Delivery Companies Are Failing

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<p style="text-align: justify;">To begin with, the Rapid Grocery Delivery (RGD) companies are failing because they are what I refer to as 'gimmick companies.' To gain attention from the press, public and investors, the companies use flashy uniforms worn by delivery couriers and offer grocery deliveries within 10 minutes or more. It's a gimmick, no.&nbsp;</p><p style="text-align: justify;">RGD company can be profitable using such a model.</p><p style="text-align: justify;">Do not assume that because most RGD companies are failing, delivery is doomed. It is 100% false.&nbsp;</p><p style="text-align: justify;">Food delivery companies such as DoorDash, Instacart, and GoPuff deliver food and groceries, but they have better business models. DoorDash, for example, recently launched DashMart nationwide, a new type of convenience store offering both household essentials and local restaurant favorites that customers can order and have delivered.&nbsp;</p><p style="text-align: justify;">The internal number shows that DashMart is widely successful. GoPuff is experiencing some difficulties, but they are fixing the issues, and they will succeed.</p><p style="text-align: justify;">Grocery delivery companies have failed to realize that they need to focus on offering a larger assortment of products that customers can order and receive with precision than delivering fast.</p><p style="text-align: justify;">More importantly, delivery companies are now just realizing that the only way they will ever be profitable is through the use of automation. Amazon has come to the conclusion that the company's 'Next BIG Thing' is opening thousands of automated hyper-local fulfillment centers.&nbsp;</p><p style="text-align: justify;">Jared Carmel, in his article argues that they are avoiding investing the startups whose base structure relies on real estate plays.&nbsp;</p><p style="text-align: justify;">I understand Jared's point of view. However, I believe that what Jared and the other investors have quoted in the article, like, Phil Haslett, Rob Kniaz, Jeff Fluhr, and Matt Birnbaum, should do is to explore the model that is being leveraged by Davinci Micro Fulfillment led by Corey Apirian.&nbsp;</p><p style="text-align: justify;">DaVinci is ahead of everyone else, including Amazon, in rolling out its model. The company is opening 750 to 1,000+ automated micro-fulfillment centers using systems from Adverb, Attabotics Inc., BRIGHTPICK, and Berkshire Grey, to automate the fulfillment of food, groceries, and other retail products.</p><p style="text-align: justify;">The model requires a fraction of the labor required today by other delivery companies. Four installations are underway.</p><p style="text-align: justify;">The future of delivery is robotics and automation, and it is happening sooner than most people realize. The need for grocery delivery isn't dead. What's needed is a new model.</p><p style="text-align: justify;"><span style="font-size: 10pt;"><em>This article was contributed by our expert Brittain Ladd</em></span></p><p style="text-align: justify;">&nbsp;</p><h3 style="text-align: justify;"><span style="font-size: 18pt;">Frequently Asked Questions Answered by Brittain Ladd</span></h3><h2><span style="font-size: 12pt;">1. What is Rapid grocery delivery?</span></h2><p style="text-align: justify;"><span style="font-size: 12pt;">Rapid grocery delivery or Quick commerce aims at offering food or groceries in a few minutes.</span></p><h2 style="text-align: justify;"><span style="font-size: 12pt;">2. What are the obstacles or challenges being faced by food delivery apps?</span></h2><p style="text-align: justify;"><span style="font-size: 12pt;">Some of the important issues faced by food delivery apps are competition, challenges in logistics, managing customer expectations, ensuring food quality standards and many more.</span></p><h2 style="text-align: justify;"><span style="font-size: 12pt;">3. How can we improve the quality of food delivery?</span></h2><ul><li><span style="font-size: 12pt;">Make the app user friendly so that the customers can order food anywhere, anytime&nbsp;</span></li><li><span style="font-size: 12pt;">Accepting various modes of payment</span></li><li><span style="font-size: 12pt;">Streamline the order acceptance process</span></li><li><span style="font-size: 12pt;">Special attention to packaging</span></li></ul><p>&nbsp;</p>
KR Expert - Brittain Ladd