Delivery Startups Are Back Like It’s 1999
nytimes.com
Delivery Startups Are Back Like It’s 1999
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Re: Delivery Startups Are Back Like It’s 1999
#2I never understood how companies like instacart explained this to their investors.
Over time one of several things must happen:
1. Instacart magically makes a courier capable of doing 4 trips an hour
2. Instacart drastically increases it's prices
3. Instacart Severely lowers the compensation to courriers
Re: Delivery Startups Are Back Like It’s 1999
#3There's another phenomenon at work in the cities which is driving the Delivery startups today: the availability of a large labor pool of people who now do these jobs to survive.
In India, the following lower caste laborers have been doing business with their mobile phones for at least a decade:
* Laundry/Dry cleaners
* Drivers
* Grocery Delivery
* Home cleaning
These folks have been doing the same work for a long time, and as cell phones got cheap in India they just started using them. Their standard of living may have gotten better, but their social standing really has not.
In my occasional travels to SF, I am starting to see a similar caste system emerge. And it's pretty depressing.
Re: Delivery Startups Are Back Like It’s 1999
#4Weren't the delivery startups of the 90s severely bloated? From what I remember, they had fleets of delivery trucks, warehouses, distributors, etc. Today's delivery startups are pretty lightweight (Not counting Amazon or Google since they're already $100b+ companies).
Re: Delivery Startups Are Back Like It’s 1999
#5But there's one huge difference between 1999 and 2014 - mobile phones. And people, everyone, seems much more accepting of digital delivery services. Back then it was kind of a novelty.
That being said I think the ones that will be most successful will put the burden of service and delivery on a 3rd party.
Re: Delivery Startups Are Back Like It’s 1999
#6I never understood how companies like instacart explained this to their investors. Over time one of several things must happen: 1. Instacart magically makes a courier capable of doing 4 trips an hour 2. Instacart drastically increases it's prices 3. Instacart Severely lowers the compensation to courriers
Or, they get 20-25% discount from retailers (coming out of stores marketing budget and reduction in store staff cost).
EDIT: The discounts come from the cost savings stores will see from delivery companies, to clarify to people commenting margins are not that high in grocery business.
1) These delivery services are become sales and marketing channel for stores.
2) Cut down time it takes for cash register scanning each product and bagging them, pick up guys do that for stores.
3) Bulk pickups-- e.g., if I can have delivery company gather milk directly from back store, my store staff does not have to spend time replenishing the shelves.
Re: Delivery Startups Are Back Like It’s 1999
#7There are some major differences.
1) Increased pool of unskilled labor-- manufacturing industry tanked, increased immigration.
2) Proliferation of internet connected, smartphones.
3) Avoiding obvious mistakes: no free deliveries for a bottle of coke, like in webvan days.
4) Doing direct store to consumer deliveries, avoiding warehouses, getting 20-25% cut from retailers (who see this as savings in marketing cost and reduced in-store staff cost)
Re: Delivery Startups Are Back Like It’s 1999
#8I never understood how companies like instacart explained this to their investors. Over time one of several things must happen: 1. Instacart magically makes a courier capable of doing 4 trips an hour 2. Instacart drastically increases it's prices 3. Instacart Severely lowers the compensation to courriers
1. It's reasonable that shoppers (with the help of a mobile app routing them) can complete multiple deliveries / hour.
2. They won't have to increase prices but are negotiating better pricing from the stores they work with (most of ICs profit comes from the items themselves, not the delivery fee they charge).
3. Compensation won't go down, but perhaps it won't rise as quickly as courrier utilization does.
Re: Delivery Startups Are Back Like It’s 1999
#9There's another phenomenon at work in the cities which is driving the Delivery startups today: the availability of a large labor pool of people who now do these jobs to survive. In India, the following lower caste laborers have been doing business with their mobile phones for at least a decade: * Laundry/Dry cleaners * Drivers * Grocery Delivery * Home cleaning These folks have been doing the same work for a long tim…
To be fair, that's not caste system.. better phrase would be income inequality or unskilled labor.
Re: Delivery Startups Are Back Like It’s 1999
#10Weren't the delivery startups of the 90s severely bloated? From what I remember, they had fleets of delivery trucks, warehouses, distributors, etc. Today's delivery startups are pretty lightweight (Not counting Amazon or Google since they're already $100b+ companies).
As far as I know you're right. The one that immediately comes to my mind is WebVan [1], which fits your description and according to the wikipedia page had a $1 billion order to build warehouses.