Grocery app Milkrun drops fast delivery pledge to limit losses

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To get there, the ten-month-old company says it will overhaul nearly every aspect of its business, from product costs to the number of deliveries its runners make each hour to how much customers spend per order.

For example, the document predicts that Milkrun will grow from an average order value of around $28.35 at its South Bondi hub in March to $41.72 in June next year as it rolls out more. products such as alcohol. A source close to the industry, who was not authorized to speak officially by his employer, called the showing “heroic”, but Milham said the average value of orders for Milkrun had already exceeded $35.

Staff salaries are another major expense for Milkrun, accounting for almost 45% of sales at the South Bondi store where they averaged $37 an hour, the document said, far more than the standard minimum wage. $22.33 for adults. Other payroll costs bring it to a total of $42 an hour, which Milkrun hopes to bring down to $30 by ending things like a wet weather bonus and reducing its use of casuals.

“One of the things we didn’t do well was the schedule and the roster,” Milham said. “So for example…when in Sydney…the crazy PCR test nightmare happened where everybody couldn’t get out, we were just getting people from all over like [job marketplace] Airtasker and a lot of casuals — and casuals are obviously better paid — [plus] lots of overtime. »

Milham said those costs would come down as the company improves on the listing and the company moves out of “hyper growth mode.”

The presentation document suggests that Milkrun was losing more than $13 per order at its South Bondi store, which is one of its best-performing, in March. Milham said that’s now a loss of around $10 per order and is improving rapidly from what was once a loss of around $40 per order.

Milkrun runners earn an average of $37 an hour at a store, well above the adult retail minimum wage of $22.33.

Milkrun runners earn an average of $37 an hour at a store, well above the adult retail minimum wage of $22.33.Credit:Louie Douvis

“The day it brings in a dollar [per order]it will be in the next few months… [then] the hub is profitable and generates thousands and thousands of dollars a day,” Milham said.

She also hopes to gain efficiency by extending order delivery times. Where it previously promised 10-minute deliveries, it now simply says “in minutes” to give passengers more time to complete multiple orders in one trip.

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Milkrun was last raised from US venture capital firm Tiger Global, which has been dubbed “a poster child of the tech meltdown” by US media. Australian fund AirTree Ventures, as well as Atlassian co-founders Scott Farquhar and Mike Cannon-Brookes’ Skip Capital and Grok Ventures have also contributed money to Milkrun.

Milham said there has been huge interest in his business from international investors, despite the downturn.

Milkrun also faces significant domestic competition in the form of Woolworths’ new Metro60 app, a 60-minute delivery service that The Sydney Morning Herald and age revealed was launching in Sydney’s eastern suburbs ahead of a wider rollout.

Milham said he was not phased by Metro60 because he was used to competing with Woolworths’ existing partnership to make other deliveries with Uber. He said Uber did not provide a reliable supply of drivers, as it relied on contractors who had no minimum wage unlike Milkrun’s traditional workforce, and used passenger cars. occasion which would cause traffic jams around the supermarkets.

“It basically won’t work at Metro [Woolworths outlets]”, said Milham. “There is no way to bring 100 cars in 30 minutes to a Metro store.

Woolworths’ Metro stores were also unprofitable, Milham said. Woolworths has been contacted for comment.

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