About the online groceries market and 15 minutes delivery

Weezy is a new London startup promising to deliver groceries within 15 minutes, for the moment in Fulham and Chelsea (some affluent hoods from London) - here’s the PR spiel.

The 15 min seems like an extreme constraint that could work for viral purposes but not sure it’s scalable. 15 minutes vs 1-2 hours is not much of a big differentiator as in retail consumers care more for i) price; ii) product scope and iii) stock availability. On top of that it’s more important to be predictable and on time rather than the fastest, given you deliver within an hour or so.

Weezy’s app (ios) seems to be still very rough to the edge of unfinished and what’s the point of selling online if you can place an order only from 10am to 10pm? Dark kitchen but for the ecommerce?

These constraints seem more suitable for impulse, on-the-spot transaction decisions rather than for planning - buying groceries is a planning process. Definitely an interesting experiment to follow.

Tbh I like better Jow’s edge in the space, also a retail aggregator of online groceries but based on customized menus they put on the front end for consumers - it’s a sort of lock-in preventing price-based decisions, making switching costs higher and without the inventory costs (they’re operating on top of physical retailers).

Online grocery retail is a dog-eat-dog business that relies heavily on suppliers, great logistics, distribution and good consumer prices. You live on thin margins and, as it’s the case of Weezy, you also have inventory costs that will require a lot of capex (storage, refrigerators, mopeds etc) and opex (stock), you work with perishable goods you need to turn over fast etc.

It is a hard business requiring consumer branding, differentiation and marketing spending even though the main asset to build has little to do with those.

Selling groceries online is a good trend to ride nowadays in Europe, as Covid augmented the e-commerce demand but the opportunity is rather taking share from local supermarkets than from Amazon. It is hard to compete with Amazon’s prices and logistics - you may win some local fights but not the war.

Weezy is basically a bet for developing a competitive logistics and delivery service, ultimately to be exited off to a lagging retail chain or even to Amazon in an edge, lucky case. Question is how many such logistics and distributions hubs can London sustain, and other big cities for that matter, on top of taxis, food and postal services - all of them will ultimately want a piece of the grocery delivery service.

Heartcore is one of the backers, unusual for them to take such early risks, probably high on conviction from prior deals with Taster (a dark kitchen op which relies on 3rd parties distribution) and La Fourche (a digital consumer buying club for organic food).

They now invested in three different parts of the chain, a correct directional bet based on the thesis that the online food delivery is going to grow quite a bit in Europe in the future. Arguably Weezy seems the most riskier of the three, and not because of the stage but because there’s no visible moat - it’s a pent-up demand business with lazy incumbents.

Apple acquired Mobeewave

Apple announced the acquisition of Mobeewave, a Canadian company with a solution that makes any phone a POS with just an app. 

That means Apple will go down the value chain and make it as easy to add merchants as it made adding consumers via their cards. The goal is to become the important connecting link managing the relationship between merchants and consumers to process identity, loyalty, rebates, rewards and coupons. 

And, why not, create a business layer on top of it, a la App Store, and take a 30% cut.

Square in US and iZettle (owned by PayPal) in Europe are some top of mind providers in the space and which will likely collide with Apple.

Apple allegedly paid $100 million for the acquisition - also interestingly, Mobeewave raised money from Samsung and Mastercard, about $25 million in total.

The tech versus the regulators, part 231527

This week the US Congress interviewed the CEOs of four of the most powerful tech companies on the planet  - Apple, Google, Facebook and Amazon - for the purpose of establishing grounds for monopolistic behaviour.

I followed a bit the live discussions, and, as always in such situations, it is striking the huge information and knowledge asymmetry between the tech regulators and the tech creators. The congress people seemed very unprepared for the job they were supposed to do, made a lot of silly claims and irelevant points, proving once again that the gap is so big between the two worlds that the politics is out of control.

Here’s what I wrote just 8 weeks ago:

The tech ecosystem has developed tremendously in the past 15 years, in spite of the shitty politics from across both ponds.

That is the very reason for which governments want to regulate Google and Facebook. The gap is so big between the two worlds that the politics is out of control.

More regulation and protectionism will not narrow it [the tech gap] down, au contraire, it will force tech to be more creative, they invent things for a living after all. And yes, US is a very different beast than Europe but smart people adapt.

In conjunction with the hearings, a lot of internal emails were made public, which make for an interesting economic history learning - worth digging through, you can find them here

Also notable Zuck’s statement claiming that Facebook is a laggard:

In many areas, we are behind our competitors.

The most popular messaging service in the U.S. is iMessage. The fastest growing app is TikTok. The most popular app for video is YouTube. The fastest growing ads platform is Amazon. The largest ads platform is Google. And for every dollar spent on advertising in the U.S., less than ten cents is spent with us.

Zuck’s PR taught him to play humble and assertive - but really, does anybody believe anything he says in public at this point? Btw, Facebook’s ad business outpaced Google’s in Q2 — here’s why.

Amazon launches in the Nordics

Amazon is set to launch in Sweden and other Nordic countries this fall. It is a long-expected move, and kind of a big deal as the Swedish/Nordic society is, in general, a closed one to big business from outside.

In Sweden retail’s case, consumers have available mostly Swedish/Nordic brands on the shelves, with little non-Nordic competition, as all the active operators are tightly controlled by a group of local wealthy families. And, like in any oligopoly, they drastically limit the market entrance from outsiders (same goes with the banks or telecoms, for example).

It is notable Apple’s case which acquired a property for opening a flagship store downtown Stockholm, only to be denied after getting their papers in order by the local authorities, who had a sudden change of heart a few years later. Unofficially though, rumours say that actually there were commercial interests at stake as Apple's way didn’t want to get local businesses involved in the Apple Store operations (they never do) and the political angle was a way to make them change their minds. Apple didn’t and was really pissed about it.

And so, Amazon is kind of a big deal in the Nordics, as it will likely shake the market and provide a much-needed competitiveness and wider access, which ultimately will benefit consumers.

The car-as-a-service vs e-bike-as-a-service model breakdown

Here’s some data I found in the Swedish media detailing the car-as-a-service model breakdown for Volvo’s M service:- period: 2018 - mid 2020 (30 months). The numbers are aggregated.- 70k registered users (nota bene: not payers!) - 5 cities: Stockholm, Gothenburg, Malmö, Lund and Uppsala- investments of SEK 640M ($72M) - losses of 400M ($45M) - revenue 242M ($27M)

In case you didn’t know, M is an on demand car service operating on a hybrid model: roundtrip, station-based, with a subscription fee and pay-as-you-go-expenses on top.

The user number is from a longer period actually, since M was launched in 2019 as a rebrand of and replacing an initial service called Sunfleet, which was more 30% more affordable - the transition likely generated churn.

The obvious difference of car-as-a-service compared to ebike-as-a-service is that instead of having to optimize for an ARPU spread over a $30-40k asset during a 3-4 years lifecycle, you optimize for a $2000 asset at a 2-3 years lifecycle.

Quick back on the envelope:

- at a monthly ARPU of $500 we get almost 5000 customers. Since the revenue is cumulated, the number is lower than that.
- a fleet of 1000 cars @ 30k accounting value at a monthly ARPU of $500 is covered by 5000 users, before SGA expenses.
- parking spaces are also big items on the income statement.

The obvious difference of car-as-a-service compared to ebike-as-a-service is that instead of having to optimize for an ARPU spread over a $30k asset during a 3-4 years lifecycle, you optimize for a $2000 asset at a 2-3 years lifecycle. 

And so, for a fleet of 1000 e-bikes at $2k a piece at a monthly ARPU of $59 you need less than 3000 users to cover inventory. 

And in a sub model you don’t have to budget parking/docking.

Here is a detailed analysis about the car as a service breakdown in the Nordics I wrote some time ago.