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These VC subsidized delivery businesses are all built to artificially scale rather than built to necessity, with almost comically predictable results. Webvan sh

These VC subsidized delivery businesses are all built to artificially scale rather than built to necessity, with almost comically predictable results. Webvan showed us how that works in practice 20 years ago and most of these latest companies are still repeating its mistakes. Then whoops the cash is gone and it turns out they never actually had a real business at all (they were merely net delivering money to customers, a truly extraordinary business model). The winners are going to be giants like Amazon that can absorb zero or negative real margins and can play a very long game until vehicle improvements (automation + electric) cuts into the delivery cost (and or they'll just find a way to bundle in other products/services to produce a broader profit).

beaconstudios 8y ago
basically the model is operate at a huge loss subsidised by investors until you can monopolise, then start vertically integrating and increasing prices. It's like if an Indian takeaway took a $MM loan to buy out all the other Indian takeaways in the area and then doubled the prices everywhere. The "tech" angle is just putting a happy face on monopolisation and price gouging.
Spooky23 8y ago
Exactly. There isn't a billion dollar market to tagging $5-10 on each Five Guys order for a 30-75 minute delivery. I order food delivery from these places about twice a month, and almost never pay anything, due to competitive pressure. End of the day, I'm never, ever paying $10 to get $20 of burger delivered. Even Amazon gave up on paying me to deliver groceries to my home. They would have a guy in a deli in New Jersey (~200 miles away) slice ham and turkey cold cuts in the middle of the night, and deliver via USPS by 7:30AM. Truly a marvel of modern logistics, except they couldn't figure out how to not put big cans of olive oil on top of eggs or bread. We probably got an average of $50/week in refunds.

beaconstudios 8y ago

basically the model is operate at a huge loss subsidised by investors until you can monopolise, then start vertically integrating and increasing prices. It's like if an Indian takeaway took a $MM loan to buy out all the other Indian takeaways in the area and then doubled the prices everywhere. The "tech" angle is just putting a happy face on monopolisation and price gouging.

Spooky23 8y ago

Exactly. There isn't a billion dollar market to tagging $5-10 on each Five Guys order for a 30-75 minute delivery. I order food delivery from these places about twice a month, and almost never pay anything, due to competitive pressure. End of the day, I'm never, ever paying $10 to get $20 of burger delivered. Even Amazon gave up on paying me to deliver groceries to my home. They would have a guy in a deli in New Jersey (~200 miles away) slice ham and turkey cold cuts in the middle of the night, and deliver via USPS by 7:30AM. Truly a marvel of modern logistics, except they couldn't figure out how to not put big cans of olive oil on top of eggs or bread. We probably got an average of $50/week in refunds.