4 ms·
There's no meaningful moat in the last mile, no economies of scale that you gain by being in more cities. You will always be subject to a race to the bottom in
by jacques_chester 7y ago
There's no meaningful moat in the last mile, no economies of scale that you gain by being in more cities. You will always be subject to a race to the bottom in every location, as soon as you stop pouring in capital the competition you drove out will drive right back in.
It's a mug's game.
- Traster 7y agoIf you gain dominance in a city, you've got a real advantage. The reason is because you can aggregate demand and supply. Once you have enough scale the problem turns from "Get one person to deliver one meal to one location" to "Get this person to deliver these 5 meals from this restaurant to these 5 apartments". Suddenly, you're doing 5x the deliveries for only 2x the cost of transportation. The game becomes a matter of how efficiently you can map multiple orders to a single delivery driver and the more demand you have the more likely you are to be able to allocate multiple delivers to a specific driver. The more orders you can allocate to a single driver the more margin you have.
- jacques_chester 7y agoI'm not completely convinced. The argument is due to economies of batching delivery. But restaurants can batch their own deliveries too. That line is the "inventory / order interface" and there's no universal optimal point for it, it will vary according to circumstances. Anyone who sells expensive food may choose to optimise for service, which means delivering themselves. Those who optimise for volume will eventually cut out the expensive middleman. Adding to which, the most profitable markets are the dense cities where there are already strong incumbents, which goes to pouring in capital as a substitute for building a business organically.