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> Margins are terrible, if they’re ever positive. It’s just a bad business. That's simply false. A lot of profit is made in the space and as soon as you have s
by badestrand 6y ago
> Margins are terrible, if they’re ever positive. It’s just a bad business.
That's simply false. A lot of profit is made in the space and as soon as you have some significant market share it becomes a cash cow.
Yes, it might not always work to start up in a already saturated market, but that shouldn't be a surprise.
- duxup 6y agoAre food delivery services cash cows? I hadn't gotten that impression.
- badestrand 6y agoThey can be, of course. I worked in a food delivery company of the Just Eat group ~5 years ago, for 1.5 years. They take a comission of ~12% of the order price just by providing the platform to place orders. The technology is simple, then you have a sales team to acquire restaurants as partners and a customer service team to support when orders get lost or to update the menus. Yes, there can be cut-throat competition in a market where a lot of money is sunk into marketing and the business is operating at a loss. But there are also consolidated markets where one platform captures >80% of all online orders and generates endless profits. Just because a few VC-backed companies burn their many millions in a short time doesn't mean that there aren't large and very profitable food delivery services.
- duxup 6y agoI feel like that is a pretty big stretch. Basically there is a "cash cow" if someone can monopolize the market, not have competition, and if people are willing to pay more. What isn't a cash cow under those circumstances?