Milkrun grocery delivery app drops 10 minute pledge to curb losses

Woolworths’ Metro stores were also unprofitable, Milham said. “The early signs of the roll out are positive, it’s a week in and we’re already seeing a good proportion of repeat customers using the service, with all deliveries coming in well under the 60 minute target” a spokesperson for Woolworths said.

In the investor pitch, Milkrun forecasts that it will one day make more revenue per customer than Amazon’s retail business in America and eventually move into some of the most contested industries in the country including payments, insurance and takeaway delivery.

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To get there, the ten-month-old company says it will overhaul almost every part of its business from product costs, to how many deliveries its riders complete each hour, to how much customers spend per order.

For example, the document forecasts Milkrun will go from an average order value of about $28.35 in its South Bondi hub in March to $41.72 in June next year as it rolls out more products such as alcohol.

Staff wages are another major expense for Milkrun, accounting for almost 45 per cent of sales at the South Bondi store where they averaged $37 an hour, according to the document, far more than the standard $22.33 adult minimum retail wage. Other staff costs take it to a total of $42 an hour, which Milkrun hopes to bring down to $30 by ending initiatives such as a wet weather bonuses and reducing its use of casuals.

“Scheduling and rostering is one of the things that we haven’t got right,” Milham said. “So for instance… when in Sydney… the PCR test crazy nightmare happened where everyone couldn’t go out we were just getting people from everywhere like [job marketplace] Airtasker and a lot of casuals – and casuals are obviously paid more – [plus] a lot of overtime.”

Milham said those costs would come down as the company got better at rostering and the business came out of “hyper growth mode”.

“The day [Milkrun] makes a dollar [per order], which will be in the next couple of months’ time… [then] the hub’s profitable and generates thousands and thousands of dollars a day,” Milham said.

Another way it hopes to become more efficient is by extending order delivery times. Where it previously promised deliveries in 10 minutes, Milkrun now just says “in minutes” to allow riders more time to complete multiple orders in one trip.

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

Milkrun last raised from the US venture capital firm Tiger Global, which has been labelled the “‘poster child’ of the tech meltdown” by one American media outlet. Australian fund AirTree Ventures, along with Atlassian co-founders Scott Farquhar and Mike Cannon-Brookes’ Skip Capital and Grok Ventures have also tipped money into the company.

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