Young Rich Lister takes on Coles, Woolies with start-up Milkrun

As the major supermarkets struggle to fill shelves, a Young Rich Lister has set up a Uber style grocery service to shake up the sector.

A Young Rich Lister has created a start-up called Milkrun, which aims to take a share of the $122 billion grocery market in Australia.

Dany Milham, who is the former co-CEO of online furniture retailer Koala, raised $11 million for his venture before it even launched in September.

Now it has gone on to attract a record $75 million in funding this year, one of the largest early stage venture capital raises in the country’s history.

Milkrun, which charges $2.99 for a sample delivery, currently operates in 35 suburbs across Sydney, stocking up to 2000 grocery products, which are housed in a network of warehouses that are described as dark stores.

It is also bringing on new suburbs each week and has plans to enter Melbourne soon.

Dany Milham is worth an estimated $150 million. Picture: Supplied

Despite only launching five months ago, Milkrun already employs 500 staff members on a casual, part time or full time basis, with riders using e-bikes to deliver orders to customers in 10 minutes or less.

Mr Milham, who is worth an estimated $150 million, said demand for services soared in the run up to Christmas and New Years, but the business also had to contend with staff shortages as people tested positive to Covid or were deemed close contacts.

He described the time “as the most testing period of my life”.

“It was good for sales … and we did pretty well to keep the wheels on, but a lot of our staff had to just dig deep and didn’t really go home,” he told The Australian Financial Review.

“We paid everyone $60 an hour to come in, there were many sleepless nights, and it was one of those moments that will hopefully never happen again. I did about 1000 deliveries myself.”

The idea for Milkman came after the 31-year-old stepped back from running Koala to look after his sick father in Byron Bay in 2020.

Dany Milham is also the co-founders of the Koala business Picture: Adam Taylor

He realised he wanted to recreate the delivery experience provided by Koala but with products that are purchased regularly.

“The highest frequency is grocery with people sometimes ordering four times a day,” he explained.

“I thought if we bought our own products, we could make money on the margin rather than the service fee.”

Business is booming for the start-up, which is hiring 40 new people a week, while it is expected to hit 1000 employees in just a few months.

Mr Milham also has plans to expand into other retail categories beyond supermarket products.

“Grocery in Australia is a $122 billion market. There aren’t many players in it, so you can make a $5 billion a year business just doing what we’re doing,” he said, adding that he wanted Milkrun to be iconically Australian.

“We want our riders to be like the local milk men and be part of our brand.”

The founder has a vision of creating a dedicated social media community for the brand too which would see customers have input into products, but also venture into newer spaces like Discord.

There are other start-ups trying to break into the space too.

Sydney-based Voly is attempting to disrupt the grocery industry, promising customers delivery in 15 minutes or less. Picture: Supplied

Sydney-based Voly, which delivers to around 42 suburbs and raised $18 million in December 2021, was co-founded by Mark Heath, who helped launch Uber in Australia.

It also employs its own riders and delivery centre staff, and said it does away with the need for customers to spend time in physical retail environments by giving people the power to order and receive their groceries in minutes.

Voly has a delivery promise of 15 minutes or less and sells everything from fresh produce to baby formula and cleaning products, which are available to order seven days a week from 8am-10pm.

“We’re doing away with the need to do a weekly grocery shop by providing convenience alongside reliability in a market that offers some of the slowest delivery times in the world,” said Thibault Henry, co-Founder of Voly.

“By owning our own supply chain, Voly delivers at blazing fast speed without compromising on price, quality or availability. We source directly from suppliers, store in our own micro-fulfilment centres and deliver using fully employed and mostly full-time staff. Voly is the supermarket of the future that is built around our customers, not the other way around.”

Voly's co-founders, Mark Heath and Thibault Henry (both pictured), established the company less than a year ago but are expanding across Sydney. Picture: Supplied

Meanwhile, Send attracted millions investment from venture capital firms last year, and is another grocery deliver start-up that is available in 46 suburbs in Sydney and Melbourne.

It offers everything from fresh produce, dairy products and snacks at retail prices, in under 15 minutes.

“Australian supermarket giants promote the idea of a big weekly shop; however, consumers don’t have time to curate long lists of groceries and spend hours shopping,” Rob Adams, founder of Send said.

“Send addresses this gap in the market by making it possible to get what you need when it comes to mind, removing the element of planning ahead.”

Originally published as Young Rich Lister takes on Coles, Woolies with start-up Milkrun