Send grocery delivery company spent $11m in 8 months, Worrells’ liquidator’s report reveals

The Australian company went under risking 300 jobs and now a report has revealed what went wrong.

An Australian company that promised to deliver groceries in under 10 minutes, which collapsed last month, burned through a whopping $11 million in just eight months, a report from the administrators revealed.

The start-up called Send was available in 46 suburbs in Sydney and Melbourne and had 46,000 registered users, but it went into liquidation at the end of May putting 300 jobs at risk.

A creditor’s report from Send’s administrators Worrells, which was filed with the Australian Securities and Investments Commission (ASIC), showed that as the company’s sales soared so did their costs.

Send’s sales topped $8113 in October last year but it made a loss of more than $658,000.

Fast forward to March and Send’s sales had skyrocketed by more than 50 times to almost $417,000 a month, but losses hit an extraordinary $2.38 million a month.

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Send promised to deliver groceries within 10 minutes. Picture: Supplied

The biggest cost was staff adding up to $5.5 million over the eight months, the administrators said.

“The significant salary and wages expense incurred is associated with the company’s business model of groceries delivered in 10 minutes as the company was required to employ a large number of staff in order to meet its business model,” the report said.

“Accordingly, despite attempts by management to reduce the losses incurred, it is clear that without external funding the company’s business model was not sustainable.”

Send founder Rob Adams, who reportedly is a high school dropout from Sydney’s northern beaches, blamed world factors for the failure of the company.

“There were a number of circumstances globally that had made it fundamentally harder to raise the necessary capital to scale the business, ranging from the war in Ukraine, harshening global economies and wide spread scrutiny among investors regarding the levels of capital intensity associated with the business model,” he told news.com.au at the time.

Mr Adams was hopeful a buyer could be found to take over the business.

Matthew Kucianski from Worrells said at the time of the collapse that like many tech start-ups, Send had a sizeable cash burn that was being deployed to grow its market share.

The Send app. Picture: Supplied

Send had aimed to take a share of the $122 billion grocery market in Australia but after its demise there are now two major players left in the area.

Young Rich Lister, Dany Milhan, created grocery delivery start-up Milkrun which raised $11 million alone before its launch in September last year and $75 million this year and is backed by Atlassian billionaires Mike Cannon-Brookes and Scott Farquhar.

He said Milkrun had reviewed Send’s financial information and it had a substantially different business to its model.

The other start-up is Voly, which was co founded by Mark Heath and delivers to about 42 suburbs after raising $18 million in December 2021.

Experts have warned that start-ups may find it hard to find funding, a crucial factor that Mr Adam’s blamed for Send going under, as supply chain problems, soaring inflation and rising interest rates, make investors cautious about throwing cash at high risk ventures.

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

Patrick Coghlan, the chief executive of credit reporting agency CreditorWatch, said start-ups often need a huge injection of cash to help them scale up and reach a level of profitability, but grocery delivery companies faced the extra challenge of Australia being spread out.

“Australia (is a place) where you don’t have a huge density of people like you would in, for example, New York and other large cities globally – you’re more spread out,” he toldThe Guardian.

“So how many of those companies can actually survive? Is it a sort of winner-takes-all scenario?”

Other start-ups have also had to make difficult decisions in recent times, including staff cuts, based on the impact of global conditions.

5B Solar, an Australian company focused on solar power projects, let go 25 per cent of its workforce two weeks ago.

It blamed supply chain and logistics disruptions brought on by the pandemic, as well as the shortage of materials and a spike in prices partly attributable to the invasion of Ukraine.

5B let go of 25 per cent of its workforce. Picture: Supplied.

Last month, buy now, pay later provider BizPay, which has offices in Sydney, was a another company to make a heavy round of cuts. It made 30 per cent of its workforce redundant blaming market conditions.

But its not just start-ups feeling the pinch from global conditions either, with established players also having to contend with headwinds.

Melbourne-based Envato, which runs a marketplace that offers access to things like stock photos, graphic design templates, audio and fonts, sacked 100 staff despite record profit after blaming economic factors such as inflation and Russia’s invasion of Ukraine.

Meanwhile, Australian investment company Remi Capial collapsed at the end of last month with a liquidators report revealing that its debt ballooned from an estimated $70 million to a whopping $124 million.