Grocery delivery app Milkrun’s $10 order loss

An Australian delivery app based in two major cities has announced how much money it loses per order amid current economic headwinds.

An Australian grocery delivery firm has admitted to losing around $10 per order during a particularly trying time for startups.

An investor pitch obtained by Nine newspapers reportedly showed the startup - Milkrun, which operates in Sydney and Melbourne - was making $4m a month in revenue, while it was losing $13 for each order it took on.

In response, founder and chief executive Dany Milham told the Sydney Morning Herald the document was from April and out of date and hence not representative of the company’s current fortunes.

Mr Milham said the company had been losing $40 per order at one point but had improved drastically.

He also insisted investor interest remained strong as the company edges closer to profitability, citing hopes it will be making $1 per order within a couple of months.

Milkrun has been up and running for 11 months. Picture: Supplied

In an update on Tuesday, the company moved to assure investors it was in a comfortable financial position.

The news comes as Mr Milham this week said there had been “unacceptable decline” in customer experience due to a number of factors including “ongoing Covid cases affecting the availability of riders and hub staff, record rainfall in Sydney, and the challenges involved with scaling a fully employed workforce faster than anyone has ever tried before.”

“I want to take this opportunity to apologise to you if you have recently experienced late delivery or a poor experience,” Mr Milham said in an email to customers.

“No excuses, you deserve better and I want you to know that I am committed to ensuring we make good on our promise and continue to deliver the best experience you’ve ever had.”

Milkrun founder and chief executive Dany Milham has apologised to consumers who have been experiencing delivery delays. Picture: Supplied

The entrepeneur also detailed a number of cost control measures as part of Milkrun’s overhaul, including shaving down rider pay and limiting expectations on delivery speed.

Where Milkrun previously promised deliveries in 10 minutes, the Milkrun site now says “in minutes”.

Milkrun, which launched in September and has boasted it is “flipping the grocery game on its head” also runs an alcohol delivery service.

Mr Milham, who is worth around $150m, raised more than $11m before Milkrun’s launch in September last year, with major tech giants and Atlassian billionaires Mike Cannon-Brookes and Scott Farquhar backing the company.

Cory Jimmieson, head of growth at delivery brand start-up, Send. Picture: NCA NewsWire / Wayne Taylor

In January, Milkrun raised another $75m from investors, although it is unclear how much money the company has left.

Milkrun’s competitors have also been forced to slash jobs and services, with some even going under.

One such competitor was Send, another start-up aiming to deliver groceries in under 10 minutes.

It went into liquidation in May after chewing through $11m in just eight months.

Mr Milham told the Sydney Morning Herald that Milkrun’s economical business model differed from Send, adding they were in a comfortable position.

Last week it was revealed that Sydney based-rival Voly had slashed its workforce, closed warehouses and scrapped its planned Melbourne expansion.

Milkrun has previously said it is not troubled by the launch of Woolworths’ one-hour delivery service for a five-dollar-fee.

The Metro60 app service quietly kicked off in Sydney last week, offering more than 4000 products delivered by Uber couriers.

Originally published as Grocery delivery app Milkrun’s $10 order loss