Woolworths has bought the branding and customer base of failed online delivery platform MilkRun

In a bid to improve delivery times, Woolworth has snapped up the branding and customer base of defunct food and grocery online delivery platform, MilkRun.

Woolworths will beef up its online delivery credentials to bring it closer to its customers wanting quick, less than one-hour delivery times for their groceries after buying the branding and customer base of failed food and grocery delivery platform MilkRun.

Under the deal, believed to be worth around $10m, Woolworths will rebrand its Metro60 platform into MilkRun and have access to the customers who enjoyed using the start-up delivery service before it became the latest victim of the current rout in tech and venture capital that has seen a wave of tech collapses.

“We’ve long admired MilkRun’s innovative brand, dedication to customers and ambition to shake up the grocery delivery model,” said Woolworths chief executive Brad Banducci.

“We are thrilled that the MilkRun story will continue to live on and thrive with Metro60 relaunching as MilkRun now powered by Metro.”

Mr Banducci said orders would be fulfilled from the Woolworths network of Metro stores which will give customers the choice of over 10,000 product lines including hot roast chickens, fresh sushi and much more.

Existing Metro60 customers will notice the app has been rebranded to MilkRun now powered by Metro and the current functionality of the app will remain the same, Woolworths said.

There will be a flat $5 delivery fee and zero service fee.

Before its demise, Milkrun was in the top 50 tech startups. Picture: Josie Hayden

Additionally, MilkRun backed by Woolworths will trigger a current promotion where there will be no delivery fee on a new customer’s first three orders. Everyday Rewards members will also earn points with every purchase.

Orders will be fulfilled via the current Metro60 model, which uses third party couriers and achieves an average delivery time of 33 minutes.

MilkRun, founded by Dany Milham, collapsed in April after failing to secure new funding as investors pulled out of highly speculative and early start-up tech stocks, that saw many companies close their doors.

The start-up last year twice attempted to raise a Series B funding round from investors, who declined to deploy more cash into the start-up, which is yet to reach profitability and had been losing as much as $13 per order according to a slide deck shown to prospective investors.

MilkRun became one of Australia’s fastest growing start-ups last year when it raised a $75m Series A round led by major US fund Tiger Global Management, with participation from Sydney-based venture capital fund AirTree Ventures, as well as Skip Capital and Grok Ventures, the funds associated with Atlassian’s billionaire co-founders Scott Farquhar and Mike Cannon-Brookes.

“MilkRun pioneered rapid grocery delivery in Australia, and I’m pleased to see the brand continue in Woolworths hands,” said Mr Milham on Thursday.

Both Woolworths and arch rival Coles have invested hundreds of millions of dollars into ramping up their technology and delivery platforms to get food and groceries quickly to people’s front doors, with smaller players such as MilkRun placing pressure on larger supermarket chains to match them on lightening fast delivery times.

In November, then Coles boss Steven Cain said he believed online grocery delivery times of 60 minutes was the “sweet spot” for the sector that stacked up economically for retailers, as instant grocery players that have tried to beat that time such as Send and Voly have collapsed and others are pulling back on their service offering.

Mr Cain, unveiled last year a “Rapid” click and collect service that cut delivery times by 30 minutes to 60 minutes for Coles shoppers, and said at the time there was a demand for fast grocery delivery times from shoppers, but this had to be tempered by making the service profitable.

“Worldwide what we are seeing is there is a demand for ‘fast’ and what we are seeing is different pricing models emerging, either you pay more for the product or you pay a delivery charge, I think everyone is still exploring what the right model is.”