Report: Instant Grocery Delivery Services Lose Roughly $20 per Order

Several startups around New York City are vying to be able to ferry groceries within 10 or 20 minutes, according to The Wall Street Journal on Sunday (Jan. 30).

Gorillas Technologies Ltd., Jokr SARL and Buyk Corp. are among the companies competing for market share in New York City.

The startups want to deliver groceries “within minutes.” They usually operate through “dark stores,” warehouses with no retail storefront, which helps them expedite the delivery process.

The prices will be similar to grocery stores. There will be discounts and many services don’t have a fee or minimum order, per the WSJ.

While the offerings have brought robust sales, there have also been heavy losses due to the high costs of advertising and paying couriers to deliver the items. Some of the losses have ended up being an average of $20 per order when advertising is factored in.

According to several executives and company backers, the losses could lead to more investments later – as groceries are an essential business, if one startup gets big enough, the numbers could become profitable. Nazim Salur, the founder of Istanbul’s Getir, which fills grocery orders there, compared it to a plane, saying in the early days of “just taking off, it consumes a lot of gas.”

He had confidence Getir would grow bigger and become profitable.

Companies say they might be able to combat losses through selling ads for brands that already exist or by selling their own brands. They might also drive up order sizes by adding alcohol or investing in tech to more efficiently distribute labor in their warehouses.

In other news involving dark stores, Ola from India will use them to put out its Ola Dash quick commerce business.

The company was formerly known as Ola Store. It plans to open 500 dark stores in the next several months. It’s already available in nine cities and Ola operates over 20 such stores and 2,500 stock keeping units, PYMNTS wrote.

Read more: India’s Ola Plans 500 Quick Commerce Dark Stores