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What contribution margin can be expected if on-demand grocery players can increase AOV to a reasonable level?


Ex-head of strategy at on-demand giant

Guest: When you're delivering fruit and veg, as well as, non-perishable items, your margins vary across the board. So it actually tends to come down to what people are ordering. How do you influence that and how do you increase AOV? Those are the two main levers that you might have.

Let's get this customer to buy something that gives me a higher margin and let's get them to buy multiple things to build the baskets. Now, both of these heavily require me to understand how customers work in order to build products around them.

This space and all of the competitors, and I can say this as a general statement, are not anywhere there at least two years further out than they need to be, to actually have technology that can start to do that kind of stuff. These are capabilities that Uber and Deliveroo of the world realized much later. 

So there isn't a lot of control over this space, which is why I don't actually have a number for what a good contribution margin can look like because there's no winner so far.

Glovo has been doing this with the partnerships model. So I don't think they are a good benchmark either. They are all severely in the red right now and they're going to try to get out of it.

Find this answer in Former head of strategy at a global on-demand giant on the economics of grocery delivery
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