9/19/2023 0 Comments Rocketship parts![]() ![]() This suggests that consumers are willing to pay for speed. Moreover, there has been a massive shift towards on-demand grocery delivery, which commands delivery fee at $5.99-7.99. Looking at these three metrics, it is not surprising to see that e-grocery holds the greatest opportunity.Īt more than $90 per basket, e-grocery has the highest ABS. the presence of customers upon delivery.the willingness to pay for delivery service.There are three things to consider when looking at the attractiveness of the categories: While the segment makes up a small portion of total grocery sales, the segment is expected to reach 18% of total grocery retail by 2025. Sixty percent of consumers order food delivery at least once a week for convenience despite the heavy price tag of 14-30% of total order value, making this a promising segment.įueled by the pandemic, more customers have adopted egrocery. What’s in the box sandwich, soda, or parcel? Let’s dive into them:Įcommerce was not the only segment that was booming during the pandemics food and grocery delivery also had their time in the limelight. To understand this space from an investment perspective, there are two things we need to think about: what is delivered and how it is delivered. But despite this expectation, their willingness to pay for this service is limited, forcing retailers and logistics partners to shoulder the costs. Some 30 to 35 percent of consumers would pick same-day or instant delivery if it were available at low prices.Ĭonsumers are aware of what is possible, and they expect to be able to choose from many ways to get the products they want quickly and conveniently. Much of this is driven by the rising consumer expectations of same day and instant delivery -a segment that is growing at as much as 40% per annum, according to data from the World Economic Forum.Ĭonsumers are becoming increasingly sophisticated in what they demand from last-mile delivery. The last mile delivery market is poised to grow from $12.2 billion in 2021 to $41.7 billion by 2028 at 19.5% CAGR, according to GlobeNewswire. It is the least productive and most difficult step to automate out of the entire logistics processes, making it also the most lucrative opportunity that many startups are vying for. This is not surprising because unlike other logistic processes that can be done in batches, last mile delivery operates in a single piece flow.Ī driver cannot really drag a container load of packages and drop them in one place. Last mile represents more than 50% of total shipping costs, making it the most expensive line item. With eCommerce exploding over the last 12 months– and as we mentioned in Part I and Part II-labor costs associated with fulfillment and shipping have also increased: a whopping 26.5% in 2018 compared to 16.6% in 2007. Last mile is the most expensive line item of the total shipping cost. Luckily, we know exactly what it takes for founders to change our mind. The difference between the two are the risks involved. ![]() Let us be frank about this: we think last mile delivery has a very attractive upside, but we think it is too challenging to be an attractive investment. ![]()
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