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Business

Woolies gobbles up Milkrun, brings it back to life

- May 25, 2023 3 MIN READ
Milkrun
Grocery delivery service Milkrun returns under new owners Woolies
When rapid grocery delivery service Milkrun shut down suddenly last month, many acknowledged the impact that startup had on improving a moribund sector dominated by lethargic supermarket giants.

Founder Dany Milham said at the time “I believe the impact that the Milkrun team had on the industry will be long lasting”. The startup certainly had an impact on Woolworths, which has bought the business and will run the brand under its Metro60 banner.

In June last year, in response to the rise of several now-vanquished delivery startups, Woolworths launched Metro60 offering delivery on 50 popular items in under an hour. The project was backed by US tech giant Uber.

Last night the Milkrun Instagram account fired up with a short clip of a Milkrun branded video game springing back to life.

This morning, a follow up post to the accounts more than 26,000 followers, titled “We’re back baby” said “Milkrun is back in the game, now powered by Woolworths Metro”.

As “Milkrun powered by Metro”, it now operates in NSW (Sydney & Newcastle), Victoria (Melbourne), Queensland (Brisbane & Gold Coast) and the ACT and will be faster, with a bigger range of groceries, delivered in around half the time – a 33-minute average.

“That means you get a 10,000+ range of groceries, tons of deals and an average delivery time of 33 minutes thanks to our delivery partners,” the post said.

The Milkrun app has been updated. Users will also received Woolworths Rewards points on purchases.

In an email to Milkrun customers – the startup generated around 1 million orders in 15 months – Woolworths said “it’s been hard to ignore Milkrun, who proved themselves to be a bold and innovative brand in the Aussie grocery space. And so we set to work to trying to figure out if there was a way in which we could bring the best of both brands together”.

When Milkrun shut down, Milham said the business had “better unit economics than many people on the outside realised… proving that the business model can work in Australia at an appropriate scale.”

It seems Woolworths also liked the numbers and believes they can work and will now bring the scale he sought amid an inability to attract additional investment for the startup, leading to its shutdown.

It’s not known what Woolies paid for the Milkrun assets, but it would have been a small fraction of $86 million from VCs such as Tiger Global and Airtree  poured into its brief 19-month life.

In a statement issued by the supermarket, Milham said: “Milkrun pioneered rapid grocery delivery in Australia, and I’m pleased to see the brand continue in Woolworths’ hands.” Milham will not be part of the resurrection of the company he founded.

Woolworths Group CEO Brad Banducci said they’d “long admired Milkrun’s innovative brand, dedication to customers and ambition to shake up the grocery delivery model” and was “thrilled” to see it continue and thrive under Metro60.

Milkrun’s rebirth is not the only delivery startup to have a second life.

After Sydney rival Voly shut down November last year, having burnt through $18 million in Seed capital, the brand sprang back to life in February after meat subscription service Our Cow bought the assets from the administrators.

Melbourne ready-meal company Efoodz. acquired the gourmet food marketplace CoLab from its administrators after it shut down last month.

Others were not so lucky. Send collapsed 12 months ago. UK global food delivery giant Deliveroo pulled out of Australia late last year after losing $33 million. Restaurant meal delivery service Providoor closed a month ago, with more than $4 million in gift cards on its books.

 

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