Business

Milkrun CEO apologies to customers for ‘late’ online grocery deliveries

In an extraordinary email to customers, the CEO has apologized acknowledging they might have had a “poor experience” recently.

The CEO of an Australian company that promised to deliver groceries in under 10 minutes has sent out an astonishing email to customers apologizing if they feel “let down” by its service.

Young Rich Lister, Dany Milham is the CEO of the start-up Milkrun called, which raised $11 million alone before its launch in September last year and another $75 million this year.

The start-up has been backed by the tech giant founders of Atlassian, billionaires Mike Cannon-Brookes and Scott Farquhar.

Mr Milham, who is worth an estimated $150 million, said there were “no excuses” but he believed there had been an “unacceptable decline” in customer’s experiences with Milkrun, in an email sent to customers on Friday.

“There have been a number of factors which have, at times, led to an unacceptable decline in our delivery experience in busy periods,” he wrote in an email to customers.

“These included ongoing Covid cases affecting the availability of riders and hub staff, record rainfall in Sydney, and the challenges involved with scaling a fully employed workforce faster than anyone has ever tried before.

“I want to take this opportunity to apologise to you if you have recently experienced late delivery or a poor experience. No excuses, you deserve better and I want you to know that I am committed to ensuring we make good on our promise and continue to deliver the best experience you’ve ever had.”

Milkrun currently delivers to 50 suburbs across Sydney and 26 suburbs in Melbourne, stocking up to 2000 grocery products, which are housed in a network of warehouses that are described as dark stores.

Mr Milham went on to tell customers that it wasn’t “all bad” with the start-up changing “how Aussies buy groceries” to create “a mind-blowing experience” and revealing it had also hired more than 1000 staff with riders using e-bikes to deliver orders.

To address the company’s issues with deliveries, he said they had opened new hubs locations to reduce delivery time and distance, hired more riders and staff and worked with suppliers.

Milkrun is hoping to take a share of the $122 billion grocery market in Australia, but now faces stiff competition from one of the supermarket giants.

Big competition muscles in

Woolworths revealed this week it had launched a new app that promises groceries door-to-door within an hour for a $5 fee, with the new venture kicking off in 11 eastern Sydney suburbs, including in some areas Milkrun already operates such as Bondi.

The app, called Metro60, will expand into hundreds of new suburbs across NSW as well as in other states in the future, according to Woolworths.

It offers 4000 products from fresh produce to pet food to baby products, which will be delivered by Uber couriers.

The first three deliveries will be free via the app before the $5 delivery fee kicks in with a minimum spend of $20 and it has been described by the supermarket giant as a way to get last-minute snacks, ingredients or meals.

“Metro60 is a gamechanger for the occasions where customers are tight on time and can’t make it to a Woolworths Supermarket or Metro store, but need something in a hurry,” Von Ingram, Woolworths chief transformation officer said.

Other start-ups in the sector struggling

It comes as other start-ups in the sector that sprung up in the last year have struggled.

One called Send collapsed in May, risking 300 jobs in Sydney and Melbourne, with an administrator’s report revealing the start-up had burned through a whopping $11 million in just eight months.

Send was available in 46 suburbs in Sydney and Melbourne and had 46,000 registered users, but the administrators report revealed that Send’s sales topped $8113 in October last year but it made a loss of more than $658,000.

Fast forward to March and Send’s sales had skyrocketed by more than 50 times to almost $417,000 a month, but losses hit an extraordinary $2.38 million a month.

The biggest cost was staff adding up to $5.5 million over the eight months, the administrators said.

At the time, Mr Milham said Milkrun had reviewed Send’s financial information and it had a substantially different business to its model.

The other start-up is Voly, which was co founded by Mark Heath and delivers to about 42 suburbs after raising $18 million in December 2021.

But it fired half of its office staff this month and closed its warehouses in Crows Nest, Manly, Maroubra and Alexandria, with delivery times extended to 20 minutes, and plans to expand into Melbourne shelved, the Sydney Morning Herald reported.

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