-backed Deliveroo, which is due to make its market debut on the London stock exchange within weeks, recently said that grocery delivery is the fastest growing part of its business.
The challenge is how to make it profitable. When Deliveroo or Uber Eats delivers a meal for an independent restaurant, they typically pocket up to 30% of the order value in commission and still end up with a loss. As supermarkets run on razor-thin margins, they can only afford to hand over a 15% or 20% fee in many markets. So the odds of making grocery partnerships profitable are lower than with restaurant tie-ups.
There are other logistical hurdles to turning a profit. Orders arrive quickly on bicycles or motorbikes, but there is a limit to how much couriers can physically carry. Baskets of bulky items like bread, milk and toilet paper take up space but are low value. Alcohol is a smarter bet because of its higher sticker price, which might explain why Uberis trying a different tack and becoming a grocer itself.
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