Business model

Will Jiffy’s new “software only” rapid delivery business model work? | Analysis and features

Just over a year after its UK launch, fast-food grocer Jiffy completed a “major strategic pivot” last week. Effective immediately, it ceased all super-fast deliveries, reinventing itself as a software company.

The software “would become Jiffy’s primary focus,” CEO Vladimir Kholiaznikov told The Grocer. While remaining a “strong believer” in quick groceries, Kholiaznikov believed that Jiffy wouldn’t break even in a reasonable enough time frame. But selling software for others to try would mean a profit in a “shorter horizon.”

So is the decision wise? And what does that bode for a quick grocery store?

“Is there a degree of despair? Yes,” says Brittain Ladd, former Amazon executive and quick grocery advisor.

All fast grocers struggle to make a profit. After growing and growing on the billions of dollars invested in them over the past two years, investors are starting to demand a path to returns. This week, Gorillas announced it was pulling out of four countries and cutting its global workforce by 300, as it shifted its strategy “from hyper growth to a clear path to profitability”. Gopuff also cut 400 employees in March and Avo cut two-thirds of its workforce in May.

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“Quick commerce’s grocery delivery model with dark stores is currently not generating net profits,” says online grocery consultant Viv Craske. But “whether Getir, Gorillas and GoPuff are profitable or not, they are so well funded that they will continue to operate.”

For less well-funded players like Jiffy – who having raised a total of $35m is a minnow compared to Gopuff’s $3.4bn, Getir’s $1.8bn and Gorillas’ $1.4bn – times are more difficult.

“Jiffy was failing as a quick grocery delivery business,” adds Ladd. “Becoming a software company makes sense because the current business model has failed. Becoming a software company certainly keeps Jiffy going.

Craske is more positive, calling the move: “Fantastic and brave.”

Long-term prospects?

But while the software pivot ensures short-term survival, can Jiffy thrive in the long term?

“The expectation of this decision is that you will pay Jiffy either an annual license fee or a per transaction fee – I don’t see that. This makes the supplier even less profitable,” says Dean McElwee, director of international e-commerce at Stanley Black & Decker, formerly of Kellogg’s, Juul and Coca-Cola. “I don’t drink Kool-Aid,”

Ladd is equally cynical. “The logical question retailers should ask themselves is: if Jiffy failed using the software they created, why would we succeed?”

Jiffy’s Kholiaznikov says it’s not just rival fast grocers who would want his software. The target market is retailers with an existing store footprint.

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Like BrewDog, the January launch partner of Jiffy’s “Q-Commerce as a Service.” BrewDog’s many physical bars could serve as dark stores, with Jiffy’s software managing orders and inventory, and delivery being handled by third-party couriers.

The supermarkets, convenience store chains and high street retailers that have partnered with Deliveroo and Uber Eats certainly suggest an appetite for faster delivery. Jiffy claims to have dozens of interesting leads.

But will retailers want to make fast deliveries themselves?

“I don’t support retailers who offer fast delivery themselves,” Ladd says. “I prefer the Tesco Gorillas model. Partnering with a fast company allows retailers to drive rapid delivery with minimal capital and operational requirements. If their customers embrace it, their chosen fast partner can easily scale the service while the retailer focuses on running their stores. »

Craske says savvy retailers, along with other fast-delivery business models like Beelivery, mean “the addressable market for Jiffy is huge.”

Ladd argues otherwise. “I don’t think the total addressable market is big enough for Jiffy, and I don’t think enough retailers will be interested in using Jiffy’s platform,” he says.

And even if there are enough customers, would Jiffy be their first choice?

“It assumes that Jiffy has the best data science abilities,” which is debatable, McElwee says. Ladd says, “Just because Jiffy made the decision to become a software company doesn’t mean Jiffy is a leader in the field.”