MilkRuns demise heralds dark days ahead for millennials hooked on instant gratification | James H

January 2021 · 5 minute read
OpinionGig economy This article is more than 9 months old

MilkRun’s demise heralds dark days ahead for millennials hooked on instant gratification

This article is more than 9 months old

The grocery delivery service imagined a brave new world where no one would need a fridge again. Now Australians must wake up to the chilling reality

This week brought dark news for Australian fans of instant gratification. MilkRun, the popular 10-minute grocery delivery app, announced to its staff that it would fold and they would all be made redundant. Founder Dany Milham, formerly of Koala mattresses, blamed its abrupt failure on deteriorating “economic and capital market conditions”.

It was not an isolated event, nor a particularly unpredictable one. MilkRun’s collapse followed the death of a series of companies including Send, Voly and Quicko, all of which offered more or less the same product and faced precisely the same problems. MilkRun was the slickest and best-capitalised of them all, but it couldn’t beat the odds.

The hyped startup was built from the ground up as an Australian riff on the global “instant grocery” craze, which came at the tail end of the last tech boom. Like its global forebears, such as Jokr, Getir and Gopuff, MilkRun made a simple promise: groceries, delivered by bike courier in 10 minutes or less, at a somewhat reasonable price.

Grocery delivery startup MilkRun collapses, blaming economic conditionsRead more

To achieve this staggering logistical feat, the company set up a network of tiny warehouses – called “dark stores” – throughout Australia’s inner-city enclaves, which were stocked with a select range of goods and acted as ultrafast hubs for a growing armada of bike riders.

The company and its ill-fated competitors was talking to a new generation of grocery customer housebroken by other near-instant indulgences such as Netflix, Amazon and Uber Eats, and no longer trained to observe the quasi-religious ritual of the “weekly shop”. Its achingly millennial marketing, in which newly supported suburbs were rolled out like limited edition Nike drops – Bondi! Erskineville! Brunswick! Collingwood! – made clear exactly the yuppie set it was targeting.

A MilkRun rider on a delivery mission in Surry Hills, Sydney. Photograph: Blake Sharp-Wiggins/The Guardian

It made a perverse sort of sense, at least in an investor presentation. Evolving consumer habits, amplified by Covid, had in theory generated the sort of person who wouldn’t blink at paying a markup to have something delivered to them fast. Some instant grocery startups imagined a brave new world where no one would ever need a fridge or a pantry again, because everything could be supplied at the touch of a button.

If all of this sounds way too good to be true: well, it was. Though instant grocery startups have slurped up a tremendous amount of investment money over the past few years, they have with few exceptions struggled to create sustainable businesses. It’s a tough, capital-intensive game, and there’s no ironclad evidence the model actually works – even if it is highly appealing to a particular sort of consumer.

In June last year, the Sydney Morning Herald reported MilkRun was burning through $13 per order at one of its most successful locations, was no longer promising 10-minute delivery, and was making a stronger pivot into alcohol delivery to keep the gravy train rolling. It didn’t work. As Coles and Woolworths expanded their own delivery offering to compete – while steadfastly refusing to make the outlandish promises of the instant grocery upstarts, the writing was on the wall for MilkRun.

But the real story here is not so much the failure of an Australian business, but the end of a global era. Since the shocks of the financial crisis, the world has been living through a prolonged low-interest rate environment, where money was virtually free and vast amounts of capital flooded into unusual harbours in search of a return.

That investment environment helped create our contemporary world and the various tech startups which sustain it, but it has also created a bubble of companies unsustainable in the long term.

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This era of speculative investment came to a juddering halt with the post-Covid inflation surge, as interest rates rose and investors grew tired of funding businesses that did not at least hint at profitability. When Milham talks about “economic and capital market conditions”, he’s gesturing at the fact the epoch of loose money died before MilkRun could find its feet and sort out its business model (that is, if it ever could).

For those who came of age in the 2010s, the demise of this era has created quite a hangover. Our lives were intermediated by on-demand platforms and services of dubious long-term viability but which were sustained, zombie-like, by investors who were ready and willing to foot the bill on the promise of a return somewhere over the horizon.

You could say the golden age of the so-called “millennial lifestyle subsidy” found its zenith in something like MilkRun, which promised – for a brief, shining moment – the hedonistic pleasure of having a bicyclist deliver you a single Cadbury Creme Egg from the other end of your suburb for a nominal fee.

MilkRun and its legion of pretenders are now gone, and Australians will wake up to the chilling reality that they may have to wait upwards of 60 minutes for their groceries. But jeez, we had it good.

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