Category Archives: Business & Economy

Grocery Delivery for 10% or Less

tl;dr For the masses, having groceries delivered will continue to cost more than the market will bear until labor and transportation costs vaporize. Grocery delivery might work in some concentrated areas, but will remain a small niche, utilized mostly by the affluent. Grocery pick-up service can be profitable and satisfy consumer demand. Someday, drones might spare us from needing to travel for pick-up.

For about 15 years we’ve heard of all the failed startups and all the current ones struggling to make grocery delivery a viable service. So, what’s the big holdup? Why must I still go into the grocery store on a regular basis, when I enjoy it so rarely? Why hasn’t anybody solved this for me?!

During the September 2013 Austin Lean Startup Machine workshop, at Capital Factory, a few of us grouped around the very common idea that grocery shopping needs to be fixed. Along with applying Lean Startup principles to ‘some’ idea, I was also intrigued by diving head first into this huge opportunity that is seemingly impossible to resolve.

It almost goes without saying, I highly recommend The Lean Startup, by Eric Ries. When you’re ready to test Lean Startup theory, look for a Lean Startup Machine workshop, you’l really learn a lot and meet some awesome people.

Validation comes easy, for some things. It was extremely clear that a lot of people don’t want to go into a grocery store and shop. There were a lot of folks who do, don’t get me wrong, some people enjoy the experience. However, you can be certain that there is a massive market for those who don’t. Not surprisingly, the vast majority of those who don’t want to go into a grocery store are willing to pay for such a luxury.

Some ideas are simply invalid. People want it and they’ll pay for it, so what’s the problem? The problem, as we discovered, was the value customers price the service at. It seemed reasonable, and substantial that the general consensus of a 10% “delivery” fee was acceptable. Hold up. We really felt that we needed at least an 18% premium to break even. We had hoped that 20% would be acceptable and we’d have a little extra cheese to work with. Nope. Sorry. Not gonna happen. Our data showed pretty clearly that very few people, all affluent, would even begin to entertain the idea of paying that much of a premium. I’m guessing this is were all those failed and failing grocery delivery startups arrive. They must figure out how to deliver at an impossible margin or convince unwilling customers to pay more.

The Resolution: Don’t Deliver. Umm, OK, but that hasn’t solved anything, or has it? We felt pretty deep down the rabbit hole. How could we turn our backs on a service we want, a service so many others want and simply say it just won’t work. So, we concentrated on why it’s more expensive to “deliver” the goods than what people will gladly pay. We thought about the overhead costs. Paying somebody, minimum wage, to actually “deliver” the groceries plus transportation expenses is greater than 10% of the typical bill of groceries.

We validated that the premium they would pay was for the benefit of not having to park, and actually shop in the store, “delivery” is not a show-stopper, whereas needing to go into the store is. So, our solution was to build a service that allows consumers to shop online or call it in, but then actually arrive at a pick-up center to receive their groceries. This way, the customers incur the transportation costs and a 10% service fee might allow for a viable business.

Amazon’s Resolution: Drone Delivery. Two months after our LSM workshop Bezos, on 60 Minutes, announced that Amazon would someday deliver groceries by drone. Aha; it seems that Amazon’s R&D must have concluded similar findings, namely:

Paying somebody, minimum wage, to actually “deliver” the groceries plus transportation expenses is greater than 10% of the typical bill of groceries.

Tesla Motors is not bad, Better Place is real good

tesla motors has some slick vehicles and post IPO investors have made some bank. however, as much as i’d like to have one of their rides, the prices aren’t yet practical. that is very likely to change for all electric car manufacturers if Better Place succeeds.

foreign oil independence for the USA might be closer than imagined before, but don’t be surprised if the Chinese beat us to it. in the meantime Shai Agassi is working to make our lives a better place. not by simply making the world ‘greener’ but by making automobiles BETTER, FASTER, CHEAPER and AS CONVENIENT AS PETRO BASED CARS TODAY.

his approach is to use batteries the same way we use fuel (petro). this might not unique, but actually tesla and most other electric car makers take the approach of using batteries the way we currently use “fuel tanks” which is not better, faster, cheaper or as convenient as petro based cars today.

here’s a good Charlie Rose interview with Shai Agassi of Better Place

Mint.com Review

Have you been using Mint.com? I checked it out a year ago or so and it was pretty basic, aesthetically nice, but basic. Over the last couple of months however, I tied in most of my accounts and I gotta say it’s come a long ways in the last year. It turns out Intuit bought Mint.com last September which opened up a lot of access to various financial institutions. I still can’t wire up my GoldMoney.com or Forex.com accounts yet, but pretty much everything else.

Chase is my primary bank and I’ve always been happy with their web interface, but Mint.com opens you up to a much broader view of your finances by pulling in information from all the financial institutions you use. So, even if you think you already get enough information from your various online account interfaces or if you tried Mint.com a while back and like me weren’t impressed, you should give Mint.com a try today. I think you’ll be pleasantly surprised.

It’s free, seriously. Basically they’re hoping to make money by discovering alternative bank, investment & credit accounts that would benefit you individually more than the accounts you already have. If you sign up for any of the new accounts they earn referral commissions.

Here’s a review from About.com

Billy Mays Checklist for Inventors Who Want to Be Seen on TV

‘As Seen On TV’, Billy Mays summed up what he and his partners are looking for in an invention or product on the interesting tv series Pitchmen.

http://www.bustercollings.com/movies_public/billy-mays-checklist.flv

1. Does it have the wow factor?
2. Does it have mass appeal?
3. It is demonstrable?
4. Does it solve a problem?
5. Does it give instant gratification?

So now you know the minimum requirements for developing a product that might make you rich and be seen on tv via Telebrands, the “As Seen On TV” company.

UPDATE: Billy Mays died while sleeping on 6/28/2009.

Electric Cars – Made in America, thanks Tesla Motors

a couple of years ago i saw “Who Killed the Electric Car“, for some reason i didn’t blog about it but here’s my chance to recommend it. this movie encourages the question “why don’t the oil companies bailout out the auto makers in Detroit”. it’s ironic to see up and comers like Tesla Motors pushing forward something that GM was years ahead of EVERYBODY on. now, GM needs federal bailout cash while they’re years away from a hybrid hybrid that uses 8 or 9 different sources of energy… gas, electric, hydrogen, coal, solar, wind and hamsters. this way if the hamsters union strikes you can flip the switch back to gasoline.

yesterday Tesla finally released some pictures and promotional materials for their sedan the Tesla Model S. looks pretty nice for a sedan.

keep in mind when you’re pricing these electric cars, you’ve got to factor in how much you’ll save in fuel costs.

GoldMoney, iPhone app and real gold make good combo

i’ve been using GoldMoney.com to buy and hold gold and silver bullion for just a little while, but i really like the service they provide. i was so happy to learn that they had released an iphone app a few days ago.. and guess what.. the goldmoney iphone app is the first one i’ve actually paid for. yep, i have several apps loaded up on my iphone but all of them except the goldmoney app are freebies. it’s a nice app, although they need to keep adding features to it. i’d love to have the ability to get text msg alerts on price points as well as the ability to buy, sell and trade metals and currencies through the app itself. all in due time i hope.

How the Economy Went So Bad So Fast

i really appreciate the Frontline investigative programs and tonight they’ll be airing ‘Inside The Meltdown’. from what i understand it should give some insights to the people (Paulson, Bernanke, Geithner) who pull the strings and some of the very very serious decisions that were made recently regarding the health of our American economy, in particular the handling of the bank bailouts.

you can also watch the program online.