This time hope they get it right

Anyone who has been through the dot com boom and bust cycle of the early 2000s or was old enough at that time knows that grocery delivery and pet accessories were among the top categories of companies that went bust.Yet a relatively new player has bravely forayed into this space. I have used Ordermonger quite a few times.Their service is good. They immediately call back to confirm your order and it is at your doorstep in within 1 hour. They have since expanded to groceries,flowers,cakes and into other cities after Hyderabad. No doubt they are useful, most web 2.0 start-ups are,but do they make any money? I was curious since online groceries and food delivery business has been beaten to death - many dot.com era companies did something of this kind and struggled to see any profits.Yet ordermonger.com seeks to turn a profit in a historically unprofitable sector.


I tried doing some basic calculations. In Hyderabad they have tie ups with around 40 restaurants and 6 sweet vendors serving around 50 localities. For groceries and flowers however they seem to have a tie up with 1 vendor and serve a lot many localities (around 300).So I thought a reasonable way to guess the orders is to assume a fixed number of orders per restaurant per day for food and sweets and an estimate on the number of orders per locality per day for flowers and groceries for example the revenue per day for restaurants is number of restaurants * number of orders per restaurant * order size * margin% .Similarly for flowers it is number of localities serviced * order size * margin % .One can then get total revenues per day across all categories and all cities.

In other cities they have much lesser presence.Bangalore they seem to have tie ups with around 5-10 restaurants (from what I see on their site) and flower delivery is available in all cities they operate in

I assume margins of 10% for food delivery and 5% for others. I dont have much of an idea though but this seems reasonable. Groceries are not a very high margin business for sure and the assumption of 5% doesn't seem way off limits. The basic calculations are here


Doing some sensitivity analysis yields revenues in the range of INR 4,000,000 - 6,500,000 per annum.The company is started by ex software professionals so the revenues are hardly enough to employ 3 software engineers. Add to this cost of maintaining a fleet of delivery staff which has to be replicated in every city,no scaling advantages here. It is going to be interesting to see how they manage to grow and yet be profitable. The biggest mistake such companies sometimes make is that they think they are a software company (one look at the website confirms that there is at least one employee trying to impress everyone with his or her web development skills) but in reality they are a logistics and operations company.(Dell, anyone?) Having that perspective will help decide the right strategy early on for the fledgling start up.

Hope the newbies take a few lessons from there.Good luck to them