WOOLWORTHS BUYS FAILED FAST DELIVERY START-UP MILKRUN

Failed Sydney-based fast delivery grocery start-up Milkrun will reemerge as part of Woolworths, after the supermarket giant acquired the brand and operating entity in a deal thought to be worth about $10 million.

The collapse of Milkrun in April, which resulted in all of its staff being made redundant, was the biggest scalp from the downturn in private tech investment markets globally, and came after it banked $86 million in venture capital funding in less than two years of operation.

Milkrun founder Dany Milham said he was happy the Milkrun brand would continue. Josh Robenstone

Rather than operate Milkrun the way it did before its collapse, from a network of “dark stores”, Woolworths will simply rebadge its existing Metro60 faster delivery service.

Orders will be fulfilled via the current Metro60 model, which uses third-party couriers and claims an average delivery time of 33 minutes.

A social media post on Wednesday evening hinted at Milkrun’s revival, and its founder Dany Milham confirmed to The Australian Financial Review on Thursday morning that a deal was done.

Woolworths and Mr Milham declined to disclose the value of the deal, but sources told the Financial Review it was believed to be worth about $10 million.

“Milkrun pioneered rapid grocery delivery in Australia, and I’m pleased to see the brand continue in Woolworths’ hands,” Mr Milham said in an emailed statement.

Milkrun developed a strong customer base in its inner-city target market by creating a network of warehouses dubbed dark stores, which stock grocery products and enable delivery riders on e-bikes to get groceries to customers in 20 minutes or less.

It was an eye-wateringly expensive business model, which followed the Uber playbook of spending dramatically to buy up market share, in the anticipation of profits at some point in the future.

But the incumbent supermarket chains were clearly spooked by the popularity of the new service amid the pandemic-era home delivery boom. Woolworths, Coles and Uber each launched their own faster to services to compete.

Speculation about a deal for Milkrun’s assets came after the start-up blew the dust off its Instagram account on Wednesday evening, to tease its 26,100 followers about a potential return.

A short video showed an arcade game branded with Milkrun’s logo restarting.

Metro60 rebrand

In a statement, Woolworths Group chief executive Brad Banducci said the Metro60 brand would be renamed Milkrun.

The current functionality of the Woolworths app will remain the same, and the deal provides access to Milkrun’s name, social media accounts and existing customer relationships.

“We’ve long admired Milkrun’s innovative brand, dedication to customers and ambition to shake up the grocery delivery model,” Mr Banducci said.

“We are thrilled that the Milkrun story will continue to live on and thrive with Metro60 relaunching as Milkrun, now powered by Metro.

“Orders will be fulfilled from our network of Metro stores which will give customers the choice of over 10,000 product lines including hot roast chickens, fresh sushi and much more.”

While the Milkrun service will no longer be the same as the one that threatened to turn the supermarket sector on its head, the Woolies deal will take the brand nationwide.

It will be available from stores in more than 500 suburbs across Sydney, Melbourne, Brisbane, Canberra and the Gold Coast.

Woolworths will charge a flat $5 delivery fee, but a customer’s first three orders would be free. Everyday Rewards members will also earn with every Milkrun purchase.