tup would be bigger than Coles and Woolworths within 10 years, but it collapsed in less than two years. It was the latest and most spectacular collapse of Australian grocery home delivery businesses, following the demise of Send in May 2022, Voly in November 2022 and CoLab in April 2023. All of the startups failed after promising 10-minute delivery, an unrealistic and costly pledge given the time it would take to pick and transport goods. Another venture, Quicko, also failed in March 2022.  It had promised a two-hour delivery. As well as the local startups, the German Foodora business closed its Australian operation in 2018, and the British Deliveroo business also quit the market in November 2022. A product of Covid-19 Milkrun was a well cashed-up venture, reportedly with around A$85 million (NZ$92.5 million) in capital, including $75 million raised in January 2022 four months after it launched. The business secured funding from venture capital investors that included the New York firm Tiger Global, Grok Ventures, Skip Capital and AirTree Ventures. The establishment costs of the hubs, staff and inventory to service the initial 35 Sydney suburbs targeted by Milkrun burned through the cash and had the venture scouring for more investors weeks before it went into administration. The $75 million raised in January 2022 was to have funded expansion into Melbourne, but the cash burn rate on the Sydney operation curtailed any bid to scale up the venture or expand into other states. The rapid home delivery startups were a product of the Covid-19 lockdowns and did manage to sign up customer despite supermarkets being permitted to trade and offering established home delivery and click-and-collect services. Most of the startups were doomed from the outset because of limited investor funding, but Milkrun was the exception in terms of financial backing. Milham blamed deteriorating economic and financial market conditions for the collapse of Milkrun, but the problem was really with the business model itself. In reality, investors likely studied the cash burn rate, the improbability of a viable business even if it was scaled up and the competitive pressures from Coles’ and Woolworths’ online home delivery and click-and-collect services, and came to the only logical conclusion. The claim about deteriorating economic conditions had more to do with inflation, the cost of delivery services, the assumption that a 10-minute delivery was actually convenient to the consumer and, significantly, a limited product range. In a market share battle, Woolworths and Coles had — and have — much deeper pockets to fund more extensive geographic options, more products to offer, buying power to support pricing incentives for consumers and existing store fulfilment efficiencies. Milkrun was losing at least $10 on each delivery and was trying to juggle service improvements and benefits against ballooning costs in an attempt to increase customer numbers and basket spend. As its competitors had found in earlier months, the business model was unprofitable, even when backed by substantial capital funding to cover establishment costs. Surprising but strategic move The decision by Woolworths to acquire Milkrun in a deal with administrators was surprising given it already was a dominant player in home delivery. Arguably, there could only have been three potential buyers, despite Milham indicating that there had been interest in a trade sale.  The three were Woolworths, Coles or Metcash IGA, all of which had store networks to support home delivery options, albeit not with the extravagant 10-minute delivery promise. All three supermarket chains have their own IT, fulfilment, marketing and customer management systems, so it would seem there would be limited intellectual property value from Milkrun’s operation. Woolworths’ objective was no doubt more about competitive strategy against Coles and Metcash IGA than about Milkrun itself; notwithstanding, that the investment was obviously small, and would have recruited some new customers. The acquisition may also finetune some of Woolworths’ systems and processes while bolstering the Metro60 rapid delivery service that has been rebranded to Milkrun. The move provides a distinctive service to Woolworths’ delivery and click-and-collect options. Under Woolworths’ ownership, Milkrun will offer an expanded ranged of 10,000 products to more than 500 suburbs across Sydney, Newcastle, Canberra,  Brisbane, the Gold Coast and Melbourne, with an average delivery time of around 30 minutes. While the Covid hangover has essentially passed, Woolworths, Coles and Metcash IGA have all continued to achieve growth in online home delivery and click-and-collect. Coles’ rapid delivery service of less than 90-minute order-to-home delivery is available from more than 460 stores nationwide, with click-and-collect offering a 60-minute service. The ongoing growth of Coles, Woolworths and Metcash IGA’s convenience offers, and the demise of so many startups, is unlikely to whet investor appetites for any new rapid delivery grocery ventures in the short term. Milkrun certainly left venture capital investors with food for thought on their future funding options.