DeepSummary
In this episode, Harry Stebbings interviews Ralph Wenzel, the founder and CEO of JOKR, a quick commerce company operating in the US and Latin America. Ralph provides an in-depth breakdown of JOKR's business model, discussing the unit economics, comparing the US and Latin American markets, expansion strategies, and addressing common misconceptions about the quick commerce industry.
Ralph explains the key drivers of profitability, including the ability to procure products directly, vertical integration, and an efficient last-mile delivery system focused on 15-minute deliveries. He shares detailed metrics on average order values, order frequencies, product margins, delivery costs, and real estate costs, highlighting the differences between the US and Latin American markets.
The discussion also covers JOKR's growth strategies, including the payback period for new markets, the balance between growth and profitability, the role of private label products, and the potential for advertising and paid search. Ralph emphasizes the importance of building a sustainable and ecologically responsible business model.
Key Episodes Takeaways
- Understanding and addressing consumer demand for on-demand delivery is crucial in the quick commerce industry.
- Profitability in quick commerce depends on efficient procurement, vertical integration, and a focus on 15-minute delivery for high rider utilization.
- Unit economics vary between the US and Latin American markets, with differences in average order values, product margins, delivery costs, and real estate costs.
- Balancing growth and profitability is essential, with marketing spend focused on areas with established efficient operations.
- Private label products can potentially increase margins by 5-10%, representing a key growth opportunity for quick commerce companies.
- Advertising and paid search could become meaningful revenue streams as the business matures and gains scale.
- Building an ecologically sustainable business model is a priority for JOKR, alongside operational profitability.
- Transparency in sharing detailed metrics and financial data can help address misconceptions about the quick commerce industry.
Top Episodes Quotes
- “We think that in 1 hour or 2 hours delivery type of basically system will never be able to yield the same profit margins as a 15 minutes delivery model.“ by Ralph Wenzel
- “We want to build an online grocery proposition that looks into what is it that customers want and when is it that they need it.“ by Ralph Wenzel
- “We think that at scale, we have like a five to 10% additional margin potential that we can unlock lock while building private led.“ by Ralph Wenzel
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Episode Information
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
Harry Stebbings
1/12/22
Ralf Wenzel is the Founder & CEO @ JOKR, a global platform for instant retail delivery at a hyper-local scale serving both the US and LATAM. Ralf has raised over $260M for the company, most recently valuing it at $1.2BN. Prior to JOKR, Ralf spent 7 years as the Founder & CEO @ foodpanda, as well as, enjoying roles as Chief Strategy Officer @ Delivery Hero, Interim Chief Product and Experience Officer @ WeWork and even moving to the other side of the table as a Managing Partner with Softbank.
In Today’s Episode with Ralf Wenzel You Will Learn:
1.) What is the unit economic breakdown for quick commerce business models? What levers can be used to improve it over time?
2.) Comparing the US to LATAM:
- What is the AOV (average order value) in the US vs LATAM?
- What is the order frequency in the US vs LATAM?
- How does labour cost vary when comparing LATAM to the US?
- How does real estate cost for fulfilment centres differ when comparing LATAM to the US?
- How do product margins on a per product basis differ when comparing US to LATAM?
3.) New Market Growth and Maturation:
- What is the payback period for new markets? How has this changed over time?
- How does the payback period reduce with every new market being opened?
- What % of AOV is spent on marketing when a new market is opened? How does this marketing spend change over time?
- In mature markets, how much new customer acquisition is organic vs paid?
- What is the average weekly growth rate in new vs mature markets?
4.) Business Model Expansions:
- How does Ralf and JOKR approach the potential for private label goods?
- How does private label change the margin structure of the goods?
- What have been their lessons from starting their first private label goods?
- How does Ralf approach the ability to integrate advertising and paid search?
- What is needed for paid search and advertising to be a meaningful part of the business?