Woolies gobbles up Milkrun and revives it

When express delivery service Milkrun suddenly shut down last month, many recognized the impact the startup had on improving a moribund industry dominated by lethargic supermarket giants.

Founder Dany Milham said at the time: “I believe the impact the Milkrun team has had on the industry will be long lasting”. The startup certainly had an impact on Woolworths, which bought the company and will run the brand under its Metro60 banner.

In June last year, in response to the emergence of several now-defeated delivery startups, Woolworths launched Metro60, which allows 50 popular items to be delivered within an hour. The project was backed by US technology giant Uber.

Last night, Milkrun’s Instagram account caught fire with a short clip of a Milkrun-branded video game coming back to life.

A follow-up message appeared on the accounts of over 26,000 followers this morning, titled “We’re back baby”, stating “Milkrun is back in the game, now powered by Woolworths Metro”.

As “Milkrun powered by Metro” it now operates in NSW (Sydney & Newcastle), Victoria (Melbourne), Queensland (Brisbane & Gold Coast) and the ACT and will be faster, with a wider range of groceries, delivered in about half the time – an average of 33 minutes.

“That means you get an assortment of over 10,000 groceries, tons of deals, and an average delivery time of 33 minutes thanks to our delivery partners,” the post said.

The Milkrun app has been updated. Users also receive Woolworths Rewards points on purchases.

In an email to Milkrun customers – the startup generated around 1 million orders in 15 months – Woolworths said: “It was hard to ignore Milkrun, who have proven to be a bold and innovative brand in Aussie supermarkets. And so we set to work to find out if there was a way we could bring together the best of both brands.”

When Milkrun shut down, Milham said the company had “better unit economics than many people on the outside realized… proving that the business model in Australia can work at the right scale.”

It appears that Woolworths also liked the numbers and believes they can work and will now bring the scale it sought amid an inability to attract additional investment for the startup, which led to its closure.

It’s unknown what Woolies paid for Milkrun’s assets, but it would have been a small fraction of $86 million from VCs like Tiger Global and Airtree poured into its short 19-month life.

In a statement from the supermarket, Milham said: “Milkrun pioneered fast grocery delivery in Australia, and I am pleased to see the brand remain in the hands of Woolworths.” Milham will not be part of the resurrection of the company he founded.

Brad Banducci, CEO of the Woolworths Group, said they had “long-standing admiration for Milkrun’s innovative brand, dedication to customers and ambition to revolutionize the grocery delivery model”.

Milkrun’s rebirth isn’t the only delivery startup to get a second life.

After Sydney rival Voly folded in November last year after burning $18 million in seed money, the brand bounced back to life in February after meat subscription service Our Cow bought the assets from the trustees.

Melbourne ready meals company Efoodz. acquired gourmet marketplace CoLab from its trustees after it closed last month.

Others weren’t so lucky. Send 12 months ago collapsed. British delivery giant Deliveroo withdrew from Australia late last year after losing $33 million. Restaurant meal delivery service Providoor closed a month ago, with more than $4 million in gift cards on its books.