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The Flink Business Model In A Nutshell – How Does Flink Make Money?
Flink is a German on-demand food delivery service founded by Oliver Merkel, Julian Dames, and Christoph Cordes in 2020. Though the company is a relative newcomer, it has grown quickly since being launched.
Flink makes money by selling marked-up grocery items which it purchases in bulk. The company partnered with supermarket giant REWE and operates smaller warehouses to boost its margins.
Flink charges a delivery fee on orders with an attractive minimum order amount. The company is also charged an interchange fee by card issuers which it passes on to the consumer.
Flink is a German on-demand food delivery service founded by Oliver Merkel, Julian Dames, and Christoph Cordes in 2020. Flink is a relative newcomer to the food delivery industry and is one of many similar companies looking to profit from the vertical approach of operating dark stores.
Each of the three co-founders has an impressive resume and extensive industry experience. Merkel was a former Bain & Company partner who led the firm’s German retail operations. Cordes was the CEO of the online shopping company home24, while Dames held senior positions at Foodora, Delivery Hero, and Foodpanda.
The impetus for the founding of Flink was perhaps provided by Merkel, who had previously made a significant investment in Gorillas – another German food delivery company promising to deliver food in ten minutes. If nothing else, this gave the co-founder access to important business data around industry profitability and margins.
Like Gorillas, Flink is pitching itself as a grocery solution delivering fresh food items on-demand. Delivering these items as consumers require them is logistically challenging, especially when compared to longer-life items such as beer, cigarettes, chocolate, and other snack foods. Despite the logistical issues, however, the Flink co-founders believed instant shopping would become the new standard for perishable grocery items. Consumers, they argue, eat three meals per day with many shopping multiple times per week – representing a potentially lucrative market where consumers make repeat orders.
After acquiring rival service Pickery, the company was operational in five German cities by February 2021. A successful round of funding then enabled Flink to expand into the Netherlands and France at a rapid pace. Less than twelve months after it was launched, Flink became the fastest German company to reach unicorn status.
In September 2021, Flink announced another round of funding from DoorDash for several hundred million dollars. Recent estimates value the company at $2.1 billion.
Flink earns money by selling grocery items on its platform and via delivery fees on customer orders.
Grocery sales
The company earns money on grocery sales by purchasing items in bulk and selling individual products for a higher price than can be found in traditional supermarkets.
Flink partnered with REWE in June 2021, with the supermarket giant becoming the exclusive supplier of the start-up. As part of the deal, it is likely Flink receives favorable rates for bulk purchases.
Margins are also boosted by the company operating small, optimized warehouses in lower-income areas where operating costs are lower.
Delivery fees
Flink also charges a delivery fee over and above the total purchase amount.
In Germany, the delivery fee is €1.80 with a minimum order amount of just €1. These fees are very attractive to consumers buying perishable items who need to make smaller, more frequent purchases.
Flink also charges transaction fees to offset the cost of the interchange fees charged by card issuers such as Mastercard and Visa.
DoorDash is a platform business model that enables restaurants to set up at no cost delivery operations. At the same time, customers get their food at home and dashers (delivery people) earn some extra money. DoorDash makes money by markup prices through delivery fees, memberships, and advertising for restaurants on the marketplace.
Glovo is a Spanish on-demand courier service that purchases and delivers products ordered through a mobile app. Founded in 2015 by Oscar Pierre and Sacha Michaud as a way to “uberize” local services. Glovo makes money via delivery fees, mini-supermarkets (fulfillment centers that Glovo operates in partnership with grocery store chains), and dark kitchens (enabling restaurants to increase their capacity).
Grubhub is an online and mobile platform for restaurant pick-up and delivery orders. In 2018 the company connected 95,000 takeout restaurants in over 1,700 U.S. cities and London. The Grubhub portfolio of brands like Seamless, LevelUp, Eat24, AllMenus, MenuPages, and Tapingo. The company makes money primarily by charging restaurants a pre-order commission and it generates revenues when diners place an order on its platform. Also, it charges restaurants that use Grubhub delivery services and when diners pay for those services.
Instacart’s business model relies on enabling an easy set up for grocery stores, the comfort for customers to get their shopping delivered at home, and an additional income stream for personal shoppers. Instacart makes money by charging service fees, via memberships, and by running performance advertising on its platform.
Lyft is a transportation-as-a-service marketplace allowing riders to find a driver for a ride. Lyft has also expanded with a multimodal platform that gives more options like bike-sharing or electric scooters. Lyft primary makes money by collecting fees from drivers that complete rides on the platform.
Uber is a is two-sided marketplace, a platform business model that connects drivers and riders, with an interface that has elements of gamification, that makes it easy for two sides to connect and transact. Uber makes money by collecting fees from the platform’s gross bookings.
Postmates is a food delivery service built as a last-mile delivery service platform connecting locals with shops. Postmates makes money by collecting fees (commission, delivery, service, cart, and cancellation fees). It also makes money via its subscription service (called Unlimted – $9.99/month or $99.99 annually) giving free delivery on every order of more than $12.
Uber Eats is a three-sided marketplace connecting a driver, a restaurant owner and a customer with Uber Eats platform at the center. The three-sided marketplace moves around three players: Restaurants pay commission on the orders to Uber Eats; Customers pay the small delivery charges, and at times, cancellation fee; Drivers earn through making reliable deliveries on time.
Coupang is a South Korean eCommerce company. Coupang makes money by selling consumer items through its desktop and mobile eCommerce platform. The company also collects various fees from its food delivery, video streaming, and advertising services.
Amazon has a diversified businessmodel. Amazon’s primary revenue streams comprise its e-commerce platform, made of Amazon labeled products and Amazon third-party stores. In addition to that, Amazon makes money via third-party seller services (like fulfilled by Amazon), advertising on its platform, AWS cloud platform, and Prime membership.
Getir is a Turkish grocery and restaurant food delivery platform founded by Serkan Borancili, Tuncay Tutek, Dogancan Dalyan, and Nazim Salur. Salur got the idea for the company after wondering if food could be delivered nearly as quickly as taxis could be hailed.
As a dark supermarket operator, Getir makes money by selling items at a 10% premium to traditional supermarkets and retailers. Margins are higher because the company only leases the warehouses where the dark stores are located.
Getir also charges a flat delivery fee on orders above a certain threshold, with fees varying according to the country served.
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