flink-business-model

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.
ElementDescription
Value PropositionFlink offers the following value propositions for its customers: – Instant Grocery Delivery: Quick and convenient delivery of groceries. – Wide Product Selection: A diverse range of grocery items and essentials. – Affordability: Competitive pricing and discounts. – User-Friendly App: An easy-to-use mobile app for ordering. – Speed and Efficiency: Fast delivery and order fulfillment. – Convenience: Saving time and effort with doorstep delivery. – Safety Measures: Ensuring safety during the COVID-19 pandemic. – Sustainability: Commitment to environmentally friendly practices.
Core Products/ServicesCore products and services provided by Flink include: – Mobile App: A user-friendly mobile app for grocery ordering. – Product Catalog: A catalog of groceries and household essentials. – Delivery Services: On-demand delivery of orders to customers’ homes. – Payment Processing: Secure payment processing within the app. – Customer Support: Support for order-related inquiries and issues. – Discounts and Promotions: Offers and discounts on select products. – COVID-19 Safety Measures: Implementing safety protocols during the pandemic. – Sustainability Initiatives: Environmental sustainability efforts.
Customer SegmentsFlink targets various customer segments: – Consumers: Individuals and families in need of grocery deliveries. – Busy Professionals: Professionals with limited time for shopping. – Elderly and Vulnerable: Vulnerable populations requiring safe deliveries. – Small Businesses: Small businesses and restaurants for supplies. – Parents: Parents seeking convenience in grocery shopping. – Urban Dwellers: City residents with busy lifestyles. – Environmentally Conscious: Customers interested in sustainable options. – COVID-19 Concerned: Individuals concerned about safety during the pandemic.
Revenue StreamsFlink generates revenue through several revenue streams: – Delivery Fees: Charges for delivering orders to customers. – Product Markup: Markup on grocery prices compared to in-store prices. – Subscription Models: Subscription fees for premium services. – Promotion Fees: Fees from brands for promotions and listings. – Advertising: Earnings from in-app advertising and partnerships. – Data Analytics: Revenue from data insights and analytics. – Sustainability Initiatives: Income from environmentally friendly practices. – COVID-19 Safety Measures: Earnings from safety-related services.
Distribution StrategyThe distribution strategy for Flink focuses on accessibility and fast delivery: – Mobile App: Offering a user-friendly mobile app for ordering. – Product Catalog: Maintaining a comprehensive grocery catalog. – Last-Mile Delivery: Efficient last-mile delivery services. – Payment Processing: Secure payment processing within the app. – Customer Support: Providing responsive customer support. – Marketing and Promotion: Promoting the app and special offers. – Partnerships: Collaborating with grocery brands and suppliers. – Sustainability Efforts: Emphasizing sustainability and eco-friendly practices.

 

 

Flink origin story

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 revenue generation

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.

Key Takeaways

  • Flink is a German on-demand food delivery service founded in 2020 by Oliver Merkel, Julian Dames, and Christoph Cordes.
  • The co-founders have extensive industry experience, coming from backgrounds in companies like Bain & Company, home24, Foodora, Delivery Hero, and Foodpanda.
  • Flink’s business model revolves around operating dark stores and delivering fresh grocery items on-demand.
  • The company quickly partnered with REWE, a major supermarket giant, to be its exclusive supplier, which helps Flink purchase items in bulk at favorable rates.
  • Flink makes money by selling marked-up grocery items purchased in bulk, thus generating revenue through grocery sales.
  • The company operates small, optimized warehouses in lower-income areas to boost profit margins.
  • Flink charges a delivery fee of €1.80 on orders, making it attractive for customers buying perishable items and making smaller, more frequent purchases.
  • To offset the interchange fees charged by card issuers like Mastercard and Visa, Flink also charges transaction fees to consumers.
  • In a short period, Flink expanded to multiple cities in Germany, the Netherlands, and France, becoming the fastest German company to reach unicorn status.
  • The company attracted significant funding from investors, with recent estimates valuing it at $2.1 billion, and received a substantial round of funding from DoorDash.

Key Points about Flink:

  • Founding and Concept Origin:
    • Flink is a German on-demand food delivery service founded by Oliver Merkel, Julian Dames, and Christoph Cordes in 2020.
    • The co-founders have extensive industry experience from companies like Bain & Company, home24, Foodora, Delivery Hero, and Foodpanda.
  • Business Model and Revenue Generation:
    • Flink’s business model centers around dark stores and delivering fresh grocery items on-demand.
    • It partners with major supermarket giant REWE to be its exclusive supplier, enabling bulk purchases at favorable rates.
    • Revenue is generated through marked-up grocery items purchased in bulk and sold individually, boosting profit margins.
    • Small, optimized warehouses in lower-income areas help increase operational efficiency.
  • Delivery Fee and Transaction Charges:
    • Flink charges a delivery fee of €1.80 on orders, making it attractive for customers buying perishable items with smaller, frequent purchases.
    • To offset interchange fees from card issuers like Mastercard and Visa, Flink charges transaction fees to consumers.
  • Expansion and Funding:
    • Flink rapidly expanded to multiple cities in Germany, the Netherlands, and France.
    • It became the fastest German company to reach unicorn status within a short period.
    • The company received substantial funding, including a round from DoorDash, with recent estimates valuing it at $2.1 billion.

Business Models Connected To Flink

DoorDash Business Model

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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 Business Model

glovo-business-model
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 Business Model

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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, andTapingo. 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 Business Model

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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 Business Model

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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 Business Model

uber-business-model
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 Business Model

postmates-business-model
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 Business Model

uber-eats-business-model
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 Business Model

coupang-business-model
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 Business Model

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Amazon has a diversified business model. 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 

getir-business-model
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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