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 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.

Value Proposition

Flink offers a convenient and efficient grocery shopping experience through its mobile app, providing customers with the following value propositions:

• Instant Delivery: Flink promises ultra-fast delivery times, often within minutes, allowing customers to receive their groceries promptly without the need for lengthy waiting periods.
• Wide Selection: Flink offers a comprehensive range of grocery items, including fresh produce, pantry staples, household essentials, and specialty products, providing customers with the convenience of shopping for all their needs in one place.
• Quality Assurance: Flink ensures the freshness and quality of its products, sourcing items from trusted suppliers and maintaining strict quality control measures to guarantee customer satisfaction.
• Convenience: With Flink, customers can easily order groceries from their smartphones and have them delivered directly to their doorstep, saving time and effort compared to traditional grocery shopping methods.

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.

Revenue Model Recap

Flink generates revenue through the following streams:

• Product Sales: Flink earns revenue from the sale of groceries and other household items listed on its platform. Customers pay for their orders through the app, and Flink collects payment for the products sold.
• Delivery Fees: Flink may charge delivery fees for orders below a certain threshold or for express delivery services. These fees contribute to the company’s revenue and help offset the costs associated with the logistics of delivering orders to customers.
• Promotional Partnerships: Flink may partner with brands or suppliers to promote specific products or offer exclusive deals and discounts to customers. These promotional partnerships may involve revenue-sharing arrangements or advertising fees paid by partner brands.

Marketing Strategy

Flink employs various marketing strategies to attract and retain customers, including:

• Digital Advertising: Flink invests in digital advertising campaigns across various online channels, including social media platforms, search engines, and display networks, to raise brand awareness and drive user acquisition.
• Referral Programs: Flink incentivizes existing customers to refer new users to the platform through referral programs, offering discounts or rewards for successful referrals. This strategy leverages word-of-mouth marketing to expand the customer base.
• Promotional Offers: Flink runs promotional offers, discounts, and flash sales to entice customers and encourage repeat purchases. These promotions may be advertised through the app, email newsletters, or social media channels to attract attention and drive sales.
• Partnership Marketing: Flink collaborates with other businesses, such as restaurants, meal kit services, or food brands, to cross-promote products and services and reach new audiences. These partnerships may involve joint marketing campaigns or co-branded promotions to leverage each other’s customer bases.

Distribution Channels

Flink utilizes the following distribution channels to deliver its services:

• Mobile App: Flink operates a mobile app that serves as the primary interface for customers to browse products, place orders, and track deliveries. The app is available for download on iOS and Android devices, providing a convenient platform for users to access Flink’s services.
• Website: In addition to the mobile app, Flink may offer a website or web-based interface for customers who prefer to shop on desktop or laptop computers. The website provides similar functionality to the mobile app, allowing users to place orders and manage their accounts online.
• Delivery Fleet: Flink maintains its own fleet of delivery drivers or partners with third-party logistics providers to fulfill orders and deliver groceries to customers’ doorsteps. These delivery channels ensure efficient and reliable service, with drivers equipped to handle orders quickly and professionally.
• Physical Locations: Depending on its business model, Flink may operate physical fulfillment centers or dark stores where groceries are stored and prepared for delivery. These facilities serve as hubs for order processing and distribution, enabling Flink to fulfill orders efficiently and meet customer demand.

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.

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