Miki Kuusi, CEO Wolt.com Besser & schneller als die Konkurrenz
Miki Kuusi hat mit seinem Unternehmen, Hauptquartier Helsinki, bereits über 700 Mio. Euro eingeworben und erobert mit seinem vertikal aufgestelleten Lieferdienst Stadt um Stadt, obwohl die Marktanteile eigentlich verteilt sein sollten. Warum ist das so? Warum funktioniert das insbesondere in Berlin so gut? Wie weit geht der Service bereits in Helsinki. Warum betreibt Wolt.com dort eigene Dark Stores. Die spannenste Perspektive für mich ist, dass der „Krieg der Lieferdienste“ ggf. doch noch lange nicht entschieden ist und ggf. nie entschieden werden kann. Der Eindruck, dass Takeaway 2014 gewonnen hatte, indem es das Deutschlandgeschäfte von der Delivery Group für 1 Mrd. übernahm, war falsch. Fehlende Innovation, bräsige operative Leistungen mit Fokus auf Gewinnmitnahme waren offensichtlich der falsche Ansatz. In einem Markt mit unbegrenztem Kapitalzugang reicht das nicht mehr aus. Gut für Wolt – schlecht für Lieferando, aber sehr sehr gut für die Kunden.
Essenslieferdienste mit Miki Kussi, CEO von Wolt.com
Argumentativ hat Alex bereits mehrmals herausgearbeitet, wie es sich bei Essenslieferdiensten um einen klassischen winner-takes-all market handelt. Für Restaurants als Lieferanten ist es nämlich selten lohnend oder nur organisatorisch möglich, mehr als ein paar der Auslieferer zu bedienen. Zudem führen die niedrigen Margen im Geschäft schnell zu einem Verdrängungswettbewerb – vor allem, wenn in Form riesiger Marketingspends mit Kanonen auf Spatzen geschossen wird. Am Ende verleiben sich pro Stadt immer nur ein oder maximal zwei Dienste den Löwenmarktanteil ein und damit ist die Sache eigentlich erledigt. Eigentlich. Denn das Fell in Berlin galt zwar lange als bereits an Lieferando verteilt. Wie es dem finnischen Spätstarter Wolt.com dennoch gelungen ist, nicht nur in der deutschen Hauptstadt schnell zu einem der am Stärksten expandierenden Lieferdienst zu werden, erfährt Alex in diesem Podcast.
Der Podcast erschien zunächst in der englischsprachigen Reihe CommerceTalks.
„Starting a city is easier than stealing a city!“
Alex: Could you start by introducing yourself and telling us a bit about Wolt?
Miki: I’m the founder and CEO of Wolt, a Helsinki-based tech company specialised in last-mile delivery. Thus far, we have been mostly focussed on restaurant delivery, but increasingly, we are expanding into other verticals as well. We operate in 23 countries and over 200 cities; recently, we raised €700 million in funding and are still expanding aggressively. We entered the German market just over a year ago.
About myself: before Wolt, I started a tech conference called Slush in Helsinki; it focusses on venture capital and is attended by around 25,000 people. And before that, I had been working at SuperCell during the advent of mobile gaming.
Alex: So you know the Finnish tech scene well. How many unicorns are there in Finland?
Miki: I would say around five, although I’m not quite sure how many of them are public. There is currently a lot of venture financing going into Finnish companies: in total, Finnish tech has raised over a billion Euros of investment in just the first half of this year.
Alex: Whenever I read interviews with you, most journalists ask you about consolidation. I too previously thought about food delivery services as a winner-takes-all market – it’s certainly a tough one that, in places like Berlin, is very crowded. So why did you decide to enter it? Most investors in Berlin would look at your case and say: “There were once five companies in that market and they all lost to Lieferando. We’re not making that mistake again…”
Miki: We are an expansionist company. After all, we started in Finland, a small country (population 5.5 million), so we always knew we would have to be good at expansion. That has made us very methodical and analytical when deciding about precisely where to expand – and indeed, for a very long time, we steered clear of the German market. It was hotly competitive with a lot of participants and a lot of money spent. Then, two years ago, the consolidation happened and Lieferando bought Delivery Hero’s business in Germany, shutting down Deliveroo. That changed the equation and left only one player in the market.
Our motto is “Follow the customers!” In our view, customers were not getting the right service, so it was only a matter of time until someone tried to offer it to them. Specifically, Lieferando was doing a great job of matching up customers to restaurants who offered delivery, but was falling down when it came to taking on the delivery itself. That was an opening, and that’s why we came to Germany. Now, you see a lot of our blue-clad delivery riders on the streets, and that shows that people have brought their money to us. So I think our estimation of the market was correct.
(Alex points out that, although Lieferando does indeed follow a platform approach without tethered riders, Wolt was not the first service in Berlin to try improving the last mile with its own staff. So why has it succeeded where others failed? “It’s all about timing,” answers Miki. During the first iteration of the market, there were six players crowding out new entrants. Wolt started once this heat had cooled off.)
Alex: What precisely is your USP vis-à-vis Lieferando in the Berlin market?
Miki: Ultimately, it’s about nothing more and nothing less than being the best possible service for the customer every day – all the while balancing the interests of customers with those of the couriers and the restaurants.
Alex: But what is the “best service”? Best food, lowest prices, fastest delivery?
Miki: The first thing is the supply – i.e. what you have on the platform, what people can order. Traditionally, food delivery companies focussed on the restaurants which offer delivery themselves. For us, though, it was always about the most popular restaurants in the city, the ones that people queue to get seated at. These are restaurants that typically don’t offer delivery because it’s lower margin or just difficult when they have enough diners coming in through the door. So we focus on improving supply.
After that, it’s about the speed of delivery – and about reliability. That means saying that we will deliver an order in x minutes; if something goes wrong, we have amazing customer support. So if you send us a message, we will ty to respond in less than a minute because, if there’s something wrong with your food, you don’t want to hear back from us tomorrow.
Then there is price and affordability. We want to be a service people can use not just on a Sunday morning when they are hungover and really don’t want to get out of bed, but more regularly. Finally, it’s about the brand you are building: we started as a mobile company, while most of our competitors set out as desktop-based, so we offer a very different experience.
I see these four things as key elements in customer experience. Just one of them is not, in and of itself, enough. We need to offer consistency in these four areas over weeks, months, and years. People decide every day whether to order using our app or another one, and we have to earn their preference every time.
Alex: I remember that, back in the Great Scramble for Customers that was raging in the Berlin market a few years ago, everyone was throwing vouchers around. What is your customer acquisition strategy now that Lieferando is a near-monopolist? Which channels work? Do you focus on a certain cohort? Are you relying on word-of-mouth? The way I heard about you was people saying: “You’ve got to get Wolt. They have much better restaurants.”
Miki: Word of mouth is the most important thing for us. Our growth in Germany – and we’re not just in Berlin, either – has been fuelled primarily by recommendations. People tell other people about services they like, and no amount of spending on customer acquisition can outrun that mechanism. Additionally, we do use paid channels like Facebook, Instagram, and Google, but to a lesser degree now, actually, because we are having trouble getting enough couriers out on the streets and new restaurants on board to meet the organic growth in demand.
(Alex has Miki take him through the numbers. In Berlin alone, Wolt has a six-digit customer base – with high levels of retention. One half of customers who makes their first purchase on Wolt then go on to make further purchases at least once a month. Customer profitability is measured on a twelve-month-return basis, with a new customer offering net yield after around a year – including acquisition costs and costs of churn. The figures vary from market to market, however, based on factors such as maturity and scale which influence order density and, by extension, efficiency and profitability.
Alex also asks about the minimum city size, which Miki pegs at an unexpectedly low 20,000-30,000. Miki explains that the size of the local market is far less important than the ability to deliver an excellent service at an acceptable cost. Coming from a difficult home market like the Nordics (small cities, low population density, high labour costs, low customer willingness to spend etc.), Wolt has always been able to work efficiently at a low order density. That’s why Germany’s reputation as a difficult market didn’t frighten Wolt off. Seen from Wolt, Berlin isn’t attractive because it’s a large market: its neighbourhoods actually look more like collection of small Nordic cities – and Wolt expands neighbourhood by neighbourhood.)
Alex: Helsinki was your first market and so, I’m guessing, your most mature. What is like there now? Have you started delivering things that aren’t food? Do you run your own ghost kitchens? Are you operating out of small local warehouses like Gorillas?
Miki: Yes, yes, and yes! We are essentially building the digital equivalent of a shopping centre. If you think about a classic mall, the grocery stores are on the ground floor, the food court is on the top floor, and in between you have all sorts of different shops. So we are a digital shopping centre, meaning that our infrastructure isn’t the mall building, but our delivery network and our application.
In this analogy, we started by building the food court on the top floor – and it’s now got the best selection of restaurants in town. What we want to do now is to populate the rest of the shopping mall, and that means going down to the ground floor and opening supermarkets: it’s a logical next step as it’s also food and is the second most requested thing by our customers. We aim to go beyond that, though, and eventually deliver everything from clothing to electronics. It’s simply a question of how far we have got in each area we serve: in our older markets, you can already order a bit of everything on Wolt; in the newer ones, we start by focussing on the best possible selection of restaurants.
Alex: So you’re still picking stuff up from other vendors in store?
Miki: Yes. We sign merchants on Volt and then they have our software running. Then we tell them if a customer orders something, they prepare the package, and the courier picks it up. We do also have dark-stores where it is just workers picking deliveries: in Finland, they’re called Wolt Market. Generally, though, we like to work with partners – like Carrefour and ICA. Our aim, after all, is to bring the offline world online.
(Alex asks if there isn’t a low limit to the potential of the model inasmuch as lots of bricks-and-mortar retail – e.g. consumer electronics – doesn’t operate with high enough margins to allow for the extra courier service Wolt is offering. Miki sees this differently: offering deliveries on-top of in-store sales can improve unit economics: shops end up selling more within the same cost structure; even though Wolt charges a margin, it is bringing in business the store would otherwise not have had. Ultimately, however, says Miki, an increase in delivery volume above a certain level leads to dark-stores. Whether Wolt runs own-brand darkstores or works with other operators is immaterial. Wolt is agnostic about where in the value chain it fits in – and even offers delivery-as-a-service for e-commerce merchants.)
Alex: Taking a strong Wolt location like Helsinki: how much does the average customer spend on Wolt?
Miki: We’re a very competitive industry, so I have to be careful here.
Alex: Okay, let’s approach it from another angle: what would be the industry-wide average order volume of a very loyal customer? And how many times do they usually order – from you, from Lieferando, etc.?
Miki: As this is a very diverse industry and we are a company with a very specific profile, I can only speak for Wolt on average. And the average Wolt customer uses us between three and seven times per month – remember, “on average”, i.e. including both very active and inactive customers who only ever make one order. In every market in which we operate, this figure goes up over time. Moreover, we have seen that, bringing things other than restaurants onto the platform is additive: people don’t switch from ordering take-away to buying groceries, but rather start buying groceries on top of their restaurant orders (and tend to order more from restaurants, too).
Looking at retention, out of everyone who makes a purchase on Wolt, anywhere between 30% and 60% become customers who order more than once a month over one to five years. So depending on the market and the maturity, between one and two thirds of first-time customers become people who use Wolt virtually forever – and things trend upwards over time: order frequency, order value, and customer retention go up over time as we become ever more established in a town or city.
Alex: From a retailer’s point of view, it makes sense to own access to the customer. Surely, when you to acquire them for Wolt, they look at the proposition and realise that, while it might begin as just another check-out option, you will eventually be selling access to the customer back to them…?
Miki: Does a shopping mall own the customer? People only go to shopping malls if they have the right stores and the right infrastructure. So ultimately, there’s a balance between the platform and merchants on the platform.
(Alex remains unconvinced – retailers have learned the hard way with Amazon that customer access can be blocked by platforms – and asks whether Wolt has trouble winning over sceptical managers at chain stores. “The bigger the retailer, the more time it takes,” answers Miki, unfazed. Restaurant managers are also often proprietors and are willing to try out something new; managers at multinational retailers are much more careful. Even so, continues Miki, most grocery retailers have realised that quick-delivery services such as Gorillas now pose a threat to their business and that they have been slow to move; therefore, they are broadly willing to try cooperating with Wolt. Miki returns to the shopping mall analogy: Wolt is providing infrastructure which retailers rely on, but needs these retailers to fill its framework with life. “Ultimately, the customer is shared.” What is more, “customers on Wolt tend to loyal to the restaurants and stores they order from, so we need a good relationship with these restaurants and stores.” Alex is still hesitant to accept this reasoning and makes out a “conflict on the horizon”.)
Alex: In cities in Germany with lots of delivery services, competition for employees is heating up and companies are even paying sign-up bonuses to new riders. Is this a broader issue or just limited to Germany?
Miki: This is happening elsewhere, but is also dependent on the stage at which the market is. If it’s a new market with lots of entrants, it tends to get a little bit crazy. In fact, there is so much demand for couriers, restaurants, and customers that it becomes something of a bottleneck. In the long term, however, it’s not an issue. To give you an idea: we work with over 100,000 couriers globally – and have a queue of close to 400,000 to become Wolt couriers.
What is more, we are competing with grocery stores for people who would otherwise be clerks. And have you ever heard of there being a severe shortage of cashiers at supermarkets? Ultimately, there will be a supply-and-demand balance. In the short term, however, with so many entrants building up a new industry, it gets very competitive: there’s a shortage of couriers, prices get high – and customers find it easy to get discounts! And it’s difficult to sign restaurants or find real-estate. But none of that is a problem in the long term.
Alex: I agree, but you have to operate now!
Miki: Exactly. And that’s where it’s tough.
Alex: Most recently in Germany, you announced that you were starting up in Düsseldorf. How long will it take you to set up there with enough couriers?
Miki: The start tends to be easy; getting the first few hundred people is manageable. It’s when you’re already in the thousands and you need thousands more that things start to get tricky! So starting a city is much easier than stealing a city. But sure, there are short-term courier bottlenecks which leads to bonuses, higher earnings etc. In the long-term, though, we’ve seen in every market that there are enough people.
Alex: Are shortages not something that can be solved by new technology such as autonomous driving?
Miki: No. All of that is very far away. Autonomous driving will definitely be a thing in the future, but is it going to solve delivery driver shortages in the next five years? I don’t think so. Just imagine, even if the technology were available, how long it would take simply to build all of the vehicles needed to deliver everything in all the cities! Just getting the infrastructure in place will take a very long time – and it hasn’t even started. People like to talk about autonomous, though, so there are lots of PR stunts – and we too do autonomous deliveries with a number of partners. But it’s still very far away from being something we can rely on.
Alex: Looking into the future, do you think there will be consolidation in the market? A well-known food expert told me a couple of days back that Delivery Hero has invested in Deliveroo in the UK… Do you see aggregation ahead? Or potentially Amazon muscling in and buying one of the providers – perhaps you?!
Miki: For Amazon, it will become increasingly difficult to make big moves in Europe. If you look at where the regulation is headed here, US technology companies are going to have a tougher time acquiring their way into markets instead of competing and expanding organically. Our market is very young, so it’s very difficult to say what the end result will be, but I do see consolidation through mergers and acquisitions ahead at some point.
From our point of view, though, we don’t need to sell the company to anyone and have a clear path to IPO and beyond. We are going to build a company ten times bigger than what we are today; that is what we are focussed on. And after you get to a certain size, there’s less and less benefit to be derived from being part of a bigger entity. As a smaller carrier, you’re ability to invest in infrastructure and new technology is of course limited and it’s hard to compete with big international players; but that’s no longer the case for us.
Alex: Apart from your verticalised approach to being best-in-class, is there anything else which is special about your model or about the technology you are investing in? Or are you just concentrating on scaling up?
Miki: Usually, with companies like us, customers see an app interface with a listing of restaurants; they order and, sometime later, someone brings them something. You might look at that and ask: “So what’s the big deal?” Well, we have over 300 people working in software engineering – and fewer than 15% of them work on things that customers actually sees. The other 85% are part of the iceberg below the ocean. So actually, we are more of a logistics optimisation company than a consumer-facing delivery service.
(Alex is surprised by the size of the software engineering team: he would have expected a higher headcount. Miki explains his preference for a small-teams focussed approach – a philosophy which boils down to the old adage that ‘too many cooks spoil the broth’. In response, Alex deploys his patented “Graf’s razor”: for stable, industry-leading tech firms, total revenues divided by software engineer headcount equal two to ten million Euros/Dollars: “So size matters!” Miki’s reply: “When WhatsApp was acquired by Facebook for 19 billion USD, it had a team of 20 people, so size is not everything when it comes to mobile products!” Too many engineers too early can, in Miki’s view, actually stop a young company shipping new features quickly.)
Alex: You’ve now scaled into over 20 markets: how different are they compared to the Nordics or Germany and have you come across any interesting country-specific peculiarities?
Miki: I particularly remember going into Tbilisi, the capital of Georgia, and Tel Aviv in Israel; we’re also in both Hiroshima and Tokyo in Japan. They are all of them very different to core European cities and countries. Ultimately, we see Wolt as a platform for our employees as much as anyone else – so our country and city teams are also customers inasmuch as we need to build them a product that allows them to be a hyper-local service in their respective markets.
It is this approach which has helped us to scale so successfully – one neighbourhood at a time. In each neighbourhood, there might be one specific restaurant you need to get onto the platform in order to establish yourself, and that’s not something a developer in Helsinki can ever know. So we have teams who live and breathe the cities where they operate. In order to help them win, they may need features which other markets don’t. So we build these features and enable them for the city in question.
Alex: Has there been anywhere where your approach hasn’t worked?
Miki: Not yet, no. I think that is a virtue of us having been careful about how we built the company. We’ve always had the least amount of money in our industry and been up against companies ten times our size, so we’ve had to make do with less. In hindsight, we could have maybe been a little bolder and already expanded into 40 countries, shut down 10 which didn’t work, and would now be in 30 instead of 23…
(Alex is curious about whether Wolt has seen a fall in demand for take-away as vaccination campaigns allow restaurants to reopen. Miki traces a stochastic development: lockdowns send demand skyrocketing and it then falls as restrictions are lifted, but remains at a higher base level than before. Telescoping out, he points out that people eat 80 to 100 times per month, but that Wolt customers order only three to seven times per month from the platform. Wolt is therefore a complementary service, not one which competes with restaurants. Alex is sceptical: they must be replacing someone! “That’s a smart way to frame it,” he adds, drawing a confession of sorts from Miki: “With companies like Wolt, people cook less.”)
Alex: What is your growth bottleneck? Imagine you have unlimited cash: what would stop you expanding even faster – and getting to my small town in northern Germany?
Miki: People. Wolt staff is now – without couriers – at around 3,500; a year ago, that was roughly 1,000 and two years ago there were 300 of us. Now, we are hiring around 300 people every month; that’s 10 new starters every day. There is a limit to how quickly we can find and integrate great people into the company. So why aren’t we in your town yet? Because we still have bigger cities we are working on with a limited number of people; and even in existing cities, we need to go into new neighbourhoods. I mentioned earlier that we have 300 people in software engineering. Well, we’re looking to double that number – and we can’t do that overnight.
(Miki then takes Alex through the organigram, explaining how launches in new cities are coordinate by the relevant country team – and how these teams weigh up the benefits of entering a new city against opportunity costs for existing locations. Alex highlights Hamburg, where Wolt doesn’t yet operate, as an example of this, trying (fruitlessly) to get a date out of Miki for north-Germany-based listeners…)
Alex: How do you see integration with supermarkets and high-street chains like drugstores? Do you see them picking orders in their shops and offering a pick-up point from your riders, or are dark-stores the superior model?
Miki: As we see it, stores in cities are already warehouses – they just happen to be warehouses which are also open to customers coming in to buy things. So you don’t need to set up a new warehouse and install new shelving space in order to sell people things very quickly online. Therefore, initially, we have stores set up pick-up points for our riders.
In the long run, though, I am a big believer in dark-stores – and dark-kitchens for that matter. The future of commerce is not an out-of-town Amazon warehouse which can deliver you something tomorrow. No, the future is you ordering something and somebody delivering it to you at home from the closest possible store.
Alex: Even for product ranges outside of food and FMCG? Are we talking small-scale dark-stores for consumer electronics?
Miki: Sure, why not?
Alex: Because there’s usually no ad hoc need for that kind of product.
Miki: But it’s about convenience and price. If you can have a very inexpensive delivery service bring you something in 30 minutes, why would you wait? It’s a race to convenience: the quickest, easiest, cheapest way to get something. Thus far, the gold standard in e-commerce has been Amazon Prime: two-hour time windows later today or tomorrow; in future, I see this gold standard as closer to thirty minutes – even ten minutes in some cases. That is the future: but we’re not there yet.
(In the end, adds Miki, major supermarket retailers will end up offering dark-store delivery because that is what customers want – and they will lose market share to new players like Gorillas if they don’t adapt. Consumers are, however, in Miki’s experience loyal to their supermarket brands: when the likes of Carrefour are listed on Wolt, users are happy as they can get their favourite product assortment from their preferred supermarket without having to drive there themselves.)
Alex: Last question: what will city centres look like in the future? There seems to be ever less of a role for retailers, especially chain operators…
Miki: I think they will remain broadly as they are. Think about 7-11: it’s an ultra-convenient corner-shop format for people who just want to buy a few items quickly without going to a larger store; in the markets where they operate, they are on every corner. Dark-stores will be similar, but the whole city won’t be just dark-stores. There will still be boutiques, cafés, and restaurants. Cities will continue to adapt to what people want and need; it will be a matter of iterations, though, not a revolution. The change won’t be as dramatic as some people might think.
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Alexander Graf, *1980, E-Commerce Unternehmer & Analyst, Gelernt bei der Otto Group, danach über 10 Unternehmen gegründet, heute Co-CEO des führenden Commerce Technologieanbieters Spryker Systems. Im Juni 2015 hat er das E-Commerce Buch veröffentlicht, das seitdem die E-Commerce Rankings anführt. Weitere Infos hier, oder direkt kontaktieren unter: [email protected]