Will Jiffy’s new ‘software-only’ rapid delivery business model work?

Little more than a year after launching in the UK, rapid grocer Jiffy last week made a “major strategic pivot”. With immediate effect it ceased all ultra-fast deliveries, reinventing itself as a software business.

Software would “become Jiffy’s complete focus,” CEO Vladimir Kholiaznikov told The Grocer. While remaining a “massive believer” in rapid grocery, Kholiaznikov believed Jiffy would not break even in a reasonable enough timeframe. But selling software for others to have a go with would mean profit within a “shorter horizon”.

So is the move wise? And how does it bode for rapid grocery?

“Is there a degree of desperation? Yes,” says former Amazon exec and rapid grocery advisor Brittain Ladd.

All rapid grocers are struggling to turn a profit, Having grown and grown on the back of the billions of dollars ploughed into them over the past year or two, investors are starting to demand a route to returns. This week, Gorillas announced it was pulling out of four countries and reducing its global headcount by 300, as it switched strategy “from hyper growth to a clear path to profitability”. Gopuff similarly shed 400 staff in March, and Avo two thirds of its workforce in May.

Read more:

• Getir to reduce global headcount by 14%

• Nippy’s new dark stores to double as walk-in shops

• Gorillas to shed 300 staff and pull out of four markets

“The quick commerce grocery delivery model with dark stores does not currently deliver net profits,” says online grocery consultant Viv Craske. But “whether Getir, Gorillas and GoPuff are profitable or not, they are so well funded they will continue to operate”.

For less well funded players like Jiffy – which having raised a total of $35m is a minnow compared with Gopuff’s $3.4bn, Getir’s $1.8bn and Gorillas’ $1.4bn – times are tougher.

“Jiffy was failing as a rapid grocery delivery company,” adds Ladd. “Pivoting to being a software company makes sense as the current business model has failed. Becoming a software company certainly allows Jiffy to fight on.”

Craske is more positive, calling the move: “Fantastic and brave.”

Long-term prospects?

But while the software pivot secures short-term survival, can Jiffy prosper long term?

“The expectation of this move is that you will pay Jiffy either an annual licence fee or a per transaction fee – I can’t see it. It makes the provider even more unprofitable,” says Dean McElwee, international e-commerce director at Stanley Black & Decker, formerly of Kellogg’s, Juul and Coca-Cola. “I’m not drinking the Kool-Aid,”

Ladd is similarly cynical. “The logical question retailers should ask is this: If Jiffy failed using the software they created, why would we succeed?”

Jiffy’s Kholiaznikov says it is not just rival rapid grocers that would want its software. The target market is retailers with an existing store footprint.

Like BrewDog, the launch partner in January for Jiffy’s ‘Q-Commerce as a Service’. BrewDog’s numerous physical bars could act as dark stores, with Jiffy’s software handling orders and stock, and delivery made via third party couriers.

The supermarkets, convenience chains and high street retailers that have partnered with Deliveroo and Uber Eats certainly suggest an appetite for faster delivery. Jiffy claims it has scores of hot leads.

But will retailers want to do rapid deliveries themselves?

“I don’t support retailers offering rapid delivery on their own,” says Ladd. “I prefer the Tesco Gorillas model. Partnering with a rapid company allows retailers to pilot rapid delivery with minimal capital and operational requirements. If their customers embrace it, the rapid partner they chose can easily scale the service while the retailer focuses on running their stores.”

Craske says savvy retailers, plus other rapid delivery business models like Beelivery, mean “the addressable market for Jiffy is huge”.

Ladd argues the opposite. “I don’t believe the total addressable market is big enough for Jiffy, and I don’t believe enough retailers will be interested in using Jiffy’s platform,” he says.

And even if there are enough customers, would Jiffy be their first choice?

“It assumes Jiffy has best-in-class data science capability,” which is questionable, says McElwee. Ladd says: “Just because Jiffy has made the decision to become a software company in no way validates Jiffy is a leader in the space.”