So, currently my cofounder and I will be delivering them, but probably will ramp up hiring with increased volume. If we serve 300 people day one, $150 dollars is enough for the gas money and a little profit. But we're still working on pricing, so if you have any ideas, we'd love to hear them.
300 people on day one. They are all going to want their coffee at about 8am.
Also they will probably be fairly randomly geographically dispersed.
If this is the case, then delivering the coffee hot is going to present another challenge, it might not be a case of 'pick up 300 coffees and deliver them to 300 addresses'.
If you serve 300 people on day one, people will get angry that their drinks are becoming room temperature. You'll have to battle the Starbucks line, and in doing so end up doing larger batches of purchases, and finally the drinks will be cooling/warming too much before they are delivered.
Unless you're Santa Claus, delivering 300 orders of coffee in a day is flat out impossible.
- First, everyone is going to want them within a two or three hour time period.
- Second, you're going to have to go to Starbucks after every order or every other order or else the coffee will get cold by the time it's delivered.
I think you can reasonably deliver 4 per hour, maybe 8 if you get really good at clustering them together. So I think more than 25 per person per day is going to be unreasonable, and realistically probably more like 15.
especially if you're using a car for delivery! Imagine at rush hour in the morning. Why do you think they use bikes for couriers? You should get a couple of bike punks and pay them cash. These guys will be productive!
If you serve 300 people on day one, people will get angry that their drinks are becoming room temperature. You'll have to battle the Starbucks line, and in doing so end up doing larger batches of purchases, and finally the drinks will be cooling/warming too much before they are delivered.
It might be a good idea to put something on the website saying where the service will be first. That would certainly encourage me to hand over my e-mail address.
I can't really see how this mvp can scale beyond a few dozen customers if manual delivery is going to be used (how many minutes do you have before the coffee gets cold? This sets all kinds of limitations on your business). $15 per customer/month isn't much if you're going to pay for (gas), salaries, etc.
Unless, of course, this is Starbucks' MVP and they are figuring out the parameters of coffee delivery. Now that would be brilliant.
You're right, this really is just introductory pricing for the MVP. We really need to work out what a sustainable pricing model is, but we decided that we should first work on the MVP. Do you have any suggestions?
This is a tricky problem. Will individuals think that getting Starbucks coffee delivered to the comfort of their home is worth the additional fee? Also, the product is fairly price sensitive and delivery has to be done on a tight schedule.
Some suggestions:
* target businesses. Your orders will be larger, evenly scheduled and the customers are less price sensitive. Expect tough competition, though, unless ...
* Broaden/specialize your product range. I assume you've chosen Starbucks because of the brand recognition. But what if you offered spectacular coffee from local coffee shops (assumption: Starbucks produces average coffee)? This could be one of your USPs: great coffee from local baristas delivered to the doorsteps of your customers.
* Transportation makes or breaks any type of delivery service. You need a form of transportation that's dirt cheap (no gas), small yet can carry many cups of coffee. I'm thinking a bike designed for cargo, maybe something like [1] ?
* Vacuum flasks may solve some of your issues. Why not carry around a couple of these and pour the coffee when you reach your destination? Naturally this would have some implications on branding and product range.
A sustainable pricing model should be a part of the MVP. It's less of a concern in software for different reasons: relatively low costs and decent margins, even as it scales.
Of course, you can treat this as an educational experience to learn more about what you need to consider for these types of businesses going forward. Just realize that proving you can sell a product at a low but unsustainable price point does not prove the product is viable.
2. You could scale this more easily with TaskRabbit.
3. A flat monthly rate will run you into the ground. Example: I order 10 drinks every morning delivered to my office. Or, if you limit to one drink/day, as head of this company I could buy a year of this for all of my employees, then together they remember to order on a daily basis.
EDIT: After all the feedback, I realized I'm wrong. There is no sustainable way of delivering all that coffee at 50 cents a day. So, we've decided to change to $1.50 a day, and ramp up slower. We're starting in the D.C area, but considering moving to the Bay area if demand is significantly creater. Thank you for the help
The nearest Starbucks to me is 44km away, which makes me think that if you were able to deliver, it would likely be cold. Also, I can't say that Starbucks coffee is nice - seems more like coffee flavoured milk than an actual drink. You can also make perfectly awesome coffee at home, for cheaper than your delivery cost, and you get to use your own cup.
For that reason, I'm out. Nice looking iPhone app though.
Thank you for your feedback. I can understand why you don't want this, and it makes perfect sense for you. With a Starbucks 44km away, you wouldn't want a cold coffee, and we probably couldn't serve you. This is for people who are too busy to make coffee, and/or just want a nice cup of coffee without the hassle, every morning. I appreciate the feedback
Strange, the criticisms I usually hear of Starbucks coffee is that their roasts are too dark, giving incredibly (sometimes almost seemingly unnatural) bold flavors without a lot of depth. I don't know a single person who'd characterize even their lighter blends as "coffee flavoured milk."
That being said, you're probably well outside the target market for having your coffee delivered to you. If you had time to make it yourself, you certainly had time to grab a cup on the way to work.
Ask any Australian what Starbucks tastes like and they will say "Coffee Flavoured Milk" or "Watery Shit", perhaps why Starbucks failed hard in Australia.
I think the best way to go about this would be to approach businesses in a small area, maybe a couple of streets, rather than targeting an entire city and advertising it online. Create a few flyers and hand them out. That way you can delivery multiple coffees at once which will make your business a lot more efficient. Another thing, if someone gets a coffee delivered for them in an office, all their colleagues will want their coffee delivered too. Word of mouth should work quite well for this business but to be successful, you'll definitely need to target businesses. Oh and finally: why not allow business accounts that let them order numerous coffees at once?
I kept thinking the next step was a generalized, personalized, on-the-spot concierge, but this app makes me think the best path to that is to go in through some small service, like coffee, or laundry.
It'd be interesting you did demand delivery pricing, so that pricing became more expensive at peak times (eg: 8AM) that way you can manage the effect of everyone wanting their drink at the same time.
You should start hyper local, one neighbourhood in San Francisco - SOMA? Hayes Valley? Mission? If you did it in a hyper local area you might just turn a profit at $1.50 delivery each.
I think this would also be hugely valuable to companies, such as being able to order all my teams starbucks drinks in one click.
I'm curious why coffee though? Most people do not appear to mind getting their coffee in the morning. Especially as it is so habitual. I hate laundry though! I hate taking my trash out. I hate not getting fresh bagels/fruit each morning.
Yeah, demand delivery pricing is a good idea as well. I did coffee for a couple reasons: one, because I love coffee. 2: Because aside from laundry, it's the most universal.
Consider adding other "universal" things that can fit easily on top of coffee.
For example I smoke a pack of cigarettes a day, and other than when I remember to buy a carton ahead of time I generally end up going to a shop each day specifically to buy them, they don't fit my general groceries timetable.
Somebody already suggested newspapers... maybe a few other easy-to-deliver snacks/drinks (can of coke, crisps..)? I'm sure there's some more things that X% of people are already buying once a day and would like to save hassle on.
The more you bring, the more the delivery charge looks good to the customer. Let's say each day you brought me a coffee (at cost), a pack of fags (at cost) and a can of coke (buy in bulk you could sell at retail cost and make some money there), still charge $1.50 delivery fee, but suddenly you're saving me three times as much hassle.
I think it should be a RTB situation. As you're runner is in the line you place bids on the 4 spaces in the coffee holder and whoever bids the most gets that round.
Even at $1.50 per coffee I'm struggling to see how this will be sustainable.
I would guesstimate you're looking at 20 minutes of labour at the very least for each coffee. That includes getting to and from Starbucks, ordering, having the coffee made, and completing the transaction by delivering it to the customer.
Each person involved might earn $4.50/hour before costs...
I think this app would be most effective in suburbs and not city centers. There are coffee shops everywhere (especially in NY) - it would actually waste time to wait for coffee then it would to walk down the block.
It doesn't work well in either place. It fails in the city for the reason you mentioned and fails in the suburbs because people live too far away from each other for them to attain any kind of useful economies of scale.
Why Starbucks? Why not setup a barista in a street cart and make your own (and you will also be mobile to handle different areas and sell to foot traffic)? You can skip the Starbucks lines, increase your margin significantly, and work on a better coffee product.
It's Sunday so I've had sometime to think about this and I'd say give it a whirl, but set some goals/paramaters. I will only try this for x months or loss x amount.
I'd get creative in how you can generate revenue too besides the demand/customer few. Right now people in the comments are focusing on the scale, well it's a hard product to arbitrage, but
1) Could you sell space on the cups for ads or other start ups? This might be the one time QR codes could work!. A Well placed QR code on the cap??
2) If you try to cut your costs (ie the coffee) look into a starbucks gift registered card, every x number of coffees you buy you get a free one. Also, once you hit a certain threshold you can customize (add flavors) to cups of coffee for free. Still charge the customer for it, but you get it for no additional cost.
3) It doesn't have to be Starbucks. I'd try partnering with unique coffee shops and try cutting a deal with them. They get people aware of their coffee and grow their customer base.
4)Or just simply use this to meet people doing interesting things. Who doesn't have time to get coffee in the morning--people who are doing things. Who can offered to have someone delivery coffee to them? People who've made money doing something.
Best of luck, interested to see what you do with this!
1. bundle your offer with a subscription to a newspaper. Possibly with a large subscription purchase, you'd save enough money that your customers would get a deal for coffee AND the paper while you up the revenue.
2. add breakfast! smoothies? Breakfast burritos? Those take time, are usually pretty healthy, and are highly portable.
3. send them a morning playlist??? like a new jazz/downtempo CD of their genre preference to get ready with while they wait? If I'm busy, which is what I'm going to have to be to use your service, I probably don't spend a lot of time getting new music.
4. have really really good looking delivery people. Nothings gonna make someone get ready faster and better in the morning than that. Hire college sororities/intramural soccer teams?
5. market yourself to startups that want their folks to come in before just getting free lunch--like a jumpstarter for their day. Maybe they'd pay a bit to see if you can get their engineers in by 9:30-10. 15-20 bucks for an extra hour or two of work sounds like a stellar rate for a top flight hacker...
Honestly though man, I'd use this as a vehicle to learn about starting up and not as the roadmap. Take all the gravity out of the situation. This should be a fun experiment to learn how you and your team operates, how you adapt when you're not getting traction, nothing more.
I respect the hustle, but this most likely will not work out. If I have time to wait for you to deliver coffee, I have time to make myself some.
This seems like a curious choice of potential business when no US-based store will deliver a $3.50 product on a regular basis despite having access to large pools of labor at arbitrarily low costs, while if you're capable of typing in "git push" to get that website up your presumed opportunity cost is rather high. Consider carefully whether you are likely to have a competitive advantage in delivery operations over an entire nation of savvy chains and independent operators with high tolerance for jobs that suck. It strikes me as unlikely.
If you really, really have a burning urge to do this, be ZeroCater for coffee and sell any three startups on doing an office-wide coffee run every morning for only 15% the cost of a new engineering hire. (P.S. Note how I do not anchor costs around the price of coffee.)
If I want to get coffee someplace (and in my area, for better or worse Starbucks is nearly the only option), then I'll go somewhere because I want to see something besides the same four walls and my lovely family.
Paying coffeehouse prices plus a convenience fee just to sit at home and save myself the few minutes it would take to make coffee seems like it will have a very small target market, at best.
It's different for different people. Every day somebody from my office (it varies who) will drive a mile and back to pick up a few cups of coffee from Costa (a chain insanely similar to Starbucks, if you don't know it - started in the UK, very, very big chain).
Some people pay the extra to drink it somewhere else, some pay for the convenience of "I don't have to bother making it", and some pay because they prefer it to what they make at home.
I don't know how costs would improve/get worse, but I imagine it would at least be operationally easier if you could brew on the road rather than constantly having to go back to the shop, and dealing with drinks getting cold.
Potentially I can imagine them selling you branded equipment (cups, tissues etc.), coffee (just big bags) and the extras you might need (e.g. syrups), then as long as you made it well, so as not to give them a bad name, they could just leave you to it.
54 comments
[ 5.3 ms ] story [ 114 ms ] threadAlso they will probably be fairly randomly geographically dispersed.
If this is the case, then delivering the coffee hot is going to present another challenge, it might not be a case of 'pick up 300 coffees and deliver them to 300 addresses'.
I fail to see how this is at all possible.
- First, everyone is going to want them within a two or three hour time period.
- Second, you're going to have to go to Starbucks after every order or every other order or else the coffee will get cold by the time it's delivered.
I think you can reasonably deliver 4 per hour, maybe 8 if you get really good at clustering them together. So I think more than 25 per person per day is going to be unreasonable, and realistically probably more like 15.
Unless, of course, this is Starbucks' MVP and they are figuring out the parameters of coffee delivery. Now that would be brilliant.
Some suggestions:
* target businesses. Your orders will be larger, evenly scheduled and the customers are less price sensitive. Expect tough competition, though, unless ...
* Broaden/specialize your product range. I assume you've chosen Starbucks because of the brand recognition. But what if you offered spectacular coffee from local coffee shops (assumption: Starbucks produces average coffee)? This could be one of your USPs: great coffee from local baristas delivered to the doorsteps of your customers.
* Transportation makes or breaks any type of delivery service. You need a form of transportation that's dirt cheap (no gas), small yet can carry many cups of coffee. I'm thinking a bike designed for cargo, maybe something like [1] ?
* Vacuum flasks may solve some of your issues. Why not carry around a couple of these and pour the coffee when you reach your destination? Naturally this would have some implications on branding and product range.
[1] http://www.treehugger.com/bikes/bicycle-cargo-chapter-1-rack... http://www.treehugger.com/bikes/bicycle-cargo-chapter-2-bike... http://www.treehugger.com/bikes/bicycle-cargo-chapter-4-carg...
They get insanely high gas mileage.
Of course, you can treat this as an educational experience to learn more about what you need to consider for these types of businesses going forward. Just realize that proving you can sell a product at a low but unsustainable price point does not prove the product is viable.
For many people, part of the point of going to a coffee shop is the social interaction and serendipitous encounters.
Good luck tho! :)
2. You could scale this more easily with TaskRabbit.
3. A flat monthly rate will run you into the ground. Example: I order 10 drinks every morning delivered to my office. Or, if you limit to one drink/day, as head of this company I could buy a year of this for all of my employees, then together they remember to order on a daily basis.
For that reason, I'm out. Nice looking iPhone app though.
That being said, you're probably well outside the target market for having your coffee delivered to you. If you had time to make it yourself, you certainly had time to grab a cup on the way to work.
I like it.
You should start hyper local, one neighbourhood in San Francisco - SOMA? Hayes Valley? Mission? If you did it in a hyper local area you might just turn a profit at $1.50 delivery each.
I think this would also be hugely valuable to companies, such as being able to order all my teams starbucks drinks in one click.
I'm curious why coffee though? Most people do not appear to mind getting their coffee in the morning. Especially as it is so habitual. I hate laundry though! I hate taking my trash out. I hate not getting fresh bagels/fruit each morning.
For example I smoke a pack of cigarettes a day, and other than when I remember to buy a carton ahead of time I generally end up going to a shop each day specifically to buy them, they don't fit my general groceries timetable.
Somebody already suggested newspapers... maybe a few other easy-to-deliver snacks/drinks (can of coke, crisps..)? I'm sure there's some more things that X% of people are already buying once a day and would like to save hassle on.
The more you bring, the more the delivery charge looks good to the customer. Let's say each day you brought me a coffee (at cost), a pack of fags (at cost) and a can of coke (buy in bulk you could sell at retail cost and make some money there), still charge $1.50 delivery fee, but suddenly you're saving me three times as much hassle.
I would guesstimate you're looking at 20 minutes of labour at the very least for each coffee. That includes getting to and from Starbucks, ordering, having the coffee made, and completing the transaction by delivering it to the customer.
Each person involved might earn $4.50/hour before costs...
edit: source http://search.dilbert.com/search?w=webvan+split&x=0&...
Premium coffee is selling for $6.50 and is turning into a luxury item. Source: http://www.good.is/post/the-end-of-cheap-coffee/ (fantastic article!)
I'd get creative in how you can generate revenue too besides the demand/customer few. Right now people in the comments are focusing on the scale, well it's a hard product to arbitrage, but
1) Could you sell space on the cups for ads or other start ups? This might be the one time QR codes could work!. A Well placed QR code on the cap??
2) If you try to cut your costs (ie the coffee) look into a starbucks gift registered card, every x number of coffees you buy you get a free one. Also, once you hit a certain threshold you can customize (add flavors) to cups of coffee for free. Still charge the customer for it, but you get it for no additional cost.
3) It doesn't have to be Starbucks. I'd try partnering with unique coffee shops and try cutting a deal with them. They get people aware of their coffee and grow their customer base.
4)Or just simply use this to meet people doing interesting things. Who doesn't have time to get coffee in the morning--people who are doing things. Who can offered to have someone delivery coffee to them? People who've made money doing something.
Best of luck, interested to see what you do with this!
1. bundle your offer with a subscription to a newspaper. Possibly with a large subscription purchase, you'd save enough money that your customers would get a deal for coffee AND the paper while you up the revenue.
2. add breakfast! smoothies? Breakfast burritos? Those take time, are usually pretty healthy, and are highly portable.
3. send them a morning playlist??? like a new jazz/downtempo CD of their genre preference to get ready with while they wait? If I'm busy, which is what I'm going to have to be to use your service, I probably don't spend a lot of time getting new music.
4. have really really good looking delivery people. Nothings gonna make someone get ready faster and better in the morning than that. Hire college sororities/intramural soccer teams?
5. market yourself to startups that want their folks to come in before just getting free lunch--like a jumpstarter for their day. Maybe they'd pay a bit to see if you can get their engineers in by 9:30-10. 15-20 bucks for an extra hour or two of work sounds like a stellar rate for a top flight hacker...
Honestly though man, I'd use this as a vehicle to learn about starting up and not as the roadmap. Take all the gravity out of the situation. This should be a fun experiment to learn how you and your team operates, how you adapt when you're not getting traction, nothing more.
I respect the hustle, but this most likely will not work out. If I have time to wait for you to deliver coffee, I have time to make myself some.
If you really, really have a burning urge to do this, be ZeroCater for coffee and sell any three startups on doing an office-wide coffee run every morning for only 15% the cost of a new engineering hire. (P.S. Note how I do not anchor costs around the price of coffee.)
Well, neither does Starbucks.
If I want to get coffee someplace (and in my area, for better or worse Starbucks is nearly the only option), then I'll go somewhere because I want to see something besides the same four walls and my lovely family.
Paying coffeehouse prices plus a convenience fee just to sit at home and save myself the few minutes it would take to make coffee seems like it will have a very small target market, at best.
Some people pay the extra to drink it somewhere else, some pay for the convenience of "I don't have to bother making it", and some pay because they prefer it to what they make at home.
There's a step between being a Starbucks customer and being a Starbucks shop. See for example http://www.starbucks.com/business/office-coffee
I don't know how costs would improve/get worse, but I imagine it would at least be operationally easier if you could brew on the road rather than constantly having to go back to the shop, and dealing with drinks getting cold.
Potentially I can imagine them selling you branded equipment (cups, tissues etc.), coffee (just big bags) and the extras you might need (e.g. syrups), then as long as you made it well, so as not to give them a bad name, they could just leave you to it.