The UK convenience sector is worth £37.5bn, and convenience retailers should be winning – convenience is the #1 cited shopper factor. Unfortunately stores are struggling due to key consumer prejudices, particularly in alcohol – we solve this. Alchemy Wings is an on-demand overlay for the convenience sector. We’ve identified a millennial shopper base looking to purchase for particular occasions in a more appealing way. We help stores access this market – stores select range and price, and we manage orders and delivery (we source the cheapest). We’re 24/7, with an API-led platform, experienced team, and a clear execution plan. Brands love us – we’ve already sold £155k of merchandising.
As a consumer-facing (B2C) business we’re an on-demand delivery solution for the convenience sector – we provide a digital platform through which consumers purchase from existing retailers. We focus on a key shopper mission which unlocks five sales categories: alcohol, soft drinks, snacks (savoury and confectionary), and tobacco. We take a commission on every sale, as well as a delivery fee.
As a retailer- and brand-facing (B2B) business we’re a new route to consumers. Brands can now directly access shopper and retailer data, and directly market to these groups. Retailers can get advice on increasing sales, and unlock new sales channels. All of these options can be commercialised.
Consumers now cite ‘convenience’ as the #1 shopper factor (ahead of price), and 70% use a convenience store every month. Further, 70% of convenience shoppers drink alcohol. The problem is that <20% buy alcohol from convenience stores, claiming four factors put them off: price, branding, convenience, lack of inspiration. A professional, competitive eCommerce solution solves these.
The convenience sector is home to 52,448 convenience stores – 75% are independently owned, but only account for 46% of sales. We specifically focus on these stores. For brands, no one has yet managed to instal a digital platform in the convenience sector, and the data we can deliver is completely new.
Our first revenue stream is on product sales – we take a c.20% commission on all products sold through the site. We also charge for delivery, holding a lower base charge of £3, but flexing this upwards when demand is less elastic (late-night and tobacco sales). Overall we deliver a predicted 40% Gross Margin. With scale we’ll charge retailers for sales positioning and other ancillary services.
For brands, around 20% of Gross Sales is re-invested as Trade Investment – with scale we’ll unlock these overriders on a ‘per product’ basis. Brands are also targeting 25% of all marketing spend to be digital by 2017, and we’ll tap into this to support our marketing campaigns and reduce our CPA.
There are three obvious exit options:
– An existing food aggregator buys us as a service bolt-on e.g. Deliveroo. They operate a different model to us – restaurant-led (rather than product-led) but we would fit well with their existing operations and logistics model.
– A US-based alcohol delivery service buys us e.g. Drizly. The European market has no current alcohol operators, but some have begun to appear in the US. We would be a good geographical acquisition for them.
– Existing Brand or Retail Group e.g. Diageo or Nisa Local. Both sets of actors have been looking for an easy path into on-demand (digital) convenience sales, and we would provide a pre-built route to this.