I see this as a bit of a pipe dream, but I know it's in demand in at least three nearby towns. We have no grocery stores. We have a Dollar General (carrying a limited selection of way overpriced dairy, juice, and pre-packaged frozen foods) and that's it. Some towns don't even have that, because the towns can't support them. Because of this, residents have to drive 15-45 minutes out of their way just to pick up basic staples. We can still have good margins, but not obscene margins, by being practically the only grocer in town.
This thread was prompted by a discussion
here, but it's something I've been kicking around for a while. I haven't wanted to get carried away with it, though, and I don't plan to, now, so consider this an interest probe, not any kind of prospectus.
The basic idea for the store is to have an automated warehouse which serves requested goods at an automated service window. Customers do not order food at the store, but online, which works like any ordinary web-store except that it doesn't ship anything out -- it's all held at the physical location for the users to pick up. They can order at home on their laptop or PC, or at work on their smartphone. They can pre-pay using bitcoin, or they can pay at the time they pick the food up by typing in their order number and using a debit or credit card (with low margins, we scrape back costs of this by passing processing fees onto the consumer, incidentally giving them incentive to adopt BTC even if they've never heard of it). EBT payment can be worked in, but there aren't too many people around here using that -- most are factory workers, with the rest either working at the university a town over or the hospital in a different town over.
Customers can pull their car up to the service window, making this a much less painful process than going to a grocery store. Once they either verify their BTC payment (by using their BT-capable smartphone to sign a message with the address they paid with) or pay for their order using CC/debit, the service window opens up, goods start to be placed in paper bags, and packed bags are then moved out to the window where the customer loads it into their car. A customer should be able to buy their weekly groceries within around 30 minutes from start to finish if they live nearby, much better than 2 hours it normally takes with distant stores and walking around. Possibly moreover, customers will no longer feel guilty for buying pre-packaged, processed foods in bulk. For those line workers with a frozen-pizza-a-night diet - no problem.
I don't think it'd be cost-effective to truly, fully automate this. Someone does need to stock the warehouse, respond to problems, monitor the warehouse, man a customer call button, and remove any inventory which's gone bad. Almost everything requiring a human can be done from a central commercial or even residential location, from adding items to customers' orders on-the-fly, to providing extra bags, to discounting food nearing its sell-by date. What this means is virtually no overhead outside electricity, Internet connectivity, and property taxes. Most importantly - without customers or employees needing to walk around inside the store, far more space can be devoted to products rather than humans without needing to heat or cool for their comfort, only for what products need.
What I can provide:
*Building physical conveyor, bagging, and shelving system using second-hand parts (family friend would be willing to help me with this at minimal charge)
*Creating the driveway (paving it would be a dumb expense, IMO)
*Programming everything (conveyor system, bagging scripts, customer interfaces, online storefront) EXCEPT payment processing
*Monitoring, maintenance, customer service (this may include creating orders for people who didn't pre-order for particularly stubborn people)
*Store card scheme
What would be needed which I can't provide:
*Building the actual warehouse and service window (a family friend would be willing to do this cheaply and possibly finance a good portion of it)
*Suitable land
*Establishing purchase orders and logistics for non-local food
*ID scanning software/hardware
*Related payment processing software and hardware
*Enough money
Upfront costs would include:
Physical store ($125-150k, 10,000sqft metal building w/service window and extra-large signage)
Land ($45-70k for two acres on main town road near I-94)
Initial inventory ($40-60k)
Physical components for conveyors, shelving, freezing ($20-30k)
Coding (free, ideally, but I might need up to $10k worth of help, up to $50k to finish within a year)
Physical payment & interface components ($1-2k)
Misc - bags, cards, hosting, advertising, small rocks (~$700)
Licensing & registration (~$300, including 24/7 liquor)
Total upfront: ~$212-363k (I believe it likely to be around $260k)
Ongoing costs (by month):
Inventory (
~$200-500k)
Property taxes (~$350)
Heating/cooling (~$250)
Electricity (~$100)
Advertising (~$100)
Machine maintenance (~$75)
Internet connectivity (~$60)
Licensing upkeep (~$25)
Quarterly accounting (investment partner?)
Purchasing & Logistics (I can handle with training, otherwise investment partner?)
Total ongoing: $960/mo excl. inventory, $201-501k with.
Assume the store receives 900 "exclusive" regulars who buy all groceries at the store and spend $400/mo on groceries, liquor, and cigarettes. This assumes nearly the entire town uses the store, and given their only alternative is Dollar General, I think this is a fair assumption. Assume there are 500 non-exclusives who spend $100/mo at the store on average. This'd come to a monthly turnover of $410k. -But let's halve that to ensure we're being realistic, and say $205k.
Assume 50% of store items (non-perishable canned & otherwise non-perishable or frozen foods) are marked up 30% of wholesale. Assume 30% of stock is purchased each week.
Assume 25% of store items (non-food, non-perishable) are marked up 25% of wholesale. Assume 50% of stock is purchased each week.
Assume 10% of store items ("cheap meat"; swiss & stew beef) are marked up 100% of wholesale. Assume 15%/mo is not sold near expiration, thus frozen and sold at 10% mark-up over wholesale. Assume 10% of that is either not fit some time after freezing or is not fit to be sold prior to freezing. Assume 60% of stock is purchased each week.
Assume 10% of store items (fresh produce) are marked up 60% of wholesale. Assume 25%/mo is not sold near expiration, thus frozen and sold at 25% mark-up over wholesale. Assume 10% of that is either not fit some time after freezing or is not fit to be sold prior to freezing. Assume 50% of stock is purchased each week.
Assume 5% of store items (premium meat cuts) are marked up 30% of wholesale. Assume 25%/mo is not sold near expiration, thus frozen and sold at 5% mark-up. Assume 10% of that is either not fit some time after freezing or is not fit to be sold prior to freezing. Assume 50% of stock is purchased each week.
Assume 10% of all non-perishable goods (5% food, 5% non-food, nominally) are on clearance at any given time for 5% over wholesale and that their sales are doubled during this time. Assume 75% of stock is purchased each week.
Whew. Alright. We're assuming $205k in sales each month, so now I need to weight the terribly broad product categories...
Non-perishable or frozen food - 1.2 units sold per month per initial stock, 60/164 of total ($75k)
Non-food - 2 units sold per month per initial stock, 50/164 of total ($62.5k)
"Cheap meat" - 2.4 units sold per month per initial stock, 24/164 of total ($30k)
Fresh produce - 2 units sold per month per initial stock, 20/164 of total ($25k)
"Premium meat" - 2 units sold per month per initial stock, 10/164 of total ($12.5k)
So now for some shaky math to project monthly profits from product categories...
Non-perishable or frozen food - $75k/mo sales, $375/mo gross from clearance items, $20,250/mo gross from non-clearance items, $20,625/mo total gross.
Non-food - $62.5k/mo sales, $312.5/mo gross from clearance items, $14,063/mo gross from non-clearance items, $14,375/mo total gross.
"Cheap meat" - $30k/mo sales, $450/mo lost to spoilage (don't worry, I'll eat it!), $405 gross from frozen products, $12,750/mo gross from normal products, $12,705/mo total gross
Fresh produce - $25k/mo sales, $625/mo lost to spoilage (om nom nom), $281.25/mo gross from frozen products, $5,625/mo gross from normal products, $5281.25/mo total gross
"Premium meat" - $12,500/mo sales, $312.50/mo lost to spoilage ("welcome to the neighborhood" expired meat BBQ. Rare? No problem!), $140.63/mo gross from frozen products, $2,812.5/mo gross from normal products, $2640.63/mo total gross
WHEW! This really needed a spreadsheet... I guess I got carried away. Anyway- so we can a project $56,015.63 gross per $205k in sales. -And guess what? NO SALARIES! That's basically all realizable profit, and once DG's pushed out of town (easy peasy), we're the only player! Not much point in even going over overhead, but for the sake of being complete after going this far, actual net/mo would be ~$55k. -On a ~$200-360k upfront investment. Crazy, right? Sounds crazy. What'd I screw up?
