Ziscuit

Ziscuit is a grocery retailer-agnostic, two-sided, reverse auction marketplace where grocery stores bid to fulfill consumers' shopping lists. Ziscuit reduces consumer cost, time, and the stigma associated with couponing while also decreasing the cost grocery retailers spend marketing to shoppers, e.g., circulars and coupons.

We are building the first version of the Ziscuit shopping suite, which includes a consumer mobile app, a server-based administrative platform for grocers, and an administrative dashboard for the Ziscuit customer support team.

According to Brick Meets Click and Mercatus, as of April 2020, online grocery shopping is a $6.6B market while IBISWorld projects online shopping to be a $13B market. The Food Marketing Institute and Nielson expects the online grocery shopping market to climb to $100B by 2025.

According to Hawk Incentives, 89% of online grocery shoppers are cost-conscious, naming price as a top factor affecting their purchasing decisions (Hawk Incentives, April 2020).

Ziscuit will initially target millennial and affluent online shoppers within the cost-conscious segment. Ziscuit will target these sub-groups because according to Valassis.com, millennial, and affluent online shoppers seek personalized savings and discounts (a unique Ziscuit advantage).

Based on the size of these sub-groups, Ziscuit projects that can capture one-third of the online shopping market valued between $6.6B and $13B.

Shoppers spend too much time and money seeking deals on groceries while grocery stores see declines in loyal customers as stock-outs increase, and food delivery windows become more inconvenient.

According to Valassis.com, 53% of all shoppers spend approximately 8 hours a month seeking deals, while 25% of millennials and moms invest 16 hours a month. Despite shoppers' best efforts, few coupons are redeemed (less than 1%), households essential are often out-of-stock, and delivery fees and limited delivery windows make online shopping untenable.

A McKinsey survey of 1,500 shoppers found that 20% of shoppers switched to a new primary store during the COVID-19 crisis. The main reason shoppers cited for their decision to change stores was that their primary store was out of stock on many items. Respondents were also looking for stores closer to where they live or work, perceived to be cleaner or safer, and seen as having more affordable prices (McKinsey, April 2020).

What if there was a reverse auction marketplace where grocers with inventory could bid to fulfill lists posted by shoppers? Shoppers would set the terms of the auction (full or partial bids, type of stores eligible, and auction end date). After a successful auction, grocers "pick-and-pack" orders and shoppers schedule a pickup date.

Ziscuit solves grocery shoppers' critical problems: (1) the need for product availability, (2) the desire for personalized discounts, and (3) schedule flexibility for grocery pickup or delivery. Ziscuit also addresses the grocery stores' fundamental cost drivers by giving foresight into shopper demand while reducing the need for home delivery.

Ziscuit has two types of direct competitors: Retail Delivery Services and Application Software Providers.

RETAIL DELIVERY SERVICES

Peapod (https://www.peapod.com/) - is an online portal that enables users to buy grocers and food products and have them delivered to their homes.

Instacart - operates same-day grocery delivery and pick up service in the U.S. and Canada. Customers shop for groceries through the Instacart mobile app or Instacart.com from various retailer partners.

AmazonFresh - is a grocery delivery service currently available in the U.S. states, London, Tokyo, Berlin, Hamburg, and Munich. Amazon integrated the Amazon Echo-enabled service for Prime customers to place Whole Foods orders and have the groceries delivered within two hours to their homes.

Walmart (www.walmart.com) plans to deliver 40% of its grocery items to consumer homes by the end of 2020 via its acquisition of FlipKart. The Walmart delivery service costs $9.95 per order and requires a $30 minimum purchase. Sam's Club, a division of Walmart, is partnering with Instacart (see above) to offer same-day delivery to its customers.

eBay (www.ebay.com) – eBay is getting into grocery delivery in Australia. eBay launched grocery delivery in Australia with Coles and will offer same-day delivery of a broad selection of non-perishable pantry items.

Target purchased Shipt (Application Software Provider) and plans same-day delivery to about half of its stores by the end of 2020.

UberEats – The ride-sharing services Uber already offer food delivery from restaurants. Given their current infrastructure (retail distributors), Uber and Lyft could enter the grocery delivery market or could be acquisition targets for large retail distributors, i.e., Amazon, Walmart, or Target.

APPLICATION SOFTWARE PROVIDERS

Google Express (https://express.google.com) is a one-stop-shop for shopping across stores like Costco, Target, Best Buy, Walgreens, Fry's Electronics, Home Depot, PetSmart and more. Google Home entered into a partnership with Walmart to offer voice-enabled ordering of grocery items for home delivery.

Shipt (https://www.shipt.com) is a mobile application that allows users to order and buy grocery products from local stores. It was purchased by Target in December 2018 (see above).

GrocerKey (https://www.grocerkey.com/) is the leading provider of grocery e-commerce technology and services. They help brick & mortar stores adapt to modern shopping demands.

ShopHero (https://shophero.com/) provides e-commerce and home delivery solutions for grocery stores.

Priceline (www.priceline.com) – Launched a reverse auction website in 1999 for grocery delivery. According to Priceline executives, the "[company] had about 2 million gasoline and grocery customers, and some 7,200 participating grocery stores and 6,000 participating gas stations" (https://www.cbsnews.com/news/priceline-runs-out-of-gas-groceries/). Priceline could re-enter the market.

Ziscuit provides cost savings for both shoppers and grocery retailers. Customers sel ect the bids that offer the most significant discount with the most convenience. Grocery stores will benefit fr om lower direct marketing costs.

Ziscuit also solves the frustration of stock-outs by enabling grocery stores with inventory to bid to fulfill shopping lists.

Ziscuit will make money in five ways: (1) subscription fees (e.g., Amazon's Prime) that grant the user the right to post lists in our marketplace; (2) Auction fees for non-subscribers who want to post a shopping list for auction; (3) Seat License fees paid by retailers to bid on lists; (4) service fees (percentage fee charged per transaction based on the total dollar amount purchased); and (5) In-app brand and retailer advertising to encourage shoppers to include items and stores in the auction.

Ziscuit will charge members a $24 per year subscription fee for unlimited access to the auction functionality. Assuming a similar ramp-up as Amazon Prime, Ziscuit projects that it will have 1.5M auction users five years after launch (with annual re-occurring revenue of $36M).

Ziscuit will charge non-subscribers $1 per list posted for auction. Ziscuit projects that 2% of the 43M online shoppers will use this option per month provides annual revenue of $10.3M

Ziscuit will charge a base seat license fee to retailers based on the number of seat licenses and the geographic coverage requested. Additional users will be added on a sliding fee schedule. We project annual re-occurring revenue of $7.5M by year five.

Ziscuit will charge a 0.01% service fee on the total dollar value of each all successful auction. We project annual revenue of $1.1M by year five.

Ziscuit will offer brands and retailers the option to purchase in-app advertisements. Ziscuit will charge $10 per 1,000 views. The ads will only be visible to non-subscribers. By year five, we project the revenue of $6.7M.

Ziscuit will charge a subscription fee and user fees for shoppers to post shopping lists in the reverse auction service. Ziscuit will charge retailers seat license fees to access the auction platform and place bids.
Ziscuit tracks the following metrics to measure the success of the business model:

Average Basket Per Customer – Measures the dollar amount shoppers send per transaction.
Number of Bids Per List Per Customer – Tracks the average number of bids each customer receives per list.

Dropout rate – Measures the percent of users who fail to activate (post to auction) a shopping list.

Number of Lists per customer per month – measures shopper engagement.

We will invest money in three major areas:
- Technology Infrastructure – We will allocate 50% of invested funds into the development of the Beta platform.
- Key Hires – We will hire a Chief Technology Officer (CTO).
- User Recruitment – Ziscuit is a 2-sided marketplace. To attract grocery stores, we have to have users. We will invest 15% of invested funds in user recruitment.

Ziscuit will offer a qualified investor six percent of the company for a $200,000 investment.

Ziscuit faces the following risks:

(1) Shelter-in-place orders – If COVID-19 requires consumers to shelter-in-place, home delivery will become a requirement – which would negative Ziscuit’s cost advantage.

(2) Pick-N-Pack Adoption – Though most grocery stores offer Pick-N-Pack options for shoppers, if those retailers do not broadly adopt this service on the platform, Ziscuit will lose a primary service advantage.

Participation in Comcast Universal/BoomTown Accelerator called "The Farm" with a startup called Pruvn.

To date, I have not won any competitions or received any awards.