The grocery business is plagued by notoriously slim margins. The trade group Food Marketing Institute estimates the supermarket industry as a whole turned in a 1.3% net profit after taxes in 2013 on $620 billion in sales.
Those numbers haven’t stopped venture capitalists like Mr. Mortiz from taking a chance again. “After our experiences with Webvan and the electroshock therapy we needed, none of us thought we’d venture ever again into the grocery business,” said Mr. Moritz, who sits on Instacart’s board. “The one thing we were very right about is that if there is an easy and reliable way to order groceries from home, the demand will be insatiable.”
Inc Magazine on 5 things we can learn from the vibrant German SME market including their supply chains and factories:
“U.S. manufacturers are already customer focused: There's less to learn from Germany on that score. What's interesting, though, is the extent to which the Mittelstand's customer orientation benefits these companies in their roles as buyers. Most companies I visited procure machines, parts, and other products from their compatriots. At least 80 percent of Igus suppliers are Mittelstand companies, according to Artur Peplinski, vice president of international group development. "We ask a lot from our suppliers, so they have to understand our standards and requirements," he says. "Having the Mittelstand makes it easier for us to fulfill our promises to customers."”
“Igus, on the outskirts of Cologne, is another global player, but there's nothing bonsai about it. Founded in a garage in 1964, the company employs more than 2,000 people, and its modular factory has been expanded seven times. Towering yellow pylons sprout from the roof at the juncture of each module, stabilizing the structure so that panels, which substitute for concrete walls, can be reconfigured on the basis of demand.”