"Last mile" problem Migros is burning millions in its online business

According to a media report, the online business of sector giant Migros is in the red. This is partly due to the expensive "last mile". Main competitor Coop, on the other hand, is said to be doing better.

Despite its cost-cutting program, the retailer Migros is actually doing well economically. Sales have reached a record high. Despite a slump last year, profits are also impressive - even if they have been better in the past.

This may have something to do with Migros' loss-making online business. The retailer's delivery service is said to be in the red, as reported by the Tages-Anzeiger newspaper, citing sources close to the company (paid content). The online business is said to have made a loss of around 30 million francs.

Costs too high

The retailer itself has not yet commented. For one expert, however, the figures seem plausible. Matthias Schu from the Institute for Communication and Marketing at Lucerne University of Applied Sciences and Arts calculates that the margin in Migros' online business is not sufficient to cover costs.

According to Schu, the compilation of the orders is important, but especially the so-called last mile, i.e. the journey from the warehouse to the end customer. He puts the costs at 9 francs per order, with the last mile costing as much as 45 francs.

Furthermore, the expert estimates the value of an average order at around 180 francs and then deducts the usual standard costs such as purchasing, storage and logistics costs. Extrapolated to the "presumed number of orders per year", "a loss of around 30 million francs is to be expected", explains Schu.

Coop is in a better position

Although the conditions in Switzerland are not the best, the online food trade continues to grow - and is highly competitive.

The last mile is particularly expensive. And at Migros, this is handled by the post office. This means that the groceries are not delivered by Migros itself, but by a postman or postwoman.

Coop, the largest competitor in online grocery retail, does things differently. The retailer invested in efficient delivery logistics with its own vehicles at an early stage, an anonymous Migros employee told the newspaper.

For example, Coop only delivers by post in rural areas. Schu is also certain that Coop is in a much better position in the online business.

The new, modern Migros warehouse in Regensdorf should now provide a remedy. When it is completed in 2026, 500 jobs will be created there and around 7500 orders will be processed every day.