Social Supermarket Founder Admits Financial Losses Amid Expansion
Translated & summarized from Ice by baba
Gabi Li, founder of the social supermarket initiative HaChishuk, is attempting to combat the high cost of living by offering lower prices without relying on major brands or sales. Despite significant growth in orders and turnover, the business is currently experiencing monthly losses of 50,000-100,000 shekels, with a cumulative annual loss projected between 600,000-700,000 shekels. Li aims to achieve financial balance by year-end and has invested 1.5-2 million shekels of his own funds into the venture.
The story in 6 lines · by baba
- HaChishuk founder Gabi Li is losing 50,000-100,000 shekels monthly on his social supermarket venture.
- The initiative aims to lower the cost of living by avoiding major brands and sales promotions.
- HaChishuk saw 17,000 orders in October, with a monthly turnover of 5 million shekels.
- The business focuses on dry goods and partners with smaller suppliers to offer competitive prices.
- Li has invested 1.5-2 million shekels of his personal funds into the startup.
- The goal is to reach financial balance by the end of the year.
Gabi Li, founder and CEO of the "HaChishuk" initiative, is attempting to lower the cost of living by establishing a supermarket that operates without relying on major food brands or sales promotions. Launched in mid-2023, the social venture has grown significantly, handling tens of thousands of orders monthly. In October, the platform recorded 17,000 orders, a substantial increase from the initial 5,000 per month, with a monthly turnover reaching 5 million shekels including VAT.
HaChishuk differentiates itself from traditional supermarkets by avoiding physical stores and a vast array of big brands. Instead, it focuses on dry goods with long shelf lives and partners with small to medium-sized suppliers. The consumer price includes a roughly 25% markup over the supplier's price to cover operational costs like rent and salaries. Despite its growth, the business is currently operating at a loss. Li reported monthly losses of 50,000-100,000 shekels over the past year due to significant expansion expenses, estimating a cumulative loss of 600,000-700,000 shekels for the year. He aims to achieve financial balance by the end of the year.
The initiative deliberately avoids products from major brands like Osem, Tnuva, and Strauss, preferring lesser-known suppliers who can offer more competitive prices. However, customer demand has led to the gradual inclusion of some well-known brands. Li acknowledges that HaChishuk may not always be the cheapest option for every product but criticizes the promotional tactics of larger chains, which he claims inflate prices on other items.
Price checks reveal competitive pricing for various items, such as 400g of halved walnuts for 13.80 shekels, 750ml of olive oil for 24.60 shekels, and 1 liter of canola oil for 7.70 shekels. Pantry staples like 1kg of basmati rice are priced at 6.50 shekels, and 500g of oats at 3.30 shekels. Other items include 400g of pasta for 2.90 shekels and 1kg of natural peanut butter for 23.60 shekels.
To address delivery costs, HaChishuk utilizes pickup points in residential buildings, tech companies, and educational institutions, consolidating orders to reduce per-kilogram delivery fees to as low as one shekel. Standard delivery fees range from 30 to 40 shekels depending on the region. A pilot program for free delivery is also underway, with costs partially absorbed into product prices. Self-pickup from the warehouse is also available at no charge.
Li, who previously worked in the high-tech industry, has invested approximately 1.5-2 million shekels of his own capital into HaChishuk. He anticipates that continued order growth and operational efficiencies will lead to a balanced and eventually profitable business, targeting a 2% monthly profit margin to facilitate significant expansion.
