21 Mar When Fast Just Isn’t Fast Enough
The pandemic brought attention to the demand for a wide range of remote services. From telehealth services offering affordable and convenient ways for patients to meet with physicians to remote work platforms designed to keep people safe, productive, and at home. Many of these services may outlive their usefulness when (or if) the pandemic ever ends and many of these services may be sticking around for a long time.
Fighting For Longevity
One industry that still has yet to prove its staying power would definitely be the emerging ultrafast delivery services. These delivery services boast the ability to bring groceries straight to your door within 10-20 minutes with little or no delivery fees. Buyk for instance, a delivery service operating out of New York, uses bike couriers (or buykers) to get food delivered to hungry New Yorkers in Brooklyn, Queens, Bronx, and Manhattan in less than 15 minutes. But they’re far from alone in this new competitive service. Let’s take a look at some of the services that are going to be fighting Buyk for longevity this year.
Getir, an ultra-fast delivery service that started in Turkey in 2015, advertises the ability to “deliver your grocery in minutes.” Getir has recently made its debut overseas in the US to metropolitans such as New York, Chicago, and Boston to impressive results.
With Getir, as long as customers order between $10 and $15 worth of groceries, they can expect a bike or scooter carrier to zip right to their door in less than 10-minutes – whether it be in the early hours of the morning or the later hours of the night. Although this service does have delivery fees, their delivery fee is a flat rate of $1.95. When compared to the nightmarish fees one might expect from traditional delivery services, this fee is almost not even worth mentioning. Getir also offers real-time inventory updates from whatever locations customers order from. With an impressive $7.5 billion valuation as of June 2021, Getir is definitely one of the many ultrafast delivery start-ups worth keeping a close eye on.
Getting groceries delivered to customers is no laughing matter for this ultrafast delivery service, also based out of New York. Similar to other services mentioned in this list, Jokr guarantees 15-minute bike courier deliveries. This service also boasts zero delivery minimums and no delivery fees. Customers ordering through Jokr can expect to only pay the exact retail price of the items they order, just as if they went in and shopped themselves.
This service was founded in 2021 and has already raised $430 million in funding.
This Philadelphia-based ultrafast delivery service definitely shows the most promise of its competition. Similar to Getir, Gopuff offers a minuscule delivery fee of $1.95 with 15-20 minute delivery times. How Gopuff sets itself apart, however, is that it advertises not just the capabilities to deliver groceries but household essentials such as diapers, pet food, over-the-counter medicine, dog treats, and even alcohol. Gopuff also offers a $5.95-a-month membership service to those who wish to ditch the $1.95 delivery fee altogether. Founded in 2013, this ultrafast delivery service is currently valued at a whopping $15 billion.
The Big Dogs
This kind of competitive growth among ultra-fast delivery services in cities is not going unnoticed by the big dogs in the delivery businesses such as DoorDash and Uber Eats.
On Feb. 1, eTailer FastAF Technologies announced a partnership with Uber Eats to create their own 25-minute delivery service in metro areas such as Los Angeles, New York, and San Francisco. DoorDash already partnered with convenience businesses such as CVS, Wawa, 7-Eleven, and Walgreens in 2020 to launch Dashmart but now the online food delivery giant is using Dashmart in New York to test the waters with 10-15 minute delivery speeds. In 2021, Instacart also launched a partnership with Kroger to deliver on-demand convenience to buyers within 30-minutes. So what does ultrafast delivery do differently? What allows this “too good to be true,” approach to delivery to happen?
Behind The Scenes
Unlike traditional food delivery services, these ultrafast delivery services fulfill their promises of fast and cheap delivery by stocking up “dark stores” with on-demand groceries. By purchasing as many vacant buildings as possible, these delivery services are able to cover a wide range of ground in metropolitan cities. A customer simply selects the groceries they wish to buy and the order is then fulfilled by a bike or scooter courier nearest to their location.
It’s as if Walmart fired all of its cashiers, replaced them with bike couriers, and bought out as many vacant buildings as possible to ensure fast delivery promises to local customers. Customers who order through these apps buy food directly from the closest vendor which is what makes the lack of delivery fees and ridiculous delivery speeds somewhat sustainable. However, not everything is as seamless as it might seem on the surface.
On Jan. 30, Wall Street Journal found that some of these ultrafast delivery services could be losing an average of $20 in profit for each order as it becomes apparent that many of these businesses are unable to build the same type of momentum that they might have experienced in European markets. Apparently, the cost of advertising and paying couriers has become too much for Jokr, which is now apparently looking to sell its business.
As it becomes clearer to these ultrafast delivery services that their business models are not working as well as they’d hoped in the US market, companies may need to start selling ads or using technology to automate and deliver their services more effectively. Whatever is the case, a change of approach appears to be in the cards if these services wish to thrive.