She said, “It’s instant satisfaction.”
Venture capitalists have invested billions in Gorillas as part of the latest pandemic delivery trend: companies promising to deliver Tylenol or iced coffee, cucumbers, or paper towels within 30 minutes, or even 15 minutes. They usually deliver from small warehouses located in residential or commercial areas.
They are considered unprofitable, according to experts. However, bigger companies continue to muscling in. Officials in European cities as well as New York City, which has been the U.S. launching point, already complain about their operations, saying that it’s detrimental for residents and employees.
Marc-Andre Kamel from Bain, co-author of an article on the online grocery industry, stated that “the problem I see in quick commerce players is that despite the enormous valuations they enjoy and the seemingly unstoppable cash flow that they get, they will eventually have to find a way to profitability.”
Already, services are being shut down. One of the services, 1520, was closed in December. Fridge No More and Buyk were shut down in March. According to reports, the Russian founders of Buyk were unable to provide money because of restrictions imposed during the Ukraine war. It did not respond to queries. Fridge No More tweeted that it would close after two years due to “growing competition” and other industry-related issues. Its founder didn’t respond to questions.
Other delivery companies are experiencing growing pains. Gorillas dropped the “10-minute” delivery promise it made in U.S. marketing. Now it’s only “in minutes.” Gopuff recently laidoff 3% of its workforce, more than 400 people.
It is not sustainable, according to Len Sherman, an adjunct professor in Columbia University’s Business School. “There will be a lot consolidation at some very difficult terms.”
Getir, a Turkish business that has operations in Europe, New York, Chicago, and Boston, stated that the key to financial success is the expansion of mini-warehouses in cities where it delivers.
Langston Dugger (Getir’s chief of U.S. operations), stated, “We’re there for the long-term.”
The company raised $768 million recently, which is close to $12 billion. It plans to expand in America.
FastAF founder Lee Hnetinka said that profitability is not a priority right now. FastAF invests in customer service and says their strategy is long-term. He also referred to Amazon’s early days, which were unprofitable.
Established restaurant delivery companies DoorDash and Grubhub, Uber, and grocery delivery service Instacart pose new competition to the popularity of these fast-delivery apps.
DoorDash currently has three “DashMarts”, in New York, that deliver groceries and other convenience-store items in 15 minutes. It also promises delivery from Albertsons Cos. grocery shops in over 20 cities in less than half an hour. At a recent conference , its president Christopher Payne said that 15-minute delivery may not be feasible.
Grubhub delivers 7-Eleven items and other convenience stores in less than 30 minutes. Uber has partnered with FastAF and Gopuff, so that customers can choose the items they want from within the Uber app. Uber can also deliver to local grocery stores, but delivery times are usually over 30 minutes. Instacart plans to deliver within 15 minutes, starting with Publix customers in Atlanta and Miami.
It is not clear how fast these services can be provided outside of the most dense U.S. cities like New York or in the areas where they cluster in larger cities.
Stanley Lim, a Michigan State University professor specializing in supply chains, stated that this model must have density to be successful. These customers can be served in a rural location, but they are not profitable. This will limit the number of companies that can be started.
Regulative pressure could be a real threat to the city’s bustling streets. New York City Council members voiced concern about fast-delivery apps and suggested they could be violating zoning laws. The New York City Department of Buildings will work with other agencies to find the “appropriate zoning districts” that would allow for mini-warehouses. Andrew Rudansky, spokesperson for the agency, stated that they have not been included in any existing city zoning regulations because they are a new kind of business.
Concerns are also raised about delivery apps offering discounts to local businesses such as convenience stores and bodegas, as well as safety concerns regarding delivery drivers. Manny Ramirez works for DoorDash, a service called Relay, and is also an organizer for Los Deliveristas Unidos. This organization advocates for better conditions and safer delivery people. Ramirez has been seriously injured while riding his bike two times in the last year and is still in physical therapy. The more dangerous the order is, the more dangerous it becomes for the rider.
He stated, “We don’t have laws that protect bikers.”
Advocates claim that delivery workers are forced onto sidewalks because of the lack of bike lanes in the city and time pressures. This leads to concerns from residents.
Deborah Koncius lives in Manhattan’s Upper West Side and feels unsafe because delivery men are riding e-bikes along the sidewalks. She said that although she and her family have not been hit, it was only a matter time.
