GoPuff and Jokr Attract Interest
While Uber and Instacart jockey for dominance of grocery delivery, other companies looking to solve the last mile riddle are taking a different approach and attracting massive funding.
GoPuff is reportedly close to securing an estimated $1 billion in new funding after raising $1.15 billion in March. Investors are buying into the company’s vision for ultra-fast delivery, flat rate pricing and expanding product assortment. Unlike the Uber and Instacart platforms, which deliver products on behalf of other retailers, GoPuff’s approach is to vertically integrate and operate as a retailer with growing network of 250 microfulfillment centers that service 650 U.S. cities. The company doesn’t disclose sales, but it occasionally offers a nugget that hints at order volume. For example, in late June, GoPuff said it had made its five millionth delivery in Chicago after operating there for five years.
In addition, GoPuff announced the expansion of a foodservice offering called Gopuff Kitchen that offers a limited assorted of made-to-order food. The kitchen facilities are located within or adjacent to micro-fulfillment centers, enabling customers to order food for any daypart and include the products with other items for the flat rate delivery fee of $1.95.
“Gopuff is launching a completely new category and raising the bar on how technology is making our lives more convenient,” said Daniel Folkman, Gopuff’s SVP of Business. “Nowhere else can you order your everyday essentials while also taking care of dinner for the family or getting a quick coffee, all from one platform.”
The company said it has already delivered hundreds of thousands of orders across more than 20 microfulfillment centers during a pilot program in Austin, San Antonio, Miami, Nashville, Philadelphia and the Phoenix area.
Operating with a model similar to GoPuff is e-commerce upstart JOKR. Launched in April, the company bills itself as a “next generation grocery and retail delivery platform,” and in July secured $170 million in funding. JOKR operates 100 delivery hubs globally, including 10 in New York that were launched in June. JOKR is currently available in nine global cities and plans to use the new capital to expand in the U.S., Latin America and Europe.
Ralf Wenzel, founder and CEO of JOKR said the latest investment will fund an unprecedented rate of expansion and enable the company to build “the premier platform for a new generation of online shopping, with instant delivery, a focus on local product offerings and more sustainable delivery and supply chains.”
The company’s rate of expansion is aided by its simple real estate requirements. It only need about 2,500 to 5,000 square feet of ground floor space with double door access in dense commercial areas.
But Wait, There’s More
Adding further turmoil to the U.S. market and the way Americans order food, from whom and how orders are fulfilled, is the recently completed acquisition of Grubhub by Amsterdam-based Just Eat Takeaway.com. Although the deal was announced in June 2020, it wasn’t approved by Grubhub shareholders until June 15, 2021. Both companies are focused on food delivery from restaurants, but so was Uber until it decided to pursue grocery delivery.
The combined Grubhub and Just Eat Takeaway may also find grocery delivery appealing and follow the Uber and DoorDash blueprint. Like Uber, DoorDash began as delivery platform for prepared foods and became the market leader in that segement. However, when the company went public last December it talked about unlocking the power of its logistics platform to serve other types of merchants beyond restaurants.
It made good on that promise with a delivery deal involving Rite Aid in May, followed by Petsmart in June and then its first major grocery deal with Albertsons Companies. The partnership between DoorDash and Albertsons involves delivery from roughly 2,000 stores within an hour. Products can be purchased throught the DoorDash app or directly from Albertsons site.
“Consumers' desire to get everything in their neighborhood on-demand has increased dramatically,” according to Fuad Hannon, head of new verticals at DoorDash. “Leveraging our extensive logistics network and Albertsons wide selection of fresh groceries, we are creating a one-stop shop for customers to access any of the essentials they need, delivered to their doorstep within an hour."