Gopuff co-CEO Yakir Gola says its business model will outlast rivals as space attracts new rivals
A bag of groceries with the logo of American on-demand delivery start-up Gopuff.
As delivery start-ups race one another on speed, Gopuff co-founder and co-CEO Yakir Gola said Tuesday that it has staying power to outlast rivals.
The venture-backed business wants diapers, snacks, and other products to be delivered quickly to its customers. The company also wants to improve customer experiences and create a sustainable business with global scale.
He said that “I believe we are in the category of one” at the Groceryshop Conference in Las Vegas.
Gopuff belongs to a growing group of companies that are similar in concept to online convenience shops and grocers. Unlike other delivery companies, such as DoorDash and Instacart, GoPuff doesn’t retrieve merchandise from retailers’ stores. Instead, it has its own network of micro-fulfillment centers —mini, high-tech warehouses — stocked with inventory. In just 30 minutes, contract workers can pick up orders from customers and drop them off at their doors.
Gorillas Getir, Jokr and Jokr are competitors that have opened new markets. They promise even quicker delivery times of up to 15 minutes.
Gola stated that it’s a veteran company in this category. Gopuff created a name for this group, “instant-need” companies.
Gopuff, a company founded by Gola and Rafael Ilishayev in Philadelphia, was created in 2013. They were both students at Drexel University and needed a quick way to buy snacks such as chips or candy late at night without having to run to the convenience store. They began to deliver these goods along with tobacco and hookah products.
Today, the company operates in more that 1,000 cities and stocks more than 4000 items, from pet food to prescription medications. Its valuation hit $15 billion in July. And it includes brick-and-mortar stores, which double as warehouses. BevMo!, an alcohol chain based in California was one of the two acquisitions. in December for $350 million and Kentucky-based Liquor Barn in June for an undisclosed amount.
He said Gopuff is keeping delivery fees low and improving its economics by cutting out the middlemen and making money by selling products and ads. The delivery charge is $1.95 for all orders, and there may be a $2 surcharge for alcohol-related orders.
“Once you have too many parties involved — the store, the driver, the delivery platform itself — you start to erode margin and the customer experience is not flawless,” he said.
Gola stated that the company adds 40 to 50 micro-fulfillment centres each month, and is expanding into new products. It added household products such as cleaners and Covid-19 test kits to its inventory during the epidemic. In select areas, it began to deliver hot food such as pizzas, coffees, and breakfast sandwiches.
He said that the average customer is still young in their 20s and 30s but that a decreasing percentage of customers are college students. He said that baby products are the fastest growing category in terms of year-over-year growth.