Ultra-fast delivery may burn out or fade away
Ultra-fast delivery startups that have proliferated throughout the U.S. and abroad might have gotten ahead of themselves, according to a new study that finds that demand for the service is just not that big.
Only two percent of 1,000 U.S. shoppers polled in a new survey from Stor.ai said they were “very likely” to pay an additional fee to have their groceries delivered in 15 minutes. On the other hand, 57.5 percent said they definitely would not pay a fee for the service, Forbes reports.
A representative for Stor.ai said the findings demonstrate that customers prioritize fulfillment over speedy delivery. Twenty-seven percent of respondents said they would use the ultra-fast services more if the user experience improved. Twenty-two percent complained of out-of-stocks as the worst issue experienced when using the delivery platforms.
This survey is not the first indication that ultra-fast delivery might not appeal to a broad base of customers.
Two ultra-fast delivery startups in New York City closed down in a single week in March, raising questions about the long-term viability of the model.
During that week, Fridge No More, a free-fee ultra-fast delivery startup, closed its doors for good after a failed attempt to get acquired, according to CNN. This came days after Buyk, a startup with a similar model, shut down operations completely. The Russia-founded company pointed to difficulties with bridge-funding caused by U.S. sanctions against Russia as the reason for the closure.
Berlin-based ultra-fast delivery startup Gorillas in May announced that it would be laying off about half of its global office workforce, according to Modern Shipper.
And startup Jokr just announced that it will be slashing its U.S. operations to focus on doing business in Latin America, according to Morning Brew.
Even apparent leaders in the space like GoPuff are slowing down after a period of rapid expansion early in the pandemic.
GoPuff began scaling back its warehouse operations at the end of May, closing or pausing operations at 22 of its 600 warehouses, all of which were experiencing low order volumes, according to The Real Deal. The startup also laid off three percent of its global staff in March.
- Speedy Grocery Delivery Remains A “Highly Specific Niche”, Report Says – Forbes
- Two ultra-fast delivery startups shut down in one week – CNN
- Ultrafast delivery startup Gorillas slashes office workforce by half – Modern Shipper
- Gopuff scaling back warehouse footprint amid rapid-delivery slowdown – The Real Deal
- 15-minute delivery service Jokr is slashing US operations – Morning Brew
DISCUSSION QUESTIONS: Do findings like those in the Stor.ai survey change how retailers should look at their investments in, or competition from, ultra-fast grocery delivery? What factors do you see impacting the role that rapid delivery plays in the overall retail landscape and what shape will the service eventually take?