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Earlier this week, I did a post on speedy grocery delivery service Food Rocket’s big plans to add ghost kitchens and eventually open up its platform to other retailers. But as I was going over my notes, there was a bunch of great insight from my conversation with Food Rocket Co-Founder and CEO Vitaly Alexandrov about building this new type of grocery model, that I wanted to highlight some of it in this week’s newsletter.
For the uninitiated, Food Rocket is among a new cohort of upstart grocery delivery services that promise to deliver your groceries in as little as ten minutes. Gopuff, Gorillas, JOKR and Fridge No More are other players in the space, and while most of the action has been in New York City so far, California is getting in on the fast grocery action as Food Rocket expands from San Francisco to LA, and Gorillas announced it was heading out west as well.
All these companies basically work the same. They open small, dark stores that carry a small number of items and offer a limited delivery radius. In the case of Food Rocket, Alexandrov said their stores are around 3,000 sq. ft., holding 2,000 – 2,500 SKUs. “We are mostly about daily needs,” Alexandrov said. This means milk, eggs, toothpaste, napkins. “We cannot store an item for a month,” he said, “That is why we focus on items that are repeatable.”
But as I noted earlier this week, Food Rocket is also getting into the ghost kitchen game, to offer its own line of fresh, ready to eat meals. “People like to buy something already prepared for them instead of just buying cucumbers and cheese,” Alexandrov said.
In order for these stores to generate enough deliveries to justify their presence, Alexandrov said they need to set up in locations where there are 50,000 households in that 1 – 1.5 mile delivery radius. Hence, these speedy delivery services starting out in dense cities like New York and San Francisco.
Food Rocket has only been operating since the end of May this year, and the whole concept of on-demand, ten minute grocery delivery is novel to most people, so as a result, Alexandrov doesn’t have a ton of customer data to develop broad trends yet. However, there are some customer patterns that the company has noticed, such as the average Food Rocket customer places 6 – 7 orders a month. “The first order is small in terms of value,” he said, “Several avocados or bananas, just to try. Then they start to buy more and more and more. Then they start to buy ready to eat [meals].”
This consumer dabbling at first and then going back for bigger baskets is something we’ve heard before from JOKR in New York City. It makes sense since Food Rocket currently has no minimum order and no delivery fee (though they will be adding such a fee at some point). Once you see that the service works, why not order a bunch of stuff you and have it show up at your door ten minutes later?
Interestingly, Alexandrov doesn’t consider JOKR or Gorillas or Gopuff to be his main competition. “We compete with Amazon,” he said. This may seem contradictory at first, given that Amazon wants to sell you everything and Food Rocket stores intentionally carry very few items. But again, Food Rocket is focused on your daily needs, not your every need. And its fighting Amazon on the very battleground Amazon invented — speedy delivery.
Will this Food Rocket take off? If you’re in San Francisco (or soon LA), try it out and let us know!
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