Every week last year, it seemed a new story dropped about a tens millions of dollars funding round going to an ultra-quick store concept.
These startups, often with funny names like Gorillas, JOKR, Buyk and GoPuff, utilize networks of dark stores nestled into residential or mix-used neighborhoods to ensure deliveries can get to consumers within the promised time.
Not surprisingly, as these apps have risen in popularity, existing brick and mortar stores like NYC bodegas have not been happy. Not only are these news apps taking away business, but the addition of new delivery riders are adding traffic and sometimes leading to confrontations with locals.
The pushback by store owners and some residents has been heard by local politicians. According to the New York Post, a New York politician named Christopher Marte is introducing legislation that would ban these companies from advertising 15 minute delivery times.
Another politician, NYC councilwoman Gale A. Brewer, thinks they’re illegal. “They’re going to kill the wonderful Latino restaurants, the wonderful bodegas, the wonderful delis, every single wonderful mom-and-pop supermarket,” Brewer said at a recent press conference. “These Gopuffs and JOKRs and Gorillas gotta go!”
And it’s not New York where there’s pushback. In Amsterdam, where there are 31 dark stores, citizens have started to launch petitions against the dark store networks and to track their behavior on Instagram. A recent story in Ars Technica details how one dark store startup named Zapp disrupted life on one narrow street in a neighborhood called Fagelstraat.
Alex, who has lived on the street for seven years and requested anonymity to avoid further conflict with riders, says there are now 10 to 15 deliveries each day, and giant lorries regularly block the narrow road. “It’s a 24/7 business,” he says, “so riders are coming in and out late at night and early in the morning. At 2 am, I often have people standing in front of my window, smoking and talking really loudly while they are taking a break.” After a month of this, riders and residents started squaring off as tensions boiled over, Alex says.
The growing push for legislation and pushback by consumers had led some investors to become more skeptical of the model. Kunal Lunawat, co-founder and managing partner of Agya Ventures, points to thin margins and the commitment to medium to long-term leases signed using venture funding.
“There appeared to be no consideration given to the economics of these leases over a 1-3 year period,” Lunawat said.
In some ways, the dark store startups are using the same ‘move quickly, break things, ask for forgiveness later’ model pioneered by other disruptive startups (think Airbnb and Uber) over the past decade. And just like home share and rideshare apps eventually saw a wave of new rulemaking at the state and city level, I expect that NYC and Amsterdam are both a sign that a similar wave of legislation and potential bans around dark store models is underway and could take years to iron out.
It will be interesting to see if consumers (and investors) will continue to believe in these new companies as they come under increasing fire.
