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The Spoon

Daily news and analysis about the food tech revolution

grocery

Shipt Now Lets You Pick Your Favorite Shopper

If you’ve ever had a good experience with an Uber driver, DoorDash delivery person, or pretty much any other gig worker, you instantly wish you could get them the next time you pick up the app.

Today Shipt announced it was going to let you do just that (kind of).

Shipt, a wholly-owned subsidiary of Target, today announced their new Preferred Shopping feature, which allows customers to create a list of their favorite shoppers and – provided they’re available – use one the favorites whenever the customer shops with Shipt.

Here’s how it works: If a customer has a good experience, they can rate at shopper at 5 stars and add them to a preferred shopper list. From there, the shopper gets a notice and can accept the “request” to be added to the list.

If the shopper accepts, Shipt will “prioritize” that shopper for the customer, so the two are paired (provided the shopper is available) the next time a customer opens the app.

Above: Customer and Shopper Screens for Preferred Shopper Program

Why a request? My guess is this gives the shopper a little control over whether they see a particular customer in the future since, let’s be honest, not all customers are great to work with.

It’s a nice feature, but why is Shipt going through all this trouble? Wouldn’t it be easier to pair whoever’s available with the customer? Yes, but apparently, pairing customers with preferred shoppers is good for business. Shipt’s trials showed that paired shoppers ordered more often, had higher overall satisfaction, and tipped more.

In a way, it’s not unlike asking for your favorite waiter at the corner restaurant. You develop a relationship with them, they take good care of you, tips get bigger, everyone’s happy.

Long term, however, I wonder where this goes. Do gig workers like personal shoppers start to develop essentially what equates to their own book of business? Does greater loyalty from the customer and the resulting financial benefit for shoppers lead to less turnover for the Shipt workforce?

Another question I have is whether Instacart, the 800-pound personal shopping gorilla, will go in this direction. While they’ve hinted at it as a possibility in the past, as of now, they’ve never made it happen.

But who knows? With Shipt offering the preferred shopper option, maybe Instacart will follow.

Report: S2G Ventures Talks Alt-Protein, the Digitization of Grocery, and Other Areas of Food the Pandemic is Reshaping

“We continue to see the pandemic act as a catalyzing agent to accelerate trends that were in motion before it began. We believe that food and agriculture has undergone significant structural changes that will alter the course of the industry.” 

So says a new report from S2G Ventures, a VC firm based in Chicago, Illinois. The report, titled “The Ingredients for a Food System Revolution,” analyzes eight pandemics and outbreaks throughout history to pinpoint patterns around financial and economic recovery, innovation, and behavioral changes and norms. The analysis gives a clue as to how the current COVID-19 pandemic is reshaping norms, particularly when it comes to how we produce, get, and eat our food.

As an investment firm, S2G focuses mainly on the food and agriculture sectors, and counts AppHarvest, Shenandoah Growers, and Trace Genomics among its portfolio companies. It follows, then, that the new report is largely focused on how pandemics, epidemics, and outbreaks in the past have changed our food system and how the COVID-19 pandemic is continuing to do that at this very moment. “More decentralization [is] going to occur, more convergence of food and health, more decommodification as well,” Sanjeev Krishnan, S2G Ventures Managing Director and Chief Investment Officer, tells The Spoon.

As the report notes, “While there are many factors influencing the future of our food system, the study of past pandemic economic history is starkly consistent – an innovation cycle begins, and old habits and norms do shift.” 

A couple especially compelling areas where this is happening include alternative protein and online grocery.

As traditional meat-processing facilities face challenges and the unit economics for some types of alt-protein go down, we’re seeing more of the latter make its way into the mainstream. Krishnan explains we are moving more and more towards an “all of the above” view of protein. “I think there’s going to be animal protein, plant protein, and cell protein,” he says. Production of animal protein, in particular, will see “natural momentum around more niche, regional, decommoditized” products. Plant-based proteins, meanwhile, will see an increased focus on nutrition and affordability, while more countries will follow Singapore’s lead when it comes to cultivated meat. China is another important place to watch in this area, according to Krishnan.

S2G’s report also honed in on channel digitization, and specifically on the grocery sector. The report notes that a forced transition to online grocery during the pandemic “exponentially increased penetration from 24% to 49% between 2019 and 2020. Seniors became the fastest-growing segment of online shoppers on Instacart in 2020. In future, consumers will take “a hybrid approach” to groceries, and retailers will start to slightly differentiate what they sell online versus in the brick-and-mortar store.

The report also calls out controlled environment agriculture, a convergence of food and health, and food and agriculture digitization as other key areas to watch in terms of how the pandemic is reshaping the food system.  

“We can build a more resilient and hopeful food system that both addresses planet health and human health coming out of this,” says Krishnan. “Let’s use the pain and the agony and the anxiety that occurred as a call to action.

Retailers: Don’t Fret Over Online Grocery’s Downward Trend

In looking at Brick Meets Click/Mercatus online grocery sales data since March of this year, you might start to worry. After matching a record high of $9.3 billion in total U.S. grocery e-commerce in March, the numbers have steadily come down. April’s tally was $8.4 billion. May fell to $7.0 billion. And just this week, the latest data showed total U.S. online grocery sales dropped again to $6.8 billion.

But as Brick Meets Click Partner and Research Lead David Bishop explained to me by phone this week, there’s no need to panic.

“We’ve expected and predicted that 2021 would be a very choppy year,” Bishop said, adding the the pandemic, the subsequent delta and lambda variants and government relief like the child tax credits coming out will make for a very up and down year. But, he added, “Keep an eye on the big picture. We are still at significantly higher levels than prior to the pandemic.” More importantly, Bishop reassured me, online grocery shopping isn’t going anywhere. “We’re still at 70 percent of the peak, and we’re going to keep more than 50 percent of incremental gains.”

A closer look at Brick Meets Click’s numbers shows that almost the entirety of the drop in online grocery sales came from ship-to-home services (think mail order services like Imperfect Produce, Crowd Cow, etc.). Store delivery and home pickup options remained flat from May to June at $5.3 billion, and this, Bishop said, is where retailers should be paying attention — especially when it comes to curbside pickup.

Brick Meets Click’s June data showed that 33 percent of monthly active users received online grocery orders only via pickup, compared with 16 percent receiving their online groceries only via delivery. “The customer is signaling that pickup is the preferred method when given the option between home delivery and store pickup,” Bishop said.

Bishop also said that in the broader landscape, especially in the media, the message has been about delivery, and the need for faster delivery. (We at The Spoon are certainly guilty of adding to that narrative.) “The fact of the matter is that more households use pickup than delivery,” said Bishop, “And the sales gap is widening.”

Bishop doesn’t think retailers should abandon delivery, but more emphasis and resources should be put towards adding and improving curbside pickup options for customers. This in turn will create a virtuous cycle with customers. Adding more curbside pickup options with faster, more convenient pull-up options will get more people to use curbside pickup services.

Adding those pickup options, however isn’t as simple as a CEO snapping their fingers. Operational plans need to be put into place as to how the customer orders, who does the order packing, where that order is staged before pickup and who takes it out to the car. Additionally, larger chains need to order signage that directs people to pickup spots for all their store locations, and there may be city regulations that need to be met before traditional parking spots can be reserved for pickup. All that takes time.

Now that we have data around how consumer behavior is evolving with online grocery shopping, retailers can take action and adjust. Yes, there will be continued month-to-month fluctuations in the numbers, but the overall trend remains the same. “We’re trying to reinforce the underlying point, which is, we have had the acceleration [of grocery e-commerce] thanks to the pandemic,” Bishop said. “This is the year of reconciliation. Retailers and customers will re-jig how they operate and behave.” And The Spoon will be here to cover how stores and customers change with the times — so don’t worry.

More Headlines

Uproot is Bringing Plant-Based Milk Dispensers to College Campuses – the dispenser hardware is free, but schools need to buy the milks from Uproot.

Plant-Based Cheese Company Nobell Foods Raises $75M – The company basically trains soybeans to produce casein, which it says could wind up being cheaper than the costs of producing cheese using cow’s milk.

Instacart and Fabric Partner to Offer Automated Fulfillment to Grocers – Rolling out later this year, the robot-powered fulfillment service will be offered for both inside existing stores or standalone facilities.

Bbot Raises $15M Series A for its Restaurant Ordering and Payment Software – The company offers a range of hardware tools such as tablets, scanners and printer controls, as well as a suite of software to enable contactless and online ordering and manage catering.

Instacart and Fabric Partner to Offer Automated Fulfillment to Grocers

Instacart announced today a new multi-year partnership with Fabric that will see the two companies jointly offer automated order fulfillment services to North American grocery retailers.

The new automated fulfillment option will combine Instacart’s e-commerce ordering capabilities and human shoppers with Fabric’s robot-powered item-assembly process. Retailers can outfit this new system inside existing retail spaces or in dedicated warehouses. So customers will place a grocery order online, robots will assemble those items and Instacart shoppers will pack them up and either stage the completed order for curbside pickup or deliver it to the customer’s front door.

The company didn’t provide many details about implementing this new automated system, only saying it is the first phase of its “next-generation fulfillment initiative” and that it “plans to kick off early-stage concept pilots in partnership with Fabric and grocery retail partners over the coming year and beyond.”

Interest in automated fulfillment certainly accelerated over the past year because of the pandemic. Fears of COVID-19 had record amounts of people buying groceries online in the U.S. Those numbers have come down in recent months as the vaccines have rolled out and people feel more comfortable shopping in person. The latest data from Brick Meets Click shows that U.S. online grocery sales for pickup and delivery were $5.3 billion in June, down from its peak of $7.2 billion in June of 2020. If those numbers continue to trend down, will retailers still feel the pressing need to automate?

Big retailers like Albertsons, Kroger and Walmart have all doubled down on their own automated fulfillment plans over the past year. But as Grocery Dive has pointed out, there are still concerns around the efficacy of automated order fulfillment and whether it provides truly valuable productivity gains and return on investment. Now, instead of building their own automated infrastructure, smaller retailers could choose to offload that work to Instacart and Fabric, so we could see more grocers trying these systems out.

Halla Raises $4.5M for Its Food Recommendation Platform

Halla, the AI-powered production recommendation service for grocery retail, announced today that it has raised $4.5 million in Series A1 funding, led by Food Retail Ventures. This brings the total amount raised by Halla to $8.5 million.

Halla’s platform integrates with a grocer’s existing digital commerce solution to provide customized product recommendations and substitutions for out of stock items to consumers. But Halla’s platform doesn’t just rely on previous purchases to make its recommendations. The company says it uses more than 100 billion shopper and product data points to predict what a shopper is looking for. Halla’s product video embedded below illustrates how Halla’s the system looks at all kinds of data about a shopper as it makes a recommendation in real time.

Grocery has been the beneficiary of a ton of funding this year, with $10 billion going into the sector as of July this year. Most of of the funding and attention has been around speedy grocery delivery services, but money has been doled out to startups working up and down the grocery stack. Hungryroot, and online grocer that uses machine learning for predictive recommendations, raised $40 million last month. In April, Trax raised $640 million for its computer vision-based inventory management system, and Shelf Engine raised $41 million for its perishable inventory management platform.

A big reason for all this money flowing into grocery is the pandemic. Fears around COVID-19 sent record amounts of people into online grocery shopping last year, creating new logistical and fulfillment issues for retailers. But the pandemic also highlighted flaws in our existing grocery supply chain, as evidenced by the panic hoarding and empty shelves that happened at the beginning of the outbreak. All of this is to say there are a bunch of new issues for grocery retailers to solve post-pandemic, which means plenty of opportunities for startups.

Halla said that a “top-5 U.S. grocer” is currently running Halla in more than 1,100 e-commerce storefronts. Halla will use the new funding to double the number of stores it’s in, and double its headcount by 2022.

Uber Expands Grocery Delivery to 400 US Cities, Adds Albertsons Brands as Partners

Uber’s grocery delivery service is now available in more than 400 cities across the U.S., according to an announcement sent to The Spoon. The company has also added Albertsons retail brands to its delivery platform.

The move marks a big jump for Uber, which started its grocery delivery business in the U.S. a little more than a year ago, growing it to 100 cities. With today’s expansion, Uber’s grocery delivery will be available in major markets such as Miami, Dallas, New York City, Washington D.C. and for the first time in California by way of San Francisco.

At the same time, Uber also bulked up its retail partnerships with the addition of Albertsons stores to its platforms. Over the course of this year, Uber will roll out delivery to 1,200 Albertsons stores including Albertsons, Safeway, Jewel-Osco, ACME, Tom Thumb, Randalls and more.

Uber got into the grocery delivery game in July of 2020 following its purchase of a majority stake in Latin American online grocery delivery marketplace Cornershop in 2019. Since that time, grocery delivery has seen an explosion in usage, thanks in large part to the pandemic, which makes it an attractive market for a logistics company like Uber. Last month, SEC filings showed that Uber was acquiring the remaining 47 percent of Cornershop.

Unlike the modern ride sharing-business, which Uber basically invented, the company will be facing a lot of competition for your grocery delivery dollar. DoorDash, which started out in restaurant delivery has made its own aggressive moves into grocery delivery and announced its own partnership with Albertsons last month. And of course Uber will be going up against Instacart, the 800-pound gorilla in third-party grocery delivery.

But perhaps the more interesting competition in major cities for Uber will come from the rapidly expanding speedy grocery delivery startups, which promise to get you your groceries in as few as 10 minutes. Services like JOKR and Fridge No More are expanding across New York City. Gorillas is hopping beyond New York and into San Francisco, where Food Rocket also operates.

These services all operate small, delivery-only grocery stores with a limited delivery radius. They are also vertically integrated, controlling their inventory and employing their own drivers. As Food Rocket CEO, Vitaly Alexandrov recently told me, having their own fleet of delivery people gives his company an advantage over services like Uber and Instacart. When an order is placed by the customer, the network doesn’t have to spend time finding a driver who will take the job. There is already a dedicated staffer on hand to make deliveries go out faster.

DoorDash operates its own line of DashMart delivery-only convenience stores, and Instacart is reportedly looking to build out its own automated fulfillment centers. With all this competition, will Uber, which has famously built its empire by emphatically not owning parts of its business like its driver network, need to cave and develop a more owned and operated stack?

But we’re getting ahead of ourselves. First we’ll have to see if Uber customers will even use Uber for grocery delivery on a massive scale.

Food Rocket Going Beyond Speedy Grocery Through Ghost Kitchens and an Open Platform

The sudden proliferation of speedy grocery delivery startups like San Francisco’s Food Rocket has been one of the bigger food tech stories of 2021. But for Vitaly Alexandrov, Co-Founder, and CEO of Food Rocket, fast grocery delivery is just a step to a much larger play.

“In a year or two years, it will be like a commodity,” Alexandrov said of fast grocery delivery during a video chat this week, “Everyone will deliver in ten minutes.”

And he’s probably right. Throughout this year we’ve seen a number of players pop up offering on-demand, ten-minute style grocery delivery through a network of small, dark stores with a limited delivery radius. Most of the activity has been in Europe so far with companies like Getir, Glovo and Gorillas all raising big money and expanding rapidly. But we are starting to see more startups show up here in the U.S., especially in New York City. Fridge No More, JOKR and Gorillas all operate in the Big Apple, and Gorillas recently announced its jumping across the country to open up stores in Food Rocket’s hometown of San Francisco.

But Alexandrov isn’t worried about Gorillas, or any of the other competitors that will undoubtedly come to his hometown, in fact he welcomes them. “When there are many competitors, the market grows faster,” he said. The idea of ten minute grocery delivery is very new, and customers need to learn a whole new way of treating grocery shopping more like a utility. Alexandrov said that more competitors in a market vying for customers means there are more companies educating customers about this new type of service. The result is a larger pool of knowledgeable customers and that rising tide should lift all (speedy) boats.

If that does play out, and that’s a big IF as we still need to see if these speedy grocery startups can scale, how will each service differentiate themselves? For Food Rocket there are two phases to its future growth. Alexandrov said in the near term, one of the ways Food Rocket will stand out is by offering its own line of ready to eat meals. To do this, the company will add ghost kitchens to its operational network. So in addition to staples like milk and eggs, you could also get your lunch or dinner delivered, and menus can be tailored to tastes of the specific neighborhood served.

The second phase of its future involves opening up its platform to other retailers. Over the next three years, Food Rocket will continue to build out its network and fine-tune its inventory management, fulfillment and delivery routing systems. At that point, Food Rocket could allow a more traditional retailer like Albertsons or Kroger to use its platform for fast delivery, and it’s easy to see why retailers could be interested.

If Food Rocket’s type of fast delivery catches on with consumers, two-hour or even half-hour delivery of groceries could be considered too slow. Instead of building out their own speedy delivery infrastructure, retailers could just use Food Rocket’s and launch immediately wherever Food Rocket is operating. It’s similar to the way retailers partnered with Instacart to establish delivery (and it could carry the same pitfalls). Though Alexandrov says it beats existing third party services because Food Rocket delivery people are employees — not contractors. So when an order comes in, the system doesn’t have to take the time to find a driver willing to fulfill the order (of course, having employees also drives Food Rocket’s costs up).

But that vision of Food Rocket’s future is still a ways off, and a lot needs to happen before that vision can pan out. More immediately for Food Rocket, Alexandrov told me that the company’s next move is expanding to cover roughly 95 percent of San Francisco by September and then it’s on to Los Angeles, where Food Rocket has already signed leases in West Hollywood and Santa Monica. Alexandrov said that in order for the business to work, stores need to be set up in locations where its limited delivery radius can cover 50,000 homes. That means Food Rocket won’t be coming to my rural neck of the woods anytime soon, but it, along with the other speedy delivery startups, may be taking off in a city near you soon.

Gorillas is Hiring Up to Expand its 10-Minute Grocery to San Francisco, LA and Chicago

As of now, New Yorkers have just about all the fun when it comes to super speedy grocery delivery in the U.S. Companies like Fridge No More, JOKR, Gorillas and, starting next month, Buyk are all building out a network of small, delivery-only grocery stores that promise to deliver your food in as few as ten minutes

But based on its current job listings, Gorillas is prepping to make a move out west. The company is currently hiring the following positions:

Germany-based Gorillas certainly has the cash to fuel such expansion. The company just raised $290 million in March, and has raised $335 million in total. There also currently isn’t that much competition in terms of speedy delivery grocery services on the West Coast. Food Rocket launched 15-minute grocery delivery in San Francisco at the end of May. Gopuff has a number of locations across California (and Chicago), though its delivery times are a comparatively “sluggish” 30 minutes.

Gorillas, like its rivals, operates dark stores in neighborhoods that have a limited delivery radius of typically one to one and a half miles. The economics of that certainly works in densely packed urban areas like New York, Chicago or even San Francisco, but Los Angeles is sprawling (though it does have a ton of people). I’m curious to see which neighborhoods Gorillas will start with and how it will expand.

As I’ve said before, I believe this new crop of speedy delivery services are not the next Kozmo.com’s. and they have the potential to turn grocery shopping into an on-demand utility. There is power in the idea of ordering a pint of ice cream and having it arrive at your doorstep 10 minutes later, and it could upend traditional notions of going to the grocery store in person (moreso than the pandemic did).

We’ll have to wait and see on that front, but in the meantime, one good thing about the Gorillas job openings is that they are all full-time with benefits, even the delivery driver position.

Instacart Appoints Fidji Simo as its New CEO

Grocery delivery company Instacart announced today that it is appointing Fidji Simo as its new CEO effective August 2. Simo has been on Instacart’s board since January of this year. She has spent the past decade at Facebook where she was most recently Vice President and Head of the Facebook app. Instacart Founder and soon-to-be-former CEO Apoorva Mehta will move into a new role as Executive Chairman of the Board and will also report to Instacart’s Board of Directors.

According to the press announcement, Simo oversaw development at strategy for the Facebook app, and helped drive Facebook’s mobile monetization strategy. She was also responsible for “rolling out videos that autoplay in News Feed,” which may or may not be a plus, depending on your point of view.

However, Simo was also at Facebook as it moved from a private company to a public one and will most likely be leading Instacart as it does the same. Founded in 2012, Instacart has since raised $2.7 billion in funding and is preparing for an IPO. The company was thrust into the national spotlight last year as the pandemic pushed record numbers of people into online grocery shopping.

Simo is also joining Instacart at a time when it is facing competition on many fronts. Big players like Amazon and Walmart are ramping up their own grocery delivery efforts, a new wave of smaller grocery stores offer grocery delivery in as few as 10 minutes, and other third-party delivery services such as DoorDash and Uber are moving further into grocery. In response, Instacart has been forced to add half-hour express delivery in select cities. The service is also reportedly looking to create automated fulfillment centers.

Then there is the question looming around Instacart’s grocery delivery business in general. During the pandemic, it was an easy way for retailers to quickly add delivery infrastrcuture to their business. But given Instacart’s fees and concerns about who owns the customer relationship, not all retailers are finding the same value with the service.

Given all that, Simo is taking over Instacart at a critical point in the company’s existence and will certainly have her hands full the moment she starts.

PitchBook: More than $10B Invested in Grocery Startups This Year

We’ve been saying that investment in grocery startups is downright frothy this year, and now PitchBook has put a number to all this VC activity. CNBC reports that venture-backed grocery startups have raised $10 billion so far in 2021, according to PitchBook’s data, vaulting past the $7 billion raised in the sector last year.

Part of the reason for the big jump is the mega-rounds that some grocery startups around the world raised during the first half of this year:

And that doesn’t even count all the other, smaller fundraises that have happened for companies like Food Rocket and Fridge No More.

The pandemic certainly had a hand in driving all this frothiness. Lockdowns, social distancing and general fears around catching COVID-19 pushed record amounts of people into online grocery shopping in 2020. Additionally, there are a wave of startups like Gorillas, and Gopuff and Fridge No More that are creating an entirely new type of on-demand, speedy delivery model. These companies operate dark stores in neighborhoods with a small delivery radius, promising grocery delivery in as few as 10 minutes. This is a new concept for most shoppers, and the allure of tapping a few buttons on your phone and food arriving minutes later could upend the way we buy groceries.

CNBC adds that all of this massive funding is disproportionate to the opportunity in the online grocery category. As such, there could be a wave of consolidation coming soon. This is true whenever money floods a particular sector, and it is especially worth considering given the fluctuating state of the pandemic.

Questions around how much consumers will stick with online grocery shopping once the pandemic recedes remains unclear. Vaccines have helped abate the virus, but they are rolling out at different paces around the world, and viral variants threaten to bring resurgences in case numbers. Brick Meets Click reported that online grocery shopping dropped to $7 billion in sales this past May, down 16 percent year-over-year. But that $7 billion figure is still 3.5 times higher than pre-pandemic online grocery sales.

But none of what might happen can change what’s already been done. That $10 billion has been invested, now we’ll just see which companies can bring bring returns.

Hey, New Yorkers! You Have a Bunch of Dark Delivery Grocery Stores. Are You Using Them?

Bloomberg ran a story over the weekend about Russian grocery delivery service, Samokat, expanding into New York City this August. The U.S. operations will go by the name Buyk and will use the dark-store, limited-delivery radius model that has become all the rage this year.

According to Bloomberg, Buyk already has agreements to open up a number of dark stores that will each deliver to a roughly one-mile radius. The company says that because it developed the technology three years ago and already has experience scaling in Russia, it will have an advantage over its competitors here in the States.

And it will be facing competition when it opens up in New York. By our count, Buyk will be the fourth such, small, speedy, grocery delivery service operating in the Big Apple by the end of this summer, joining Fridge No More, Gorillas and JOKR. Interstingly, Buyk and Gorillas are both foreign companies (Russia and Germany, respectively) that are looking to gain an early foothold in the U.S. early on in the speedy grocery delivery game before more homegrown competitors spring up.

My question for our New York-based Spoon readers is: Are you using these services? Granted they are really new so you may not have had time to check them out yet. JOKR just launched in June, Gorillas launched at the end of May and Fridge No More in October of last year. Given the newness of these services and their small, neighborhood-focused approach, a lot of people probably still haven’t learned about or have access to this new type of on-demand-groceries-in-less-than-fifteen-minutes service.

But at least one New Yorker, The Wall Street Journal reporter Anne Kadet, appears to be hooked after testing Gorillas, Fridge No More and JOKR. Earlier this month, Kadet wrote:

My conclusion? Whether you need a full grocery delivery or just a carton of milk for the pancake batter you’ve already started, you can’t go wrong with any of the three. They all offer a user-friendly app, no minimum delivery, decent prices and service that lives up to their speed guarantees.

As I’ve written before, on-demand speedy grocery delivery has the potential to upend the way we shop for groceries. Whether we need a last-minute ingredient, are throwing an impromptu party or are just feeling lazy, the ability to summon our food and drinks with a few taps could alter our relationship to grocery retail. This, in turn, could put pressure on existing large retailers like Albertsons and Kroger to change the way they do business. That is, if these new speedy upstarts can scale economically. Which means they’ll need a lot of customers in those small delivery areas.

Which is why I’m asking, New Yorkers, are you using any of these services? Leave a comment or drop us a line and let us know!

GoPuff Acquires rideOS for $115M

On-demand delivery service GoPuff announced today it has acquired fleet management company rideOS, with TechCrunch also reporting a $115 million price tag for the deal after speaking with sources familiar with the matter.

GoPuff, which raised $1.5 billion this past March, operates a delivery service that can fulfill orders — anything from food to baby products to alcohol — in 30 minutes or less, 24/7. To do this, the company operates micro-fulfillment centers in residential areas of cities. The company currently has these centers in over 650 U.S. cities.

As it grows both the number of markets in which it operates as well as the number of fulfillment centers in each city, GoPuff will need to further optimize its delivery operations and tech, which is where rideOS comes into play. For GoPuff, the rideOS deal means access to the latter’s proprietary delivery, routing, and logistics technology as well as the expertise to build new technologies that can further reduce delivery times and enable new modes of delivery. 

GoPuff acquired alcohol retailer BevMo for $350 million in 2020 and the U.K.’s Fancy Delivery in May of this year.  

The rideOS acquisition comes at a time when on-demand delivery startups are raking in the investment dollars and expanding services. Currently, that list includes Weezy, Glovo, and Getir in Europe, and Food Rocket, Fridge No More, Gorillas and JOKR in the U.S.

The concept will realistically only work in dense residential areas, where micro-fulfillment centers can be located within blocks of customers. Receiving an order, fulfilling it, and delivering it in under 30 minutes to a customer in suburban or rural areas seems less feasible given the greater distances couriers must travel. That means large swaths of the U.S. will likely never see extensive implementations of these services, while competition will increase in more concentrated urban areas.

GoPuff acquiring a fleet-management software platform could give the company a strategic edge in terms of being able to optimize routes for delivery, decrease fulfillment times, and possibly even handle more inventory.

GoPuff said it expects to “significantly increase” headcount by the end of the year and expand its presence in Silicon Valley, Pittsburgh, and Berlin.