The startup 1520 got its name from its value proposition — to deliver grocery orders to customers in 15 to 20 minutes. The company is not alone in that mission, especially in its hometown of New York City, where a number of fast grocery delivery services have launched this year. Two of those services have raised more than $100 million dollars each. But 1520 co-founders Oleg Shevlyagin and Moucheg Sahakian aren’t too worried about the competition, and have developed their own plan to stand apart from (and stay ahead of) other speedy delivery startups.
Before co-founding 1520, Shevlyagin and Sahakian both worked at Russian tech giant Yandex, where they launched the first three such speedy grocery stores for that company. The two brought that experience with them when they started 1520 in Manhattan in January of this year.
Like others in the space, 1520 operates a number of small, delivery-only grocery stores that carry a limited inventory and have a small delivery radius. The company now serves everything below 96th St. (for those New Yorkers who know what that means), and is eyeing expansion to Long Island City, Jersey City and Hoboken, New Jersey.
During a video chat with Shevlyagin and Sahakian this week, I asked them about the proliferating number of speedy delivery startups and what that means for 1520. “I don’t think that competition adds too much pressure,” Shevlyagin said, “You have 40 grocery chains in New York alone. We have four players in this ultra-fast space.”
Operationally speaking, Shevlyagin said that 1520 is different from other speedy delivery startups in a few ways. First, the company operates slightly smaller dark stores that are only 1,500 to 2,000 sq. feet, compared with the 2,500 to 3,000 sq. ft. stores other services run. Despite these smaller stores, 1520 has a slightly larger delivery radius than its competition. Most speedy services have a delivery radius between 1 and 1.5 miles. Shevlyagin said 1520’s delivery radius is between 2 and 2.5 miles.
This larger delivery radius in turn means more customers. As a comparison, fellow speedy delivery startup Food Rocket says that one of its stores serves 50,000 households, whereas one 1520 store services 90,000 households. It’s hard to say that bigger is better in this scenario. What you gain in footprint, you could lose in speed. Food Rocket delivers in 10 minutes, while 1520 is 15 to 20 minutes. That may not sound like much, but if you’re in the business of treating groceries like an on-demand utility, those extra minutes might cost you extra business.
But Shevlyagin also says 1520 is different from other speedy delivery startups in more existential ways, too. “GoPuff and DashMart are running [a] convenience store rather than full-blown grocery,” Shevlyagin said, “For them it would be more like you are running out of beer and snack. For us, it’s ‘I want to cook my dinner tonight.'”
As such, Shevlyagin said that 1520 is focused on high-quality fresh food and produce. “We do believe urban customers are more concerned about their health,” Shevlyagin said, “They want produce rather than chips and a Coke.” I’m not sure if that’s entirely true. I mean, who doesn’t love the idea of a late night pint of ice cream delivered to your door in minutes? But 1520 is certainly choosing a lane with its fresh food approach.
There are ways in which 1520 is very much like others in the rapidly evolving fast grocery delivery space. Similar to Food Rocket and DashMart, 1520 is moving into ready-to-eat meals, and will offer its own line of sandwiches, salads and microwaveable meals.
Unlike others in the space, 1520 has yet to raise a massive amount of funding. Germany-based Gorillas raised $290 million prior to its U.S. expansion, and New York City-based JOKR just raised $170 million to fuel its own growth.
Shevlyagin said that 1520 has so far raised a Seed round of funding. I asked him if his competition’s now-sizeable warchests were a big concern for him. Shevlyagin was rather matter-of-fact, saying, “As any other venture-backed startup, we will have to raise at some point, probably in the next two to six months.”
But the funding issue also matters as these companies look to expand and gain first-mover advantage in new cities, since there are only so many cities in the U.S. with dense enough populations to support speedy grocery. I asked Shevlyagin how 1520 will roll out to stay ahead of its rising competition. “The real estate world is the biggest barometer,” he said, explaining that they look at real estate listings to see where dark store type spaces are being leased, and by whom. “We know what’s happening in every city in the country.”
Even if other players get to one of 1520’s target markets first, Shevlyagin doesn’t appear too concerned. “It still takes you some time to make sure your supply chain works well,” he said. “We are deep in discussions with other cities. We still have this time.”
