the race to deliver your groceries
faster is speeding up demand for
delivery services boom during the
pandemic and startups in the u.s and
europe are now promising to deliver
items in as little as 10 minutes so
instead of you walking to the grocery
and all that we are the ones that do
that for you so how can they do so
quickly something that often takes hours
or even days
they're operating out of hyper-localized
dart stores or mini warehouses scattered
around cities i really think of it as a
store that the customer just doesn't see
and what they see is the app
gorillaz is one of those startups that
launched last year it already has dog
stores in a fleet of delivery workers in
40 european cities and in new york
investment in ultra-fast grocery
services left several fold in the first
six months of 2021
but super fast delivery means high
operational costs in a sector that's
already crowded with established players
and some analysts and experts are
skeptical about whether they can make
money i don't see how it can be
profitable there is this big overarching
question of
is this a sustainable business model and
with this level of competition what does
the future look like we visited dog
stores in london to see how these
startups are pushing to deliver
groceries in minutes and the long-term
challenges their businesses face
while many delivery companies operate
out of big warehouses or team up with
supermarkets dark stores are small and
localized occupying between two thousand
and five thousand square feet to carry
fewer products
to use the service a customer places an
order through the app on their phone
staff at the dark store receive the
order
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and quickly begin picking items which
are laid out in a way that speeds up the
packing process like grouping heavier
items near each other so they can be
packed first and won't squash fresh
produce if you're a pick packer in the
warehouse you hardly have to think and
you're simply going around because
everything is organized and under
control through systems etc and that
allows you to be very speedy basically
and then we come to you in minutes alec
dent ceo of uk based wheezy says close
proximity to customers is the main
reason apps like wheezy and gorillas can
deliver so quickly most dark stores are
usually within a one to two mile radius
from households they deliver to
grocery delivery sales have slowed since
a peak during lockdowns last year when
online ordering became a habit for many
people this crisis accelerated grocery
e-commerce
and this kind of gave us a chance like a
fast start chest and gorilla says it
still sees high demand for deliveries
even as economies reopen last year was
just a crazy time i think so it's
difficult to say that this year is the
same but from a consumer's preference
and choice point of view they still
order as frequently as they did before
gorillaz has amassed about 860 000
downloads worldwide on google play since
its launch in may last year it's another
way of reducing
traffic in stoves
with time
i'm sure it might be the only thing
happening later on kovit has shown a
light into traffic patterns and how
people move and where they go for
groceries and what people expect in
terms of convenience and a lot of these
consumer behaviors aren't going away the
last mile delivery sector raised 16.2
billion dollars in venture capital
funding in the first half of 2021. our
timing and our growth was
super super to the point and it
attracted multiple investors as of
mid-2021 guerrillas had raised nearly
350 million dollars in venture capital
funding philadelphia-based gopuff which
already has more than 400 dark stores
across the u.s had received 2.4 billion
dollars but retail industry experts like
phil lempert cautioned that the initial
influx of investment isn't always a sure
sign of long-term success venture
capital firms
want to invest in food they love food
whatever the idea is if you can combine
food and convenience they're going to
throw money at it doesn't mean it's
going to last
these companies say that in the future
they hope to make money from bigger
orders but analysts warn that the
growing competition on top of labor and
transportation costs could hinder
profitability
the core challenge in my opinion of
ultra fast delivery or rapid delivery is
that it's fundamentally a very capital
intensive industry it's a little bit of
a departure from the ubereats doordash
software intermediary model every time
you want to open a warehouse it's a new
real estate lease that we're signing or
a team that we're building or inventory
that we're buying and so i think a lot
of our money and our capital goes
towards that
companies like doordash in the us and
deliveroo in the uk already known for
their restaurant delivery services have
also partnered with large supermarket
chains to bring customers grocery items
in minutes
and competition is only growing
bigger players like online grocery giant
instacart are also planning to build out
their own fulfillment centers and launch
ultrafast services grubhub and deliveroo
their business model is different their
revenue is coming from various sources
versus these startups like gorilla and
so on where i don't know where their
revenue is coming from the key question
for me is can these companies maintain
their sort of pricing power as they face
increasingly robust competition from
others you need to build a sustainable
business model that's curated for local
markets that can stand on its own once
the vc money dries out