Ultrafast Delivery: The $28B Market to Build the On-Demand Bodega

Today, there is a new crop of companies looking to push the envelope on shipping even further. Dark store-enabled, “ultrafast” delivery companies are getting funded and expanding across Europe, Asia, Russia, South America, and the United States.

The strategy is largely out of the same playbook as other on-demand apps—capture customers, consolidate control over a high-frequency behavior, expand and cross-sell to other higher-margin categories. But their challenges are significant as well, from spoilage rates on grocery to hard-to-predict inventory requirements and building relationships wit... See more

Brick-and-mortar grocers have built in geographical demand, but online grocers must pay “rent” to Google, Facebook and other top-of-funnel acquisition tools—and that rent tends to rise over time

Ultrafast services promise something like the magic moment that put Uber on the map. With Gorillas or Getir or Flink, you don’t have to think about what you may eat in the days ahead, what you need to buy, or find a time that you’ll be home to receive your order. There are no substitution requests. Instead, you get home from work, think about what ... See more

If ultrafast delivery services flame out, it will most likely be because despite their popularity and value proposition, they cannot make the unit economics sustainable. What will happen instead is that existing players in grocery will leverage their existing infrastructure of stores and warehouses or acquiring an ultrafast player at a discount to ... See more

Here, bike and scooter sharing is a cautionary tale. Both bike and scooter sharing and ultrafast delivery are capital-intensive industries with no customer loyalty, low switching costs, and limited network effects. The unit economics are unproven, and while optically high, growth could be short-lived.

Amazon’s big insight with Prime was the importance of speed in ecommerce.

Ultimately, CVS ($110B) and 7-Eleven ($42B) should be ultrafast's real targets, not Kroger ($28B) or Albertsons ($9B). Online grocery is a massive challenge both in logistics and demand generation, and ultrafast services are better off building a better convenience store than challenging for the whole of the online grocery market.

The ultrafast vision is to replace the local grocery store the way Uber disrupted car ownership. By turning groceries into something summoned at the touch of a button rather than something planned and scheduled, ultrafast services want to change how we shop entirely.