Gopuff Takes Aim at Convenience

The upstart delivers goods direct from its warehouses to consumers, and investors are on board.

December 06, 2021

NYC Gopuff Ad

ALEXANDRIA, Va.—Gopuff, a virtual on-demand convenience store, aims to provide its customers with a wider and more eclectic range of products than they’d find in a convenience store, and it delivers orders to customers in 30 minutes or less, reports Bloomberg. Orders are fulfilled through its warehouses across the U.S. from the “dark convenience store.”

In March, the dark convenience store company announced it was “solidifying its position as the market leader for instant needs” after raising $1.15 billion in new funding. With these new funds, Gopuff said it would “continue to accelerate our strategic priorities, which include geographic expansion across the U.S. and internationally, introducing new product categories, and investing in top-tier talent and new technology that will further enhance the customer experience.” During the past seven years, Gopuff has amassed a network of more than 250 micro-fulfillment centers that service 650-plus U.S. cities in 41 states and Washington, D.C., and it recently acquired 161 BevMo! Stores.

Gopuff serves about 1,000 cities from more than 550 locations globally, and it’s opening an average of one or two more a day. According to Bloomberg, the company’s fast growth includes issues such as identifying the best places for Gopuff’s warehouses, anticipating what items to stock to meet local demand, keeping perishable items from going bad and staffing its delivery operations in a competitive labor market.

In the first nine months of 2021, venture investors poured $5.8 billion into the dark convenience store sector, compared with $496 million in 2020 and $1.1 billion in 2019, according to research firm CB Insights. Investors are also investing heavily in a new breed of delivery companies coming on the scene to bring convenience-store-style products to consumers, promising to deliver orders in as little as 10 minutes after customers purchase the products. These companies are differentiating themselves not only with their extra speedy delivery, but with who delivers the products. Instead of using independent contractors, or gig workers, these companies hire employees.

Gopuff is collecting and analyzing customer data to make better business decisions, something that third-party delivery apps hold close to their chests instead of sharing with the businesses they deliver for like c-stores. Gopuff used its data to decide which items to stock—at-home COVID-19 tests, cleaning supplies, and baby products have surged during the past year—and where to locate facilities, as well as to power its growing targeted-advertising business. “The name of the game is collecting as much information as we can,” Gopuff’s head of business Dan Folkman told Bloomberg.

According to NACS’ “Last Mile Fulfillment in Convenience Retail” report, only 61% of retailers are satisfied with their third-party delivery partners. Concerns include high fees, little access to consumer data, difficulties delivering age-restricted products and service and operational issues. Read more about these challenges and what c-stores are doing to make delivery work for their businesses in “Delivering Convenience” in the December 2021 issue of NACS Magazine.