Gopuff Eyes Delivery Success

The upstart convenience player is trying to differentiate itself from the competition.

April 15, 2022

GoPuff Bag with Deliveries

ALEXANDRIA, Va.— Yakir Gola, Gopuff’s CEO, is insistent that his company can crack the instant delivery code, reports the New York Times. But after deciding to not go public this year and laying off about 3% of its workforce, the question now is if Gopuff has done delivery differently enough in a crowded space.

“We built a sustainable business that thrives and that is set up to win long term,” said Gola in an interview last month. Gopuff, he added, is “a disrupter.”

Yesterday, Gopuff announced that it has tapped Maria Renz, a former executive at SoFi and Amazon, as senior vice president of North America to oversee Gopuff’s strategy and execution in the U.S.

Gopuff has more than 600 locations across the U.S. and Europe, and the company says it generates “an average of $4+ contribution profit per order and continuous category share gains in key markets such as New York, London and France.”

Gopuff delivers to customers in more than 1,200 cities across four countries, employs more than 15,000 people and serves nearly four million customers globally.

Gopuff, which promises 30-minute delivery, seemed ready to go public late last year—it was valued at $15 billion—but startups are facing headwinds as tech stocks have dropped, inflation is high, interest rates are rising and the economic outlook is unclear. In response, Gopuff decided to hold off on going public and is trying to raise $1 billion in debt that could potentially be turned into stock, reports the Times.

With the pandemic easing, the demand for food delivery appears to be slackening. Last month, Instacart cut its valuation to about $24 billion from $39 billion. What’s more, food-delivery startups also face increased competition from supermarkets fielding their own delivery services.

According to Gola, the only way for delivery businesses to be profitable is to have warehouses and inventory because companies can then make money off of goods and not just charge delivery fees.

“Once you can execute, and obviously that’s hard, it wins in the long term,” Gola told the Times.

Gopuff says it sets itself apart by purchasing goods from distributors and wholesalers and by having warehouses. Its warehouse workers are full-time employees, though its delivery drivers and bike messengers are gig workers.

Gopuff’s vertically integrated model also includes Gopuff Kitchen, an electric-powered mobile kitchen located adjacent to or inside Gopuff’s micro-fulfillment centers. The menu offers items such as hot pizza made from scratch, freshly brewed coffee, fresh prepared breakfast sandwiches, hot chicken tenders and salads.

In Florida, Gopuff Kitchen has joined forces with BurgerFi, a fast-casual restaurant, to bring BurgerFi’s burgers and sides to Tallahassee customers through a “Fi on the Fly” food truck. This is the first time Gopuff Kitchen has partnered with a restaurant.

Meanwhile, like the convenience industry as a whole, Gopuff is commited to giving back. In partnership with the American Red Cross, Gopuff in March said it would contribute $450,000 in financial and in-kind donations to help support disaster relief efforts. Taking the effort a step deeper, Gopuff and the Red Cross launched a pilot program in Philadelphia to deliver essentials to people affected by disasters in the city.

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.