Last fall, amNewYork Metro Metro explored the sudden and skyrocketing popularity of fast grocery delivery services. A host of brand new companies backed by private capital promising to deliver everything from canned goods to specialty meats from local brands in 15 minutes or less were spreading across New York, and small businesses, local politicians and consumers alike didn’t know not what to do with them.
In less than a year, the industry, which was growing at breakneck speed, has changed dramatically. Many companies, which boasted of receiving millions of dollars in funding, closed their doors for good. Local politicians are considering imposing more regulations on businesses, which find themselves in a gray area of the city’s labor and zoning laws, and consumer demand for instant grocery delivery appears to be waning.
In our follow-up to the series, “Still Racing to Deliver”, we’ll explore the rise and fall – or just the rise – of fast commerce delivery apps, the impact they’ve had on delivery people and businesses. local, and what might happen next. In the first episode, we’ll recap where we left off last November and look at what’s happening now with fast commerce delivery apps.
The first “dark stores” – the tiny private warehouses at the center of any quick-service grocery delivery app – started popping up in New York last spring. Clustered in Manhattan and some of the more affluent neighborhoods in outlying boroughs, the dark shops have brought with them a legion of new bike delivery people and colorful advertisements seeking to woo consumers with short wait times and fees. low delivery.
Within months, the city was flooded with similar businesses, almost all with catchy one-word names: JOKR, Gorillas, 1520, Buyk, Fridge No More, GoPuff, and Getir. By the end of the year, even former DoorDash delivery pros wanted in, announcing it would launch Delivery in 15 minutes from one of its DashMart locations in Manhattan.
Sudden death for several grocery delivery apps
But despite a frenzy of media coverage and billions of dollars raised from investment firms, the bubble was quick to burst. In December 2021, 1520 was the first to pack up, posting ads for competitor Getir on their social media platforms.
“It’s time to switch your grocery service to Getir,” the post read, encouraging customers to use a promo code for $30 off. The company’s website and app appear to have been taken down soon after.
Three months later, Fridge No More announced on social media that it was closing “effective immediately”.
“We are so proud of what we have built over the past two years and always will be,” the company said in a March 11 Instagram post. “However, due to increasing competition and other industry issues, as of this week, we have made the difficult decision to close the business.”
According to its most recent delivery map available, Fridge No More was operating in most of Manhattan and northern Brooklyn, like most of its competitors, but had also expanded to Mott Haven in the Bronx, Sunnyside and Rego Park. in Queens, and parts of southern Brooklyn, including Sheepshead Bay and Midwood.
A few days later, Buyk, a Russian-backed company that launched in the city in September 2021 and had double its dark store count last November, filed for bankruptcy after US sanctions put in place in response to the war in Ukraine made it impossible for the company to access its main source of funding.
JOKR was next, halting its delivery service with four days’ notice last June and keeping its dark stores open for deeply discounted pick-up orders for a week before closing its doors permanently. Seven months prior, the company had ten dark stores operating in New York and planned to double its footprint before the end of 2021, American co-founder Tyler Trerotola said amNY at the time.
The sudden shutdown came just months after JOKR closed its European operations, with the intention of focusing on central markets and South Americaaccording to Business Insider.
Startups vs big players
New York’s fast commerce delivery is now centered around three startups: Gorillas, the last man standing from companies launching in spring and summer 2021; Getir, a Turkish company whose jumpers are outfitted with a signature purple and yellow pattern; and GoPuff, which was founded as one of the first fast delivery outfits in 2013 but first entered the New York market late last year.
A more familiar name is also exploring new frontiers in the world of delivery: DoorDash, which has spent years delivering hot meals to restaurants, has opened an outpost of its convenience store-style DashMarts in chelsea last December, promising 15-minute delivery and full-time employment for its Dashers.
DoorDash has continued to expand its super-fast delivery service to Manhattan and Brooklyn, a company representative said, and New Yorkers tend to order fresh staples — like meat, produce, dairy and bread – in addition to local brand fares carried in DashMarts.
The oldest and most established of the quick commerce players, DoorDash has been able to leverage its existing infrastructure while expanding its offerings, a spox said, and the company’s size and existing customer base have made it the first choice of many consumers looking to order food and groceries.
Each of the surviving companies has at least one thing in common: their dark stores are at least not totally dark. Getir, GoPuff and DashMart locations are open for browsing or at least pickup, and the New York Post reported in February that Gorillas would open some of its locations to the public.
Gorillas did not return a request for comment.
Keeping at least some places open to the public — even if they’re primarily used as delivery centers — could ease the pressure as local elected officials, including the current City Councilman and former Manhattan Borough President, Gale Brewer, begin to question whether businesses comply with zoning and licensing requirements.
The uncertain future
However, all is not well for the surviving companies. In addition to Brewer’s zoning inquiries, fellow Manhattan City Council members Christopher Marte and Julie Menin earlier this year introduced a trio of bills aimed at regulating dark stores and the industry – perhaps the toughest of the three proposed laws would prevent delivery services from promising 15-minute delivery and penalize workers whose deliveries take longer time.
Gorillas has already removed its 10-minute delivery commitment to keep passengers safe, according to the Post.
Outside of the legislative sphere, both Getir and GoPuff have recently fired large numbers of workers, especially in their European hubs. In May, Gorillas laid off 300 workers as it focused on its most profitable markets, including the United States, according to a press release.
Gorillas CEO Kağan Sümer said in a statement to employees that the industry is changing rapidly and within a year there will only be one or two fast trade delivery companies left.
“Gorillas will be that player. And that requires a new plan,” Sumer wrote. “The plan that will further strengthen Gorillas and ensure that the legacy we have built together grows stronger. With this new plan, we will be much more specific about what we do, how and where we do it. This will align our priorities on our cost structure.
Some New Yorkers worry about the impact the new ventures will have on their favorite local businesses, and reports between city delivery people and some grocery delivery services are strained.
As inflation pushes Food prices higher, demand for grocery delivery has plummeted, according to the Associated press. Capital funding for rapid delivery services would have dried upleaving the future of the once promising industry unstable, and far fewer people are downloading even the most popular apps than they were last year.
Join amNY over the next few weeks as we explore the impact fast commerce delivery services have had on local businesses and neighborhoods; how the rise and fall of business has affected the thousands of delivery workers in New York; how legislators intervene; and more in Still Racing to Deliver. Check back next week for a look at how fast commerce delivery apps are impacting local businesses and what can be done about it.