The pandemic changed the way we work and live in many fundamental ways, of course, and a natural question is to what degree these changes will endure. For instance, it is clear that remote work will remain in place for many white collar workers, at least to some degree.
Another seismic change during the pandemic was the rapid, widespread adoption of app-based instant-delivery services like Doordash, Amazon, and Postmates. Many instant-delivery providers thrived – and innovated – as never before during Covid. Having leaned on these services for some time now, consumers have come to appreciate the convenience and low-cost time-saving they provide and are continuing to rely on them even in the post-covid economy: The instant-delivery genie is out of the bottle.
That continued demand for these services is strong is not surprising. For example, when my friend’s daughter moved to Boston for her first post-college job she found an apartment close to restaurants and a T stop to get to work, but she was a 30-minute walk to the nearest full-service grocery store. Getting groceries the old-fashioned way would entail a lot of time, effort, and bag-schlepping, but instant-delivery companies save her time and money--and allow her to forgo obtaining a car.
Despite the value these services provided during the pandemic, some cities are now trying to restrict or prohibit these services in the name of protecting communities and small mom and pop bodegas. This is shortsighted: Seeking to banish new and innovative services, or hobble them via overregulation, moves from protecting the public to protecting entrenched businesses. Turning back the clock by excluding or hamstringing rapid-delivery service from a market would certainly not benefit consumers.
Cities should welcome innovative companies that fill gaps in the marketplace to meet consumer needs, and delivery companies provide flexible jobs and local tax revenue. Bodegas and local convenience stores will not disappear just because some consumers switch to instant delivery for some products. There is room for both types of providers in meeting consumer needs, and more competition in the space will ultimately lead to better outcomes for consumers.
Instant delivery is a challenging business; marketing and transportation costs are high and the logistics of such an operation can be complex. Industry startups like Buyk and Fridge No More have gone out of business, and others--like JOKR and Gorillas--have attempted to cut costs through layoffs and retrenchment to conserve capital during the current market downturn.
However, absent unwarranted local roadblocks, the future looks strong for those with a strong business model. Gopuff, for example, is a current instant-delivery leader in the U.S., and its advantage is that it owns and operates its distribution centers and directly engages its drivers rather than merely serving as a middleman. It delivers thousands of products, from ice cream to cleaning sprays for a flat fee of $2.95 or a $6 monthly subscription. Many of the centralized distribution centers also operate a “Gopuff Kitchen'' that offer freshly prepared meals, increasing efficiency. A recent Gopuff memo stated that it averages more than $4 in profit per order.
Although Gopuff announced a round of layoffs a few months ago, it is part of a restructuring to adopt a global strategy – it is already in more than 1,200 cities across North America and Europe – and emphasize existing markets where it has a strong foothold. These are typically the more densely populated urban areas and college towns where tech-friendly young residents are eager for time-saving life hacks.
Gopuff was valued at $15 billion in July 2021 and is reported to be close to closing a $1 billion funding round.
While cities debate whether these delivery companies are beneficial for their population and cynics deride them as being dependent on the largesse of their venture capital backers, companies like GoPuff have proven their ability to profitably provide a valuable service that people want across America. Regulating them out of business simply to preserve entrenched retailers would do a disservice to consumers.
