New York City is killing the rapid grocery delivery space for companies, according to former Amazon executive and supply chain consultant Brittain Ladd.
“On the surface, launching a rapid grocery delivery business in a city with a population of 8.85 million people appears logical,” he said on LinkedIn.
“The goal of each rapid grocery delivery company is the same as every other company in existence – create a customer.
“With its densely populated neighbourhoods full of shoppers eagerly seeking groceries and other goodies to meet their needs, New York City is a grocery retailer’s paradise. Is it?”
Ladd refers to some of the newer players to the scene including Jokr, Fridge No More and Buyk.
“For most of these, this was a big mistake,” Ladd continued.
He did however acknowledge the work being done by Buyk, which was was founded by two ex Samoket employees.
“However, I believe Buyk, founded by two men with experience working for Samokat, a leading RGD company in Russia, should do quite well in New York City as they have a more disciplined approach to controlling costs and seeking profits as quickly as possible,” he said.
“In discussions with executives and/or associates from RGD companies operating in New York City, I can state that most of the companies aren’t breaking even nor are they close to being profitable.”
“Some of the companies are losing hundreds of dollars on every order they fulfill when discounts, promotions, waived fees, labour, and all other actual costs are accounted for.
“Reducing unit costs and achieving a profit is nearly impossible for most RGD companies.”
The rapid grocery space is showing signs of consolidation after the heights of the pandemic where the market came into its own and a number of startups clambered to make gains.
One of the early leaders Weezy was recently purchased by market giant Getir for an undisclosed sum, with its 700 employees making the switch over to the Turkish-based company.