For some time, it seemed like there was a new app every week promising New Yorkers food and other deliveries in 15 minutes or less.
Now, it looks like there could be a bump in the road – or several bumps – for these startups.
NYC CRACKING DOWN
In New York City, Council Member Christopher Marte, who represents District 1 in Lower Manhattan, believes that the pledge of grocery deliveries in a matter of minutes “creates a lot of risk, a lot of pressure, and a lot of stress [for] workers,” reported Fast Company (Feb. 23).
Marte also says the pressure can frazzle riders and pressure them into running red lights, riding against traffic on one-way streets, and violating other traffic laws. He has crafted a bill, which he plans to introduce in the coming weeks, that would ban these apps from marketing 15-minute turnarounds to customers.
The bill is part of broader legislation he has drafted that seeks to “bring a lot more oversight and accountability” to such operations.
Many of the apps operating in the city have secured spaces zoned for retail businesses — not warehouses — but are effectively operating warehouses anyway, according to Upper West Side councilwoman and former Manhattan borough president Gale Brewer, reported NY Post (Feb. 21).
The councilwoman has asked the city’s department of buildings and department of planning to investigate whether the apps violate zoning laws and could introduce legislation around the pending answers.
Delivery app Gorillas has already scrapped its 10-minute grocery delivery promise and tweaked its business model following scrutiny from lawmakers, as well as increasing competition, reported Business Insider (Feb. 24). Instead, the company is adding a walk-in service in the city.
RUNNING OUT OF MONEY
On top of lawmaker objections, ultrafast delivery services in New York City are also racking up huge losses as they battle for customers, reported The Wall Street Journal (Jan. 30).
Losses are heavy when factoring in the high cost of advertising and paying couriers, according to industry investors. Some are even averaging a loss of over $20 per order.
The Information (Jan. 31), reported in January that instant-delivery startup Jokr initiated talks to sell its New York operations, which make up the bulk of its U.S. business, after encountering heavy losses in the city, according to three people with direct knowledge of the matter.
This report followed one by Business Insider in December 2021 that ultrafast grocery delivery startup 1520 shut down after the business ran out of capital. It had been in acquisition talks with Jokr, but a deal never materialized.
COMPANIES STILL MOVING AHEAD
Despite all of this, some companies are still launching new services in the quick delivery space.
- Uber Eats recently revealed it was partnering with FastAF Technologies, a curated quick commerce retailer, to launch 25-minute delivery in New York City, Los Angeles, and San Francisco.
- Grubhub is also partnering with real-time grocery delivery service Buyk to bring ultrafast 15-minute grocery delivery to the Grubhub marketplace.