European cities are breaking new ground in the grocery delivery field, and venture capitalists are investing billions in the unproven idea that people want some basic staples delivered to their doorstep within ten minutes.
The Wall Street Journal reports that starts ups like a company called Gorilla could be fighting an uphill battle as Amazon, Walmart, and grocery chains as well as Instacart and Door Dash explore new ways to speed their processes. Senior Analyst Asad Hussain with Pitchbook tells WSJ that it’s dicey. “They key question for me is whether these companies can maintain their pricing power as they face increasingly robust competition from others.”
And is there enough money in it to sustain the business? Right now they’re surviving off deep-pocketed investors, but when the rubber meets the road is there sufficient demand to support the model?
Rapid delivery, as it’s called, is achieved by developing many small warehouses storing most commonly purchased items, and an inventory system that allows staff to fill orders quickly, in addition to a fleet of bicyclists that can traverse crowded city streets. It only works in densely populated city centers. “The core challenge, in my opinion, of ultra-fast or rapid delivery is that it’s fundamentally a very capital intense industry. It’s a little bit of a departure from an Uber Eats or Door Dash software intermediary model,” says Hussain.
You can see a You Tube video of the Wall Street Journal’s story here.
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