Gopuff on the future of 'instant needs' commerce: 'No more are consumers are willing to wait two hours to get the goods that they want'

By Mary Ellen Shoup contact

- Last updated on GMT

Photo Credit: Gopuff
Photo Credit: Gopuff

Related tags: Gopuff, Online grocery shopping, e-commerce

A massive shift in consumer shopping behavior is underway in which speed and convenience have become top priorities for shoppers and basic tablestakes for e-commerce players, says first-party consumer goods delivery platform Gopuff.

Gopuff, which owns 600 micro-fulfillment centers stocking an inventory of more than 4,000 SKUs, is able to deliver a variety of food, beverage, and household items directly to consumers in less than 30 minutes, giving rise to a new "instant needs category."​ Founders and co-CEOs of the company, Rafael Ilishayev and Yakir Gola, identified this unmet consumer need and gap in the market when launching the company in 2013, around the same time the likes of third-party services GrubHub and Uber were gaining popularity. 

"They took a contrarian approach, and instead of building another asset light marketplace they decided to build inventory, build fulfillment centers, and control the entire customer experience,"​ Daniel Folkman, Gopuff SVP of business, said during the ICR virtual conference last week. 

"By operating your own network at scale, it inherently gets more efficient. We’re able in real time to operate much more intelligently. The thing about first-party​ [delivery] is we actually make our money on the products that we sell and not on the people that make the deliveries or the fees and service charges,"​ explained Folkman. 

That approach, while also operationally complex, has allowed the company to expand into more than 1,000 metro areas in the US including a recent launch in New York City, as well as the UK and France. 

"We built what we consider to be the rails for the future of commerce,"​ said Folkman.

Over its eight-year journey, Gopuff has attracted major investment capital including $1bn in new funding raised in July 2021 from new and existing investors, bringing its total funds raised to more than $3.5bn. Much of this has been deployed directly back into the business to fuel the company's "instant needs engine," ​said Folkman. 

Meeting instant and immediate demands

"When I think about the industry going forward, first-party is the sustainable approach to delivery long-term," ​he added, as consumers are no longer willing to wait more than five minutes for their Uber ride and much less, a few hours for their grocery delivery when they can get many of the same items in as little as 20 minutes. 

According to the National Retail Federation​, 83% of consumers surveyed in 2020 said that convenience while shopping for their everyday needs is more important to them than it was five years ago and 97% reported not following through with a purchase if they found it to be inconvenient, of which delivery speed was a prominent purchase decision-making factor.

"We saw a big year of consumer adoption ​[last year], and we think this will be the major year when consumers adapt to this kind of shopping behavior. No more are consumers are willing to wait two hours to get the goods that they want," ​Folkmain said.

What's next?

While not commenting on a possible IPO rumored to happen in the second half of 2022, according to some media outlets​, Folkman did note how the company is the clear leader in the growing instant needs category with an more than 70% market share, which it intends to grow both geographically and through an expanded product assortment. 

Last year, Gopuff launched Gopuff Kitchen, delivering freshly prepared food and beverages in more than 70 locations with more locations planned for 2022. The company also recently introduced its own private label line of affordable snacks, water, and home essentials, called Basically.

"I think long-term, the success of our platform will be predicated on the differentiated assortment that we actually carry, and we​ expect to see this category grow tremendously over the next few years," added Folkman. 

Related topics: Markets, Food retail and e-commerce

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