- Gopuff started as a delivery service for college students seeking smoking supplies and snacks.
- The "instant-needs" delivery operator now sells 4,000 items from booze to baby goods.
- On Tuesday, July 20, Gopuff said it is adding meal delivery as a new service.
On Tuesday, Gopuff announced plans to expand its delivery operation beyond grocery and convenience store goods by adding made-to-order restaurant-style meals.
The company is setting up mobile kitchens near its micro-fulfillment warehouses. Each Gopuff Kitchen acts as a dark kitchen or ghost kitchen for cooks preparing made-to-order delivery-only meals and drinks such as specialty coffee, breakfast sandwiches, chicken fingers, tater tots, and salads.
Because the kitchen hubs are near the warehouses, this enables the bundling of grocery orders with hot meals. For example, a customer in Austin, Texas, can now bundle a delivery order that features a latte, baby diapers, ice cream, and a made-to-order pizza.
Gopuff Kitchen, in test since early 2021, is now available in 20 cities including Austin; Phoenix, Miami, and Nashville. More cities will come on board by the end of the year as the company pushes to give consumers one-stop shopping in an app that combines services found at Instacart, DoorDash, Uber Eats, and Grubhub.
"With today's news, Gopuff is launching a completely new category and raising the bar on how technology is making our lives more convenient," Daniel Folkman, Gopuff's senior vice president of business, said in a statement. "Nowhere else can you order your everyday essentials while also taking care of dinner for the family or getting a quick coffee, all from one platform."
The expanded delivery offerings also come as Gopuff has been on a buying spree.
The once under-the-radar delivery startup that catered to college students looking for snacks and smoking supplies has become a leader in on-demand delivery.
On a buying spree
Over the past few months, the Philadelphia startup has been striking partnerships with Uber and has bought BevMo, Liquor Barn, the UK delivery startup Fancy, and Bandit.
And its acquisition ambitions don't appear to be over. Prospective targets include the London grocery-delivery startup Dija and the German delivery startup Flink.
"We're really pressing on the accelerator and moving in a very aggressive fashion," cofounder and co-CEO Rafael Ilishayev said in a June podcast with 20VC.
One of its recent purchases is helping the company with its latest move into fresh food delivery.
In late 2020, Gopuff acquired Austin-based Bandit, billed as the first "app-only coffee shop" in the US. Gopuff said the purchase is helping the company jump-start Gopuff Kitchen.
Bandit was co-founded in 2019 by Max Crowley , who is now leading Gopuff's business expansion efforts, including the Gopuff Kitchen vertical, the company said.
Crowley, in a statement, said Gopuff is taking mobile ordering to "the next level and beyond by making it easier than ever before to get everyday essentials alongside quality food and drinks all in less than thirty minutes."
Gopuff raised $1.15 billion from investors in its latest funding round in March, including D1 Capital Partners and SoftBank Vision Fund 1. The company is now valued at nearly $9 billion and has raised a total of $2.4 billion.
Burt Flickinger III, a retail analyst, said Gopuff's acquisitions were an opportunistic move to "massively grow" quickly during the pandemic, as online grocery buying has surged.
"It's a very smart strategy for a significantly unserved market," Flickinger, the managing director of Strategic Resource Group in New York, said.
Flickinger was referring to Gopuff's direct-to-consumer business model that focuses on delivering goods that consumers want in a rush, like baby diapers. Gopuff bills itself as an "instant-needs" delivery operator whose 4,000-item product mix includes snacks, baby supplies, cleaning products, beer and wine, and over-the-counter medications.
Since November, the company has more than doubled its fulfillment centers from 200 to more than 450 sites delivering to 650 US cities.
"It was really important for us to nail that business model before scaling it," Ilishayev said in the podcast.
Growing merchandise and cutting delivery times
While Instacart shoppers pluck items off grocery shelves, Gopuff controls its inventory by buying in volume directly from manufacturers. And that strategy — bypassing retailers and selling directly to shoppers — has led to "really superior unit economics" for Gopuff, Ilishayev said in the podcast.
The company told Insider that Gopuff was profitable in "100% of markets older than 18 months."
Delivery times in most areas are between 20 and 40 minutes, with 24-hour delivery available in most of Gopuff's markets. But Ilishayev said by summer 2022, Gopuff hoped its average delivery time would reach 15 minutes.
To help reach its ambitious logistics goals, the startup brought on Tim Collins, Amazon's former vice president of global logistics, in April as its senior vice president of operations.
In mid-June, Gopuff bought RideOS, a last-mile-delivery platform created by former Uber, Google, and Apple employees. RideOS's multimodal delivery options, such as bike couriers, cars, and delivery by foot, assist with dispatches in high-density markets like Los Angeles and New York City.
By buying BevMo and Liquor Barn stores, Gopuff can now deliver from those sites to improve speed. The acquisitions also allow Gopuff to instantly obtain liquor licenses in key markets like California.
"Our first holy grail was alcohol," Ilishayev said in the podcast interview, adding that the company's strategy was to create market fortresses and hook customers with its ultrafast delivery.
Gopuff said it planned to enter new markets including Los Angeles, San Diego, New Orleans, Seattle, and Dallas. The company will launch in New York City later this year, where it will face on-demand delivery rivals such as Jokr, Fridge No More, and Gorillas.
For now, Gopuff is diversifying its bottom line.
The startup is making it easier for brands to buy targeted ads through a new partnership with CitrusAd. The self-service ad platform allows brands like Pepsi to buy targeted ads on the app, similar to those found on Instacart and Kroger's digital platforms. Gopuff's partnership with the consumer-intelligence firm Skai gives brands insights into those ads.
Watch: How FreshDirect delivers 100,000 grocery orders across NYC each week
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