Are Fast Grocery Deliveries Here to Stay?
Piles of cardboard boxes and broken wooden pallets are scattered inside the ground level of 150 Rivington St. Behind the heavy glass windows, two workers idled around a plastic table while two blue grocery bags sat on the far side of the empty room. The gigantic blue canvas and slogan that was cladding the street facade just a month ago was nowhere to be found, the small white letters on the entrance signals to passerby what’s left of Gopuff.
Since its introduction to New York in October, the Philadelphia-found rapid grocery delivery company quickly spread around New York City, along with a slew of similar venture capital backed startups. For a few months, their promise to deliver in less than 30 minutes echos the future of grocery shopping in the bustling metropolis where customers orders online for their goods to be delivered from warehouses. As time went on, however, the future of getting groceries online becomes increasingly unclear.
Across from Gopuff’s Rivington St. location, Stop 1 Deli’s outside wall is plastered in graffiti and advertisement flyers. It was under the shop’s plastic street sign that local politicians and business owners gathered in January. Their goal: To voice their worry over the survival of bodegas — the often immigrant-owned, essential businesses that are a staple of New York City landscape.
“Immigrants work hard and create generational wealth through these small businesses,” said Frank Gonzalez, co-founder of the Lower East Side Small Business Alliance. Gonzales feared immigrant community would struggle and non-English speaking customers would have a hard time navigating the apps when bodegas are muscled out, “The bodegas can’t compete with them. They’re eliminating the human interaction of getting goods and services,” Gonzalez added.
Christopher Marte, the New York City Council Member representing Lower East Side, also expressed concern over the financial advantage of the e-commerce startups over pandemic-ridden bodegas. “They have a lot of cash to not be profitable in the first few years,” Marte said during the January rally, “so this is a long-term strategy to really take over the corner stores.” The Lower East Side native used to help his father stock the bodega just a few blocks away from the busy crossing where Gopuff and the local Deli stood face to face.
Gale Brewer, also a city Council Member and former Manhattan Borough President, took problem with the new retail businesses’ rapid takeover of retail spaces. “They deaden our streetscapes, as windows are sometimes papered over and there is no ability to actually enter and shop,” Gale Brewer wrote in a letter to various city agencies, “(They) thereby reduce foot traffic, which ultimately impacts adjacent small businesses.” Brewer observed the dubbed “dark stores” are barely accessible to walk-in customers, which comprises a potential a violation to city regulations.
In recent months, however, financial reality began to topple the rapid grocery companies before the legislators were able to act. By the end of December 1520 became the first delivery startup to shut down from depleted funding. Another instant delivery startup, Jokr, was reportedly looking to sell off its New York operations by the end of January.
“There is no way to run a company in a competent way when you had the kinds of growth imperatives that any something portfolio company is going to have,” says Moe Tkacik, a Senior Fellow at the American Economic Liberties Project and former business reporter covering food delivery apps, “they just burn money.”
On the other hand, the Russian-Ukrainian war is adding on to the financial strain as businesses are cut off from Russian investors. Buyk, the subsidiary of popular Russian grocery delivery service Samokat, declared bankruptcy less than six month after its launch in September of 2021. “We have diligently explored all possible options and partnerships to restructure Buyk and keep the business going, however, the war in Ukraine and subsequent restrictions in funding have unfortunately made it impossible to continue operations,” Buyk CEO James Walker said in a statement.
Fridge No More, the Russian-funded company who had raised 16.9 million dollars since 2020, ended its operations early this month after its deal to be acquired by Doordash fell through.
Nevertheless, away from the venture-capital saturated market, one of the online grocers is able to sustain. My Bodega Online was introduced early in March of 2020 to let New Yorkers order groceries and sandwiches from their neighborhood bodegas for delivery. Instead of relying on fulfillment centers, the founder Jose Bello chose to partner with local bodegas to market their own stock. “We are not e-commerce, we don’t have warehouses, we don’t buy inventory,” says Bello, “we are the bodega, we use the own employees, we sell their own inventory.”
While only nine bodegas in the Bronx are listed on the platform, Bello plans to register 1000 NYC bodegas in the next 18 months, depending on how the bigger platforms like Instacart and Doordash are going to change. “We know that in November there were about nine companies,” said Bello, “now, they are about two big quick commerce businesses.”
Nevertheless Bello pointed out the online platform is proving beneficial to bodegas. The technology streamlines transaction, eliminates the language barriers, and also helps vendors to potentially extend their reach a couple of blocks further. Placing an order through the website, according to Bello, is only a tool to strengthen the business in bodegas.
“Bodegas are resilient and they are unique about New York,” Bello said, “we really relies on the community that goes to the bodega, who just want a different experience of buying.”
Gopuff did not respond to an email request to comment.
