8 minute Takedown of 15 minute Grocery Delivery

I have lived, studied and worked in seven cities across three continents and traveled to dozens more. I built a career in advertising, solving business problems and selling products that meet consumer needs, and in all my years on this planet, I have?never?met a human being who said:?“I wish I could get groceries in 15 minutes.”

There is no question that ultra-fast grocery delivery is a business being built to solve a problem that?does?not exist and will?never?exist. More on this later.

Since 90% of America lives within?15 minutes of a Walmart, these ultra fast grocery delivery companies are focusing on large urban centers, like New York.

While big cities like New York don’t have a Walmart close by, they do have a myriad options. You could walk to any number of conveniently located local supermarkets or get groceries delivered by them. If you prefer not to leave the confines of your couch, you can shop on AmazonFresh or FreshDirect and get same, or next day delivery. On the rare occasion when you need an ingredient immediately, you can change out of your athleisure wear, put on adult clothing, and walk over to the bodega across the street and buy it.

The pandemic has been responsible for a growing number of sedentary behaviours including, grocery shopping. In the first year of lockdowns, online grocery sales in the US grew 80% and then another 17% in 2021, according to?Coresight Research.

When Domino’s launched their “30 minutes or it’s free” guarantee, at least there was a consumer problem they were solving - nobody likes cold and soggy pizza. Albeit, a smarter solution would have been to invent a better insulated bag. However, with ultra fast grocery delivery there is absolutely no reason on God’s warming earth anyone needs an avocado in the blink of an eye.

More importantly, with speed there are also worker safety issues we need to consider.

In 1992 Domino's paid $2.8 million to the family of an Indiana woman killed by one of its delivery drivers. The company continued to settle multiple lawsuits but refused to end their 30 minute guarantee. It took a jury awarding a 49-year-old woman from Missouri $750,000 in actual damages and?$78 million in punitive damages?for the company to finally end their time-guaranteed delivery.

We know that in order to meet time-guaranteed deliveries, it will be black and brown workers who represent the overwhelming majority of?delivery workers?that will be pushed by over-zealous managers to ride faster and more recklessly on crowded city streets, leading to more accidents, serious injuries and fatalities. There is ample evidence that?worker safety diminished and injuries increased?at Amazon's warehouses after we got addicted to two day shipping.

During the pandemic, many out-of-work people had to turn to restaurant delivery apps to feed their families. While every company has a different policy, one thing was common across all of them: their workers did not receive benefits, get any overtime or paid sick leave. Delivery workers even had to pay for their own e-bikes, which can cost?anywhere from $1,500 to $2,500, and buy the insulated backpacks they use to carry our food.

It was only after a public?petition by workers?that Instacart stopped engaging in?“…a sneaky form of tip theft by using customers’ tips to subsidize their own costs.”?Delivery workers were?not even being paid minimum wage, despite taking all the risks.?New York City just passed a law?to?protect delivery workers, which includes giving them the right to use a bathroom, which they were denied by businesses.?

Ultra-fast grocery-delivery companies will argue that, unlike food delivery and ride hailing companies, they employ workers and provide benefits, with the exception of GoPuff. Let’s be clear that this decision was not based on a desire to help workers. These companies first?used the gig-worker model?but soon found that with the promise of ultra-fast delivery, they need staff that are always available and ready to go at a moment’s notice.

Besides, a paycheque still does not eliminate the safety issue. A?survey of food delivery workers, by Cornell University in 2021, found that almost half had suffered an accident while delivering food. More than half reported being robbed, with 30% saying they were assaulted during the robbery. This is one of the costs of our convenience.

Do you still need that apple in less than 15 minutes?

The fact is that despite the pandemic-led hyper growth of restaurant and food delivery apps, these companies are still?not profitable. DoorDash, whose revenues trippled in the fourth quarter of 2020, saw?losses doubling?during the same period. Similarly, UberEats. saw?record revenues in 2021, but still continues to lose money.

Now, consider that the grocery business is a notoriously?low-margin?one, offering barely 2% profit. In fact, grocery is counted in the top five?least profitable industries?in America. So, apart from the fact that there is no customer need, there is also no viable business model or path to profitability.?

GORILLAS advertises $20 off your first three orders of $25!

FRIDGE NO MORE mailed me an offer with 25% off my first order, and proudly stated in bold letters?"Buy a single apple-we’ll deliver it at no additional cost”.

BUYK?offers $20 off. Their site explains how they save you in life-threatening situations, “Craving something sweet, but a bar of?chocolate is?not worth going to?the store? Don’t sweat?it, Buyk?it!”

JOKR?offers 50% OFF your first order.

GOPUFF in addition to?coupons, offers FAM, a?subscription?for free delivery.?

1520?offers 20% off your first three orders.

Most of these apps charge no delivery fees and require no minimum order. As a result, far from being profitable, most are?averaging losses?of over $20 per order. Yet they will gladly deliver one low value item, sending a poor delivery worker to rush it over to you.

Still want that bar of chocolate in less than 15 minutes?

The fact is that these companies are aware that nobody?needs?ultra-fast delivery, which is why they need to?“pay"?customers to use their service, through big discounts and referrals. Their hope is that we become addicted to the convenience and speed - as one?customer touted?about getting?“$400 of free cookies-and-cream ice cream, laundry detergent and other groceries delivered”?right to his door.

How can a viable business afford to do this, a reasonable person might ask?

The investors in these startups are not interested in short-term profits. They are employing a Silicon Valley startup madness called?"blitzscaling". The idea is that with limitless money you can destroy the competition and create?network-effects?by becoming the most dominant and largest player in the category. The logic goes that once you achieve scale, your customer?acquisition costs come down and you will magically find a path to profitability; or so they tell themselves.

Based on this belief, venture capitalists have poured in a?staggering $5.8 billion?into the ultra-fast grocery space in New York alone in the first nine months of 2021, according to CB Insights.

So why have I got my knickers in a twist about ultra-fast grocery? Some might argue that in a capitalist economy if people want convenience let them have it.

This type of winner take at-all-costs mentality is bad for business, because it encourages people to start companies without defining a clear customer need or business problem. The limitless nature of funding without a requirement for profitability or efficiency wastes tons or money and expends precious resources on useless endeavors. And this idea that?you can win purely using?financial muscle,?fosters unscrupulous, unprincipled and cut-throat behaviors in founders, like we saw with Travis Kalanick and how he built Uber’s unprofitable dominance, totally devoid of any business ethics.

It also discourages real innovation by encouraging stupidity. Cutting down on delivery times from an hour to fifteen minutes, is not innovation. Nor is it a pressing problem that a world with many more serious?problems?needs solving.

Also, we must consider the cost that unreasonable time expectations have on our personal interactions and behaviors. I often refer to us as the instant generation; a group of people who are addicted to instant gratification, people who no longer have the patience or ability to wait for gratification of any kind.

It started online with instant search results on Google and likes on social media, and then Amazon brought it into the offline world with two-day and now one-day shipping.

The pandemic has supercharged this impatient behaviour, as the?New York Times recently wrote?“Customers these days feel so entitled — and they are enraged. People are angrier, meaner, and more prone to throwing childish tantrums in front of service staff.”??We have become so addicted to frictionless transactions through our mobile phones, instant delivery, chatbots, and self-checkout kiosks that people now have an expectation of immediacy combined with better, faster and cheaper service.

This behaviour is becoming so prevalent that consumer behavior scholars have started calling these?impractical expectations?based on one-click buy and one-day shipping the “Amazonification of business”. However, there is a hidden and even more corrosive element to our incessant need for convenience and speed, not immediately apparent.

In order to deliver items in under fifteen minutes, companies need to create warehouses stocked with groceries, called?dark stores.?In cities around the globe, these companies have been quietly taking over retail space and transforming them into distribution warehouses, which are closed to the public.

In New York City there are currently seven companies competing in the ultra-fast grocery space, and they have taken over dozens of storefronts since July last year, with plans to open hundreds more in this city.

Many of these companies are now saying that in order to become profitable, they will need to stop delivering items from local supermarkets and stores, and vertically integrate to sell their?own private label products.

Effectively saying that their long-term success depends on putting our local butcher, baker and bodega out of business, and ultimately grocery stores and supermarkets. Most of these companies do not plan to stop there, as the head of JOKR’s US operations recently told Axios, “Today it’s 15 minutes for groceries. Tomorrow, it could be anything”.

This, will be the impact of our addiction to ultra-fast delivery. A?Bloomberg article?summarises this ultimate cost “While a glut of vacant storefronts plagued American cities even before the pandemic, dark stores reinforce those holes in the urban fabric?by plugging them with services that move the point of sale from the street to the doorstep, discouraging the hustle and bustle that defines cities.”?

Mom and pop stores are the heartbeat of America, and lifeblood of a healthy and thriving community. Without them our cities will lose the vibrancy of daily life and soon we will also lose the ability to practice basic social graces in public.

The next time you want your avocado in under 15 minutes, stop to think about the cost of this convenience - it is clogging our cities, unnecessarily endangering workers, creating low-paying jobs, and shuttering mom-and-pop stores.