The rapid downfall for fast delivery startups like Jokr | MarketingwithAnoy

It only took eight months for Jokr, the super-fast delivery startup, to become a unicorn, and only six months more for its strategy to start to fall apart. Jokr had plastered New York City with bubbly ads promises to deliver groceries within 15 minutes—Free of charge! Without minimum order! – and raised a total of $ 430 million in venture capital to continue flash scaling across cities around the world. From Boston to Bogotá, its Turkish-clad couriers whizzed around on scooters with pints of ice cream and jars of pasta sauce.

Jokr was also bleeding money. In the first half of 2021, the startup generated $ 1.7 million in revenue but suffered $ 13.6 million in losses, according to data reviewed by The information. In April, it shut down in Europe. This June-14 months after launch and a year after announcing plans to build 100 department stores in New York City alone – Jokr announced it was pulling out of the U.S. and firing 50 employees. The company still operates in cities such as São Paolo, Mexico City and Bogotá.

Other startups with fast delivery have also become rapidly shrinking. In May, Gorillas and Getir – two of the largest companies in the sector – fired thousands of employees and withdrew from the best delivery cities around Europe. Gopuff, worth $ 15 billion by 2021, evaporated 76 of its 500 distribution centers this summer. These are the lucky ones. Others, like Buyk, Fridge No More and Zero Grocery, have already stalled and are disappearing as fast as they arrived.

The downfall of super-fast delivery reflects the sober mood of 2022. In the last two years, venture capitalists have sunk nearly $ 8 billion into the six fast-delivery startups competing in New York City, encouraging rapid growth and a land capture. Now investors are increasingly demanding profitability. The sudden turnaround hits Thomas Eisenmann, a professor at Harvard Business School, who is reminiscent of the dotcom crash of 2000, when busy startups such as Kozmo-which promised an hour of delivery of groceries and DVDs – folded just a few years after collecting millions from VCs. “With these new companies, what has changed?” He says. “It did not work then, and it does not work now.”

Eisenmann teaches a class on startup errors and last year wrote a dissertation on the subject entitled Why startup fails. He says fast-delivery companies are vulnerable to a common pattern of failure where early gains and growth are not sustainable. The first wave of customer interest comes easily and for free because people are willing to try a new service with an incredible promise. But in order to retain these customers and earn new ones, a startup needs to clarify its value proposition. For fast delivery, this means finding people who regularly need things like BandAids or a banana delivered quickly – and are willing to pay a premium for it – instead of going to the bodega to get it themselves.

As the growth of new customers begins to slow down, Eisenmann says, “you start having to offer $ 20 free groceries on every order to get new customers.” From there, the economy can quickly deteriorate. A recent blurred economic outlook and the recent high inflation make it a bad time to try to persuade people to take up a new premium service.

Leave a comment