Gopuff is an on-demand delivery platform. Customers can order from a selection of 3,000 products in categories as diverse as pet food and office supplies.

Gopuff makes money by marking up products, through delivery fees, subscriptions, as well as advertising on its platform.

Founded in 2013, Gopuff has become one of the biggest delivery startups in the United States. Its business is currently valued at $15 billion.

Please read the attached article and provide responses to the following questions along with your comments on two (2) other student responses.

• Gopuff is trying to outrace its competitors in the dark convenience store business. What does this mean and how is Gopuff doing?

• What challenges does Gopuff face with their rapid delivery business requiring a large network of mini warehouses?

who worked in their families' businesses growing issue across food-related industries, but says the up. They hired a programmer to build a mobile app, company's spoilage rates are below industry aver- and bought snacks, booze, condoms, and smoking ages, without providing specific data. She says the paraphernalia in bulk. Starting in 2013, the two men company prioritizes health and safety, and con- began personally shuttling items to nearby dorm ducts regular audits, inspections, and training. rooms and apartments. Depending on who you ask, Delivery companies relying on gig workers have the pair named the company after either Drexel's been brutal about offloading financial risk onto the dragon mascot or the company's focus on smoking workers themselves, by hiring them per delivery products. When pressed about the name's meaning instead of for a shift. Gopuff pays its drivers for set now, some employees just laugh and roll their eyes. blocks of time regardless of whether there are deliv- Gopuff saw itself as providing not only conve- eries, to ensure it has enough couriers ready at an nience but also discretion for deliveries that might instant. This approach isn't always cost-effective, be sensitive or embarrassing. Judgment is a big especially in new markets. On a recent after- thing. Otherwise we wouldn't be selling so many noon at a BevMo location in Oakland, a batch of Plan Bs. Ilishayev told the Philadelphia Inquirer Gopuff drivers were napping in their cars or scroll- in 2017, referring to the emergency contraceptive. ing through TikTok in the parking lot and nearby As Gopuff expanded to a handful of East Coast streets. "You get paid for just sitting here," said markets, it saw the chance to distinguish itself by Mitzi Lewis, a 54-year-old grandmother who's been collecting and analyzing customer data to make working for Gopuff since this summer. It's good. better business decisions-perhaps an ironic focus Gopuff's ability to manage its inventory and labor for a company whose pitch was keeping people's force are the key factors in whether it will make its personal taste in hookahs to itself. It used this infor- business work at its rapidly increasing scale. The mation to decide which items to stock-at-home company has little choice but to keep expanding, Covid-19 tests, cleaning supplies, and baby prod- given how many competitors are trying to gain a ucts have surged over the past year and where foothold in choice markets. Berlin-based Gorillas, to locate facilities, as well as to power its growing valued at $2.1 billion and backed by Delivery Hero, targeted-advertising business. The name of the DST Global, and others, and Istanbul-based Getir, game is collecting as much information as we can," valued at $7.5 billion and backed by Sequoia Capital says Gopuff's head of business, Dan Folkman. and Tiger Global Management, both began operat- The BevMo purchase gave Gopuff 161 retail ing in the U.S. this fall. While Gopuff boasts it has stores, along with the food and beverage licenses sliced delivery time from 30 minutes to 20, Gorillas to operate them. Gopuff has added about 100 deliv- and Getir say they can cut that time down to just 10. ery facilities to BevMo stores so far. Last year, the -Lizette Chapman company also began preparing hot food and drinks in small kitchens built mostly in existing locations THE BOTTOM LINE Gopuff's rapid delivery business requires a large network of mini-warehouses, a logistical challenge even for a or their parking lots; it has more than 60 operating company that's raised billions of dollars. There's evidence Gopuff has sometimes had trou- ble managing its expansion pace. Food spoilage has been a problem since at least 2017, with employees regularly throwing away hundreds of cases of ice cream because of poorly timed deliveries or spotty fre- 27 Hatching a New quent rodent infestations. There were always Plan for Twitter mouse issues and poop to clean up," says Nicholas Fernandes, one of the ex-employees, who packed deliveries in a Boston warehouse until late 2018. . Incoming CEO Parag Agrawal is inheriting a Logistics problems persisted as recently as this company in the middle of a transformation spring, often because there was no room inside warehouses to walk between aisles, according to Bill McNeely, who handled driver operations at 54 sites On his first day as Twitter's chief executive officer, in Texas before leaving the company for another job. Parag Agrawal gained about 150,000 followers on the "Stuff would show up two to three times a week, and social network. He also made a new batch of online there wasn't any room for it, he says. It was chaos." enemies, who dug up an 11-year-old tweet in which The Gopuff spokeswoman describes food he quoted a joke from the comedian Aasif Mandvi waste as an "unfortunate but at times inevitable" that, in their minds, revealed how Agrawal's racial convenience store 20 than they'd find in a convenience store, delivered inventory at wholesale prices, stocks it in locations to their home within a half-hour of placing an order convenient to dense populations of potential cus- through an app. It bought BevMo for $350 million tomers, and then charges retail prices plus a deliv- late last year to gain a foothold in California. ery fee of $2 or so. It's a simple concept that's tricky Since then, Gopuff has bought a chain of liquor to execute, according to Ryan Sweeney, a partner stores in Kentucky, a pair of European delivery at venture capital firm Accel who's been backing companies, and a fleet-management and map. Gopuff since 2018. The mini-warehouse model is Number of equity deals in the dark ping software company. Gopuff has more than very unique and hard to do," he says. This is not 1,000 locations globally, and it's opening an aver- just another delivery play. sector, globally age of one or two more a day, fueled largely by pan- In the first nine months of 2021 venture inves- demic-era enthusiasm for commerce that doesn't tors poured $5.8 billion into the dark convenience 30 involve leaving the house. Growth that fast comes store sector, compared with $496 million in 2020 with issues, though: The company has to quickly and $1.1 billion in 2019, according to research firm identify the best places for its warehouses, antic- CB Insights. Flink, Getir, Gorillas, Jokr, Buyk, and ipate what items to stock to meet local demand, other companies are all executing similar strate- keep perishable items from going bad, and staff its gies, and DoorDash and Uber Eats are competing delivery operations in the most competitive labor for customers by expanding to offer deliveries from market in recent memory. pharmacies and grocery stores. The promise of leveraging the web to enable Despite the enthusiasm from investors, there's near-instant delivery has captured the imagina- no consensus that the basic business model even tion of entrepreneurs since at least the first inter- works, according to Laura Kennedy, a lead analyst 2016 2021 net bubble, when startups Kozmo and Urbanfetch with CB Insights. You do have to question whether offered delivery at speeds and prices that seemed they can all survive," she says. "We've gone past the almost too good to be true-then famously collapsed delight of having things delivered to your house. A under the weight of unsustainable business models. Gopuff spokeswoman says the company was profit- More recently, DoorDash, Instacart, Uber-owned able in its early days but is now focused on invest- Postmates, and others have focused on food delivery, ing in expansion. She declined to say when the avoiding the costly infrastructure requirements their company expects to be profitable again. predecessors had by using independent couriers to Gopuff initially set out to solve the late- deliver products from existing restaurants or stores. night needs of students at Drexel University in Gopuff's plan is old-fashioned compared with Philadelphia. Its co-founders, Rafael Ilishayev and those of the DoorDashes of the world. It buys Yakir Gola, were students there, sons of immigrants At Gopuff's BevMo EU 10 0 AS OF 1V12 store in Colma COON juice mother oljement Melo appetizers bread diff BE WHEAT LE (MAT GOPUFF. PHOTOGRAPH BY CARLOS CHAVARRIA FOR BLOOMBERG BUSINESSWEEK TWITTER: GETTY IMAGES DATA: CB INSIGHTS 10 who worked in their families' businesses growing issue across food-related industries, but says the up. They hired a programmer to build a mobile app, company's spoilage rates are below industry aver- and bought snacks, booze, condoms, and smoking ages, without providing specific data. She says the paraphernalia in bulk. Starting in 2013, the two men company prioritizes health and safety, and con- began personally shuttling items to nearby dorm ducts regular audits, inspections, and training. rooms and apartments. Depending on who you ask, Delivery companies relying on gig workers have the pair named the company after either Drexel's been brutal about offloading financial risk onto the dragon mascot or the company's focus on smoking workers themselves, by hiring them per delivery products. When pressed about the name's meaning instead of for a shift. Gopuff pays its drivers for set now, some employees just laugh and roll their eyes. blocks of time regardless of whether there are deliv- Gopuff saw itself as providing not only conve- eries, to ensure it has enough couriers ready at an nience but also discretion for deliveries that might instant. This approach isn't always cost-effective, be sensitive or embarrassing. Judgment is a big especially in new markets. On a recent after- thing. Otherwise we wouldn't be selling so many noon at a BevMo location in Oakland, a batch of Plan Bs. Ilishayev told the Philadelphia Inquirer Gopuff drivers were napping in their cars or scroll- in 2017, referring to the emergency contraceptive. ing through TikTok in the parking lot and nearby As Gopuff expanded to a handful of East Coast streets. "You get paid for just sitting here," said markets, it saw the chance to distinguish itself by Mitzi Lewis, a 54-year-old grandmother who's been collecting and analyzing customer data to make working for Gopuff since this summer. It's good. better business decisions-perhaps an ironic focus Gopuff's ability to manage its inventory and labor for a company whose pitch was keeping people's force are the key factors in whether it will make its personal taste in hookahs to itself. It used this infor- business work at its rapidly increasing scale. The mation to decide which items to stock-at-home company has little choice but to keep expanding, Covid-19 tests, cleaning supplies, and baby prod- given how many competitors are trying to gain a ucts have surged over the past year and where foothold in choice markets. Berlin-based Gorillas, to locate facilities, as well as to power its growing valued at $2.1 billion and backed by Delivery Hero, targeted-advertising business. The name of the DST Global, and others, and Istanbul-based Getir, game is collecting as much information as we can," valued at $7.5 billion and backed by Sequoia Capital says Gopuff's head of business, Dan Folkman. and Tiger Global Management, both began operat- The BevMo purchase gave Gopuff 161 retail ing in the U.S. this fall. While Gopuff boasts it has stores, along with the food and beverage licenses sliced delivery time from 30 minutes to 20, Gorillas to operate them. Gopuff has added about 100 deliv- and Getir say they can cut that time down to just 10. ery facilities to BevMo stores so far. Last year, the -Lizette Chapman company also began preparing hot food and drinks in small kitchens built mostly in existing locations THE BOTTOM LINE Gopuff's rapid delivery business requires a large network of mini-warehouses, a logistical challenge even for a or their parking lots; it has more than 60 operating company that's raised billions of dollars. There's evidence Gopuff has sometimes had trou- ble managing its expansion pace. Food spoilage has been a problem since at least 2017, with employees regularly throwing away hundreds of cases of ice cream because of poorly timed deliveries or spotty fre- 27 Hatching a New quent rodent infestations. There were always Plan for Twitter mouse issues and poop to clean up," says Nicholas Fernandes, one of the ex-employees, who packed deliveries in a Boston warehouse until late 2018. . Incoming CEO Parag Agrawal is inheriting a Logistics problems persisted as recently as this company in the middle of a transformation spring, often because there was no room inside warehouses to walk between aisles, according to Bill McNeely, who handled driver operations at 54 sites On his first day as Twitter's chief executive officer, in Texas before leaving the company for another job. Parag Agrawal gained about 150,000 followers on the "Stuff would show up two to three times a week, and social network. He also made a new batch of online there wasn't any room for it, he says. It was chaos." enemies, who dug up an 11-year-old tweet in which The Gopuff spokeswoman describes food he quoted a joke from the comedian Aasif Mandvi waste as an "unfortunate but at times inevitable" that, in their minds, revealed how Agrawal's racial convenience store 20 than they'd find in a convenience store, delivered inventory at wholesale prices, stocks it in locations to their home within a half-hour of placing an order convenient to dense populations of potential cus- through an app. It bought BevMo for $350 million tomers, and then charges retail prices plus a deliv- late last year to gain a foothold in California. ery fee of $2 or so. It's a simple concept that's tricky Since then, Gopuff has bought a chain of liquor to execute, according to Ryan Sweeney, a partner stores in Kentucky, a pair of European delivery at venture capital firm Accel who's been backing companies, and a fleet-management and map. Gopuff since 2018. The mini-warehouse model is Number of equity deals in the dark ping software company. Gopuff has more than very unique and hard to do," he says. This is not 1,000 locations globally, and it's opening an aver- just another delivery play. sector, globally age of one or two more a day, fueled largely by pan- In the first nine months of 2021 venture inves- demic-era enthusiasm for commerce that doesn't tors poured $5.8 billion into the dark convenience 30 involve leaving the house. Growth that fast comes store sector, compared with $496 million in 2020 with issues, though: The company has to quickly and $1.1 billion in 2019, according to research firm identify the best places for its warehouses, antic- CB Insights. Flink, Getir, Gorillas, Jokr, Buyk, and ipate what items to stock to meet local demand, other companies are all executing similar strate- keep perishable items from going bad, and staff its gies, and DoorDash and Uber Eats are competing delivery operations in the most competitive labor for customers by expanding to offer deliveries from market in recent memory. pharmacies and grocery stores. The promise of leveraging the web to enable Despite the enthusiasm from investors, there's near-instant delivery has captured the imagina- no consensus that the basic business model even tion of entrepreneurs since at least the first inter- works, according to Laura Kennedy, a lead analyst 2016 2021 net bubble, when startups Kozmo and Urbanfetch with CB Insights. You do have to question whether offered delivery at speeds and prices that seemed they can all survive," she says. "We've gone past the almost too good to be true-then famously collapsed delight of having things delivered to your house. A under the weight of unsustainable business models. Gopuff spokeswoman says the company was profit- More recently, DoorDash, Instacart, Uber-owned able in its early days but is now focused on invest- Postmates, and others have focused on food delivery, ing in expansion. She declined to say when the avoiding the costly infrastructure requirements their company expects to be profitable again. predecessors had by using independent couriers to Gopuff initially set out to solve the late- deliver products from existing restaurants or stores. night needs of students at Drexel University in Gopuff's plan is old-fashioned compared with Philadelphia. Its co-founders, Rafael Ilishayev and those of the DoorDashes of the world. It buys Yakir Gola, were students there, sons of immigrants At Gopuff's BevMo EU 10 0 AS OF 1V12 store in Colma COON juice mother oljement Melo appetizers bread diff BE WHEAT LE (MAT GOPUFF. PHOTOGRAPH BY CARLOS CHAVARRIA FOR BLOOMBERG BUSINESSWEEK TWITTER: GETTY IMAGES DATA: CB INSIGHTS 10