It only lasted eight months for Jokr, the super-fast delivery start-up, to become a unicorn, and only six more months for its strategy to fall apart. Jokr had covered New York City with smashing ads promise to deliver groceries within 15 minutes – for free! Without minimum order! — raising a total of $430 million in venture capital to continue blitz scaling in cities around the world. From Boston to Bogotá, the turquoise-clad couriers whizzed around on scooters, carrying pints of ice cream and jars of pasta sauce.
Jokr also bled money. In the first half of 2021, the startup raised $1.7 million in revenue but suffered $13.6 million in losses, according to data reviewed by The Information. In April it stopped in Europe. In June, 14 months after its launch and a year after announcing plans to build 100 microwarehouses in New York City alone, Jokr announced it was pulling out of the United States and laying off 50 employees. The company is still active in cities such as São Paolo, Mexico City and Bogotá.
Other fast-delivery startups are also shrinking fast. In May, Gorillas and Getir, two of the industry’s largest companies, laid off thousands of workers and withdrew from the main delivery cities in Europe. Gopuff, worth $15 billion in 2021, vaporized 76 of its 500 distribution centers this summer. Those are the lucky ones. Others, such as Buyk, Fridge No More and Zero Grocery, have already gone out of business and are disappearing as quickly as they came.
The demise of superfast delivery reflects the sobering mood of 2022. Over the past two years, venture capitalists have sunk nearly $8 billion into the six fast-delivery startups competing in New York City, encouraging rapid growth and land grabs. Now investors are demanding more and more profitability. The sudden turnaround seems to remind Thomas Eisenmann, a professor at Harvard Business School, of the dotcom crash in 2000, when buzzy startups like Kozmo — which promised grocery and DVD delivery within an hour — just a few years after they millions of VCs went bankrupt. “What has changed with these new companies?” he says. “It didn’t work then and it doesn’t work now.”
Eisenmann teaches boot failures and wrote a treatise on the subject last year titled Why startups fail?. He says fast-delivery companies are vulnerable to a common pattern of failure, where early profits and growth are unsustainable. The first wave of customer interest comes easily and for free, as people are willing to try a new service with incredible promise. But to retain those 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 band-aids or a banana – and are willing to pay a premium for it – rather than walking to the bodega to get it yourself.
When new customer growth starts to slow, Eisenmann says, “you have to offer $20 free groceries with every order to get new customers.” From there, the economy can deteriorate quickly. With the new murky economic outlook and recent high inflation, it’s a bad time to try and persuade people to use a new premium service.
