DoorDash launches ultrafast delivery in NYC, but speedy snacks may not be profitable
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10-minute Doritos… The race to deliver snacks in under 15 minutes is getting spicy. Yesterday DoorDash launched an ultrafast-delivery service in NYC that delivers snack staples like chips and candy to customers in 10 to 15 minutes for a $1 to $2 fee. How it works:
- Deliveries are limited to an area near Dash’s tiny urban warehouse (aka: “DashMart”) in NYC’s Chelsea neighborhood. Dash plans to expand supercharged delivery to other DashMarts in NYC and beyond.
- Full-time employees who make $15/hour with benefits will complete the extra-quick deliveries, a big shift from Dash’s norm of using gig workers. Quick-delivery rivals Gorillas and Jokr also employ full-time workers.
Ultrafast growth… Online grocery sales more than doubled last year, inspiring a wave of startups focused on fast urban delivery. This year 15 quick-delivery companies have raised nearly $8B. Jokr, Gorillas, and Flink — all under two years old — each hit $1B valuations. GoPuff, which launched in 2013, is now worth $15B.
- But fast Fritos don’t work everywhere: Delivery companies say the 15-minute model works only in dense cities with high order volumes.
NYC is an ultrafast-delivery lab… But consumers’ broader appetite is still uncertain. As the densest city in America, the Big Apple is perfect for delivery experimentation. But superfast delivery is risky even there: Last week, 1520 closed after it spent all its cash trying to win customers. Because DoorDash’s and Uber Eats’ regular delivery businesses still aren’t profitable — and speedy delivery has even higher costs — some doubt 15-minute snacks will ever be profitable.