💬 "GoPuff & the Cost of Instant Delivery"

Hosts: Nora Ali & Scott Rogowsky
Guest: Tom Dotan | Reporter | Insider
Category: 💬 Opinion

Podcast’s Essential Bites:

[4:54] “GoPuff was started by two buddies at Drexel University in Philly. And it was dreamed up as a way to deliver […] party supplies […] to people in the Drexel campus rapidly. […] It was initially […] a college oriented, supply delivery business [that developed] into […] a convenience store delivery business. The lead user of it for most of its life, and maybe until now, is college students. And they actually had a fairly […] measured and slow growth for a number of years. It's not the sort of crazy quick growth, hockey stick type of thing you see in tech, or in Silicon Valley, at least. But in the last three or four years, they've really turned on the heat in terms of raising money, and at this point have raised upwards of $2 or $3 billion from investors. And from what I hear, they are planning on going public this year.”

[6:27] “It is not currently seeing a profit. […] The numbers that I have heard, and were reported by other outlets, is that last year, they burned through $500 million.”

[8:19] “This idea of […] the 15 minute delivery window is […] an invented need. There wasn't […] a period before this, where I was like, […] I would love to order through Instacart, but the fact that it's not getting to me in 15 minutes just completely makes the service useless. And our […] attention and our patience for delivery, apparently keeps getting shorter as far as these companies are concerned. I mean, we used to order stuff on Amazon, and it took a week […] and then it gotta be two days with Prime and then it was […] later in the day with Instacart. And then now with this class of companies, it's […] if it's not getting to me in 15 minutes, I'm gonna be super pissed off. […] You tell people what they want before they want it and then they've decided that they've always wanted it.“

[11:00] “If you talk to the managers, the people that work at these warehouses, their case is that GoPuff does not have a very well run supply chain. […] The idea of ordering stuff at scale, distributing it to warehouses over the country is just a relatively new skill set to a tech company. And their awareness of how much stuff is in stock, how much stuff is on the shelves, just isn't that sophisticated. […] It's even less issues around inventory, than it's issues around places to put it. […] They just physically don't have the space inside their warehouses to put this stuff.”

[16:33] “You do see that the mentality that is encouraged by the investors is to grow as quickly as possible. And you can figure out profit down the road.”

[17:35] “GoPuff has this program internally, it's called Never out of Stock. And it ensures that for customers, if they're looking through the app for stuff, certain items like eggs, bacon and milk will always be available. […] Because the supply chain is so unreliable, they do run out of stuff, or they fear they may run out of it if they don't get a shipment coming in soon enough. And so to avoid having any out of stock items, they basically send their employees to the grocery store or with Instacart they get Instacart workers to go shop at the grocery stores and deliver the stuff to them. And they charge the corporate credit cards in order to get it moving to an extent that they max out their corporate credit cards fairly regularly.”

[19:04] “You have different tiers, all of which individually are things that you've seen tech companies do before. There's obviously gig worker companies all over the place. But then you have the retail level of it, which are these warehouses, the micro fulfillment centers […]. And you've got to get all these sides to work in harmony for this company to work. And if anyone isn't up to snuff, like if the retail is in chaos, because their supply chain isn't working well, if the technology isn't very good and can't dispatch drivers accurately or efficiently, or if they're issues with the gig drivers, if they're not paying them well enough, or they can't hire enough or it's too expensive to hire them because they all are working for DoorDash […] or Uber, then the kind of fine alchemy that needs to take place for this company to work gets completely thrown out of whack and you have all kinds of problems.”

Rating: 🚀🚀🚀🚀

🎙️ Full Episode: Apple | Spotify | Google
🕰️ 37 min | 🗓️ 03/14/2022
✅ Time saved: 35 min

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