The Speedy Downfall of Rapid Delivery Startups


It took only eight months for Jokr, the superfast delivery startup, to become a unicorn, and just six months more for its strategy to start coming apart. Jokr had plastered New York City with splashy ads promising to deliver groceries within 15 minutes—For free! With no minimum order!—and raised a total of $430 million in venture capital to continue blitzscaling across cities around the world. From Boston to Bogotá, its turquoise-clad couriers whizzed around on scooters, carrying pints of ice cream and jars of pasta sauce.

Jokr was also bleeding money. In the first half of 2021, the startup took in $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 touting plans to build 100 microwarehouses in New York City alone—Jokr announced that it was pulling out of the United States, and laid off 50 employees. The company still operates in cities like São Paolo, Mexico City, and Bogotá.

Other fast-delivery startups have also become fast-shrinking. In May, Gorillas and Getir—two of the largest companies in the sector—laid off thousands of employees and retreated from prime delivery cities around Europe. Gopuff, valued at $15 billion in 2021, vaporized 76 of its 500 distribution centers this summer. Those are the lucky ones. Others, like Buyk, Fridge No More, and Zero Grocery, have already gone bust, disappearing just as rapidly as they arrived.

The downfall of superfast delivery reflects the sobering mood of 2022. In the last two years venture capitalists sunk nearly $8 billion into the six rapid delivery startups competing in New York City, encouraging fast growth and a land grab. Now, investors are increasingly demanding profitability. The sudden reversal strikes Thomas Eisenmann, a professor at Harvard Business School, as reminiscent of the 2000 dotcom crash, when buzzy startups like Kozmo—which promised one-hour delivery of groceries and DVDs—folded just a few years after collecting millions from VCs. “With these new businesses, what’s changed?,” he says. “It didn’t work then and it’s not working now.”

Eisenmann teaches a class on startup mistakes, and last year wrote a treatise on the topic titled Why Startups Fail. He says that rapid delivery companies are vulnerable to a common pattern of failure, where early gains and growth aren’t sustainable. The first wave of customer interest comes easy and free, because people are willing to try out a new service with an incredible promise. But in order to keep those customers and earn new ones, a startup has to clarify its value proposition. For rapid delivery, that means finding people who regularly need things like BandAids or a banana delivered urgently—and are willing to pay a premium for it—rather than walking to the bodega to get it themselves.

When new customer growth starts to dwindle, Eisenmann says, “you start having to offer $20 of free groceries on every order to get new customers.” From there, the economics can rapidly deteriorate. A newly cloudy economic outlook and recent high inflation make it a bad time to try and persuade people to adopt a new premium service.

Quoted from Various Sources

Published for: 533Soft