Gauging the impact/demand of ultrafast grocery delivery options

Who really wants 10-minute grocery delivery? Most grocers do not, and most customers only want it occasionally. However, when these customers have an immediate need, it can be a lot better than a trip to the store – and “the convenience of immediacy” will accelerate these consumers’ use of online shopping for groceries.

Reaction to the May 30 opening of Gorillas in NYC will tell us more about the overall impact and/or demand for ultrafast delivery. Gorillas is a German on-demand grocery delivery service that promises 10-minute deliveries. They do this by operating micro-warehouses – small dark stores located in each of the neighborhoods they serve.

The Gorillas business model has two advantages that set it apart from most other on-demand delivery services.

• The efficiency of selecting orders in a space built for order assembly instead of the traditional store.
• The short delivery distances that result from locating the micro-warehouse right in the neighborhood it serves.

One more thing sets Gorillas apart: Its delivery team is not made up of gig workers; these are a mix of full- and part-time employees with benefits.

Considering all these advantages, it’s hard to imagine that other delivery services like Instacart can match this performance and still make money.

Gorillas isn’t the only ultrafast on-demand delivery service.  Others include:

• Fridge No More has been operating in NYC since late 2020 with a model like Gorillas. The founders of the 15-minute delivery say they are more of a grocery store than a convenience store, and they plan to expand across NYC with 30+ fulfillment centers.
• Getir , an early pioneer of ultrafast delivery, is headquartered in Turkey. It began operations in London and Amsterdam earlier this year and has announced plans to expand into Paris, Berlin and several U.S. cities using money from its most recent round of funding.

BMC POV

While ultrafast on-demand delivery services are likely to be available only in dense urban markets, it’s also likely that customers in these markets will use the service to avoid some trips to the store. As a result, “the convenience of immediacy” will accelerate these consumers’ use of online shopping for groceries.

Experience coming from other markets such as Turkey, where ultra-fast delivery of groceries is available, indicates the urban grocery retailers in the market will need to decide whether to offer their own ultrafast delivery or lose the business.

Ultrafast delivery won’t be easy to execute, but it does look feasible when the distribution hub is right in the neighborhood it serves.