Gopuff is the Go-To When You Need Q-Tips and a Six Pack of Beer

Yes indeed, we all need Q-Tips and beer ASAP. And Gopuff, a Philly start-up is just the company to bring these must-have items to our homes. Prior to reading about Gopuff’s most recent funding news, we were only aware of the company because of a direct mail piece we recently received. The piece announced that Gopuff has opened a new market. In this case, Marin County, CA. 

Gopuff offers “daily essentials delivered in minutes”.  Of course, everyone defines “essentials” differently. For some, it’s Q-Tips. For others, it’s beer. 

The company is reportedly in the process of raising as much as $1 billion on a pre-money valuation of $14 billion. This comes on the heels of a $1.15 billion March 2021 raise on an $8.9 billion valuation. This may seem like a head-scratcher. But there is no shortage of money chasing the latest local product delivery opportunity. 

Seven years ago, the company’s two co-founders were frustrated with their efforts to stock up their college house. They figured they’d try and solve that challenge for the thousands of students at Drexel University in Philadelphia. Founders Rafael Illshayev and Yakir Gola got started by delivering stuff like cold medicine, beer, and toilet paper out of their mini-van. You know, the essentials.

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The company’s first raise, totaling $3.25 million, came in late 2015. Six months later Gopuff raised an $8.25 million Series A round. The company has since put some $2.4 billion to work growing the company. Now with 400 plus mico-fulfillment centers, plus 650 BevMo liquor stores and 7,000 employees, the company is racing as fast as it can to lead the local delivery space. 

Buying Uo BevMo

Last November, Gopuff used $350 million to buy up 650 local BevMo locations. They’ll likely use some of their pending raise to scoop up additional delivery companies that don’t have the ambition or aspiration to scale up as fast as Gopuff can. That’s clearly Gopuff’s preference. Charging just $1.95 per delivery, the company suggests you can order thousands of everyday items and have them delivered in hours. 

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It’s a pretty interesting play and clearly one that is gaining momentum. The company is pushing to drive $1 billion in topline revenue. Of course, the pandemic provided a considerable boost to the model. And with some Delta variant anxiety emerging, the company could be in line for another demand boost.

In many ways, the small incidental items may be more interesting than groceries. Many of us still like to smell the cantaloupe or test the softness of the peach. And for that reason, we continue to go to the grocery store. Incidentals don’t carry the same personal touch requirements. Instead, the appeal comes from avoiding a trip to the local CV, Walgreens, or BevMo. Not a bad idea. 

All Kinds of Edibles

We think there’s a very strong possibility that down the road Gopuff will pursue cannabis delivery as well. With the laws relaxing in state after state, Gopuff would seem well-positioned to be the deliverer of choice for edibles or pre-rolled joints. Of course, the kicker is that now you can get your high delivered along with the necessary chips or ice cream or cookies to handle the inevitable munchies. 

Local delivery is a massive business with tons of scale opportunities. And there are already lots of other players trying to consolidate this business. In a space that requires such massive scale, they’ll be plenty of opportunities for Gopuff to deploy its pending capital infusion to accelerate growth through acquisition. No doubt there’ll be some losers who can’t charge $1.95 and make even a nickel.

Time will tell. But if you’re still scratching your head, have Gopuff deliver a bottle of Head and Shoulders. The experience might address your curiosity about how Gopuff works. And it’ll help with that itchy head too.

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