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For example, Instacart offers groceries through merchants such as Kroger and Costco, but the platform essentially has no control over their assortment, pricing and in-stock capabilities. Meanwhile, the delivery experience is predicated on securing real-time delivery drivers (who are usually independent contractors) and relying on their individual ability of navigating to varying merchant locations, pick-up and deliver customers’ orders within the time promised on the app - all while maintaining high product quality. Lack of control in these critical aspects creates a major challenge for these platforms in the form of varying customer experience from order to order. So, what have been some alternative models to solve this challenge? Gopuff, founded in 2013, takes a non-traditional approach to delivery: The company leverages a vertically integrated supply-chain and fulfillment operations.
Gopuff has its own network of micro-fulfillment centers (MFCs), buildings where it houses its owned product assortment. This approach allows it to strategically place MFCs closer to its customers while in turn creating the ability to offer ultrafast deliveries. The world of e-commerce was already getting acclimated to fast shipping with players like Amazon, but 30 minute deliveries was a whole different ball game. Control over its MFC operations (stowing, picking, packing), along with autonomy over assortment and pricing, gives Gopuff a distinct advantage over competitors that predominantly rely on the asset-lite model. How did this model perform? Launched in 2013, Gopuff offers a curated list of SKUs across snacks, drinks, alcoholic beverages and more, and has seen steady growth. 2019 was a breakthrough year for the company as it secured $750M funding from SoftBank to
31 The Acumen
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