determine what products to order and from where, but also whether to flow and hold the inventory in a regional DC or allocate directly to individual MFCs. The replenishment decisions subsequently power the forecasting layer, which signals the demand flow to the MFCs to prepare for inbound and inventory stowing every day. It also signals an hour-level demand forecast for outbound operations in order to more efficiently plan MFC labor capacity for picking, packing and planning for delivery partners to deliver orders to customers. In 2021, Gopuff acquired rideOS, a company focused on last-mile routing optimization to help scale delivery operations. The routing algorithms sync with MFC operations to determine when and how to dispatch customer orders. Dispatch decisions by the systems are made in real-time based on the order characteristics (e.g.-fresh vs non-perishable), when the orders are placed, customer proximity and minimizing the total delivery time. This critical innovation allowed Gopuff to economically grow its operations while sticking to the business’ core value proposition of providing rapid delivery.
The significant investment in operations, technology and infrastructure paid off with reported billions of dollars in sales. The company believes that placing inventory closer to the customers and offering them a seamless experience based on a vertically integrated model is the winning strategy in the long-term. While Gopuff believes that it has a differentiated and sustainable business model in the long- term, macroeconomic conditions along with the lack of consolidated net income profitability has significantly challenged the strategy of all delivery companies, regardless of their business model. It’s clear that, over time, e-commerce will continue to grow even if that rate of growth slowed in 2022. We can also expect consumer adoption of delivery apps to grow. The question remains which model will reign supreme over time and what will help last mile delivery firms navigate through these significantly challenging financial conditions? We do know, however, that convenience, reliability and selection will remain consumer priorities in the foreseeable future; investing in supply chain, infrastructure and technology will be key parts of success for these companies.
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33 The Acumen
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