Scott Galloway talks last last mile delivery and the value of time
Scott Galloway, a professor of marketing at the New York University Stern School of Business, and a public speaker, author, podcast host, and entrepreneur, has been giving his thoughts on the booming rapid delivery space.
Historically, the last mile has been rhetorical, he observes in an online post. The nearest UPS hub or DHL warehouse might be 10 or 20 miles.
Startups like Jokr, Buyk, Gorillas, and Fridge No More, however, have dispersed their distribution networks to within an actual mile, via the use of dark stores. In doing so, they’ve created the last last mile.
“These firms were all birthed during the pandemic and may be points in a line of the prosperity often registered post-crisis. New York City has become a petri dish for dozens of budding delivery startups,” Galloway writes.
“They’re recrafting the supply chain with hundreds of millions in venture capital to achieve (roughly) the same thing: Get you your shit fast, really fast.”
VCs recognise the opportunity. Gorillas has raised more than $300 million since its founding last year and is valued at over $1 billion. Jokr, which started delivering groceries eight months ago, has raised $350 million at a $1.2 billion valuation. They’re two of the fastest zero-to-unicorn firms in history.
Galloway comments: “It’s a global phenomenon. Spain’s Glovo raised $528 million in April ($2 billion valuation). Turkey’s Getir raised $550 million in June ($7.5 billion valuation). America’s Gopuff raised $1 billion in July ($15 billion valuation). Prague has Rohlik, London has Zapp, Moscow has Samokat … the list goes on. In the first quarter of this year alone, instant-delivery startups raised nearly $8 billion - more than in all of 2020.”
Yet delivering at these speeds is similar to supersonic travel: expensive. It means operating hundreds of distribution hubs and hiring thousands of full-time couriers.
To get the reliability they require, these companies put their delivery staff on salary, in contrast to Uber’s gig economy model. That’s on top of enormous marketing budgets.
“Buyk will spend a fifth of its new capital on marketing this year. Jokr lost $13.6 million on just $1.7 million in revenue. You read that right - it had losses equal to eight times its revenue,” Galloway says.
There may be trouble ahead
Meanwhile, some instant delivery companies say they’re competing with supermarkets.
“Jokr’s co-founder says he’s coming after Amazon. That might sound crazy, but when your valuation is 706 times your revenue … you need to articulate a big vision and assure investors you are hunting elephants,” Galloway says.
“The market’s growing, and so are our expectations. In 2015 most consumers defined fast shipping as three or four days. The next year, it was two days. If these companies normalise 15 minute delivery, we’ll likely develop a taste for last last mile flesh. And that could reshape the $1 trillion grocery market.”
That might be enough to scare the delivery behemoths into action. In October, Uber launched a 15-minute grocery-delivery programme in Paris. Last month, DoorDash acquired Finland’s ultrafast service Wolt for $8 billion. Instacart is reportedly launching its own trial programme, as is Amazon.
Galloway states: “This is part of a larger trend that’s bigger than just physical delivery.”
“Everything is getting delivered. Streaming brought the box office into the home; roughly half of pre-pandemic moviegoers aren’t buying tickets. Telehealth brought doctors and therapists into the home; telehealth claims are up 37 times from before the pandemic. Yet more evidence of the Great Dispersion.”
“Over the past two decades, the dispersion of retail from shelves to porch fronts has created and reallocated trillions in value.”
“A similar tectonic shift is likely to occur in grocery and restaurants at the hands of ghost kitchens, ride hailing companies, and well capitalised last last mile firms. The question is, will new giants be birthed or will the existing behemoths grow new heads?”
The value of time
Something is lost in the rush towards the instant distribution of everything, Galloway argues.
“There’s something unmistakably human about a doctor placing a hand on your shoulder when they break good or bad news, or a therapist looking you directly in the eye when you start telling them what’s on your mind. We’re losing these moments by the day, minute by minute.”
He adds: “Yet something is gained, as well. Innovation in the last mile has likely created more shareholder value in the past two decades (e.g., Apple Stores, Amazon Prime, streaming) than any innovation in any era.”
“Why? Because they help us make the most of our time. The same is possible in our personal lives. We, too, would benefit from an investment in going the last mile. Do we get to the love and admiration we feel?”
“Do we tell our spouse we appreciate the life we’ve built together? Do we show our kids, every day, that they are wonderful? Do we practice citizenship, every day, in ways that supersede partisanship or empty recognition from media algorithms? Most of us feel all these things, but do we say at the same rate what we think and feel?”
Galloway concludes: “The only real asset is time. And at the end of this sentence you’ll be closer to having … less. The unlock in many of our own lives is the last last mile.”
