It has been an, erm, eventful, few days for the red hot rapid grocery delivery industry, with two major players, Buyk and Fridge No More, both shutting down operations.

On the surface, the apparent reason is that both companies have Russian founders, and the events in Ukraine have resulted in them losing access to capital due to sanctions.

But there is more to the story, observes Brittain Ladd, a former Amazon exec and supply chain consultant.

In a LinkedIn post, he said: “I spent Saturday, 5th March, and several days thereafter, corresponding with the CEO of Buyk, James Walker, and an investor, Stefan Schimenes, that I'm currently working with on a new parcel delivery model, to see if there wasn't some way to provide James with funding to save Buyk. James was in need of $20 million immediately.”

THE RUSSIA CONNECTION - WHY BUYK AND FRIDGE NO MORE WENT OUT OF BUSINESS

It's been a busy week in the rapid grocery delivery (RGD) industry. Two RGD companies, Buyk and Fridge No More, both shut down operations. On the surface, th…https://t.co/XSX6RZH2Tq https://t.co/dwn4txOcQ2
— Brittain Ladd (@Brittain_Ladd) March 11, 2022

According to Ladd, Walker was presented with two options.

1. Receive $5 million to $10 million to cover operating costs and prepare Buyk's dark stores to receive parcel packages. The firm’s network of couriers would be leveraged to begin delivering parcel packages within about 30 days.

2. In exchange for 50% of the company, receive additional funding, and eventually return to operating as a rapid grocery delivery company.

Ladd says that he encouraged Walker to engage with Grubhub and find a way to cut a deal that would result in immediate funding from the latter, with Grubhub acquiring the company.

“Unfortunately, none of the options or recommendations presented to James have become a reality. James has been a great CEO at Buyk,” Ladd said in his LinkedIn post.

Grubhub has made a mistake in not pursuing Buyk, Ladd added.

He wrote: “Founders Rodion Shishkov and Slava Bocharov are two of the most qualified and capable individuals in the rapid grocery delivery industry, and they would prove valuable to helping Grubhub improve their operations and company. I continue to respect and like Rodion and Slava, and I wish both men the best.”

“I received a note from James as I was writing this post stating that Buyk has raised enough capital to pay the salaries of all of the associates, but the company is ceasing operations. I still anticipate the Buyk brand returns.”

As for Fridge No More, it “was always going to go out of business in my opinion. The company had a capital intensive business model and poor unit economics.”

“It would deliver one apple to a customer or use five couriers to deliver a large order to a single customer. The lack of parameters related to order size and delivery profitability, killed the company.”

Ladd concluded: “Fridge No More lost a massive amount of money on every order they fulfilled.”

“The model was flawed, and the unit economics were never going to improve. It couldn’t raise more capital and the company was forced to shut down.”

Sign up for our free retail technology newsletter.

Featured