Gopuff boss Rafael Ilishayev addresses rapid delivery critics
Gopuff Co-founder and Co-CEO Rafael Ilishayev has taken to LinkedIn to defend his company’s business model.
Rapid delivery firms flourished during the Covid-19 outbreak as restrictions and lockdowns forced many physical locations to close.
But since then, growth has dried up, and businesses in the space have begun to cut jobs and pull back from new markets.
A recent article by The Information claimed that Gopuff had shelved business initiatives, lost top executives, and lots of cash.
In a LinkedIn post, Ilishayev said: “Since Yakir Gola and I started Gopuff nearly nine years ago, we’ve come across scepticism on the space and business model - and I understand why. So here is my point of view on the industry and why we believe in it as much today as we did nine years ago.”
He continued: “Often, we have investors, analysts and the media asking us: why do people need ice cream in 15 minutes? Truth is - they don’t. Nobody needs ice cream in 15 minutes. Our business is far beyond that - it’s about serving the changing trend in commerce.”
Ilishayev argued that we have become a culture of “when I want it.”
“Consumers have been trained that they don’t have to cater to hunting for taxis, store hours or broadcast scheduling - they can do everything they want on their own time,” he wrote.
“Similarly - people use Gopuff not because they need ice cream in 15 minutes, but because it allows them to control their time and spend it with the people and things they love instead of going to the store. The tides of commerce are changing.”
Possibly so, but, ultimately, how can a business like this be profitable?
“People say, you can’t make money delivering a few items. To that end - they’re right. That is not a profitable business. It’s also not what we do.”
“What we have built has taken nearly a decade. During the first three years of our business, we steadily grew while maintaining profitability without a single venture capital dollar.”
“We used our free cash flow to expand into new markets, expand into alcohol and steadily grow our team both in our MFCs and in HQ.”
Around 2016, however, the market shifted to “rewarding growth” and Gopuff took on its first round of investment funding.
In the six years that followed, it used that cash to expand its assortment into pet, beauty, baby, grocery, electronics and more, went global through the acquisitions of Fancy and Dija, entered California through the acquisition of BevMo! and became an online retailer of alcohol, launched its Ads business and expanded within the US to cover ~25% of the population.
Ilishayev stated: “Combining our growth with our understanding of how to drive free cash flow, we can drive profitability across our entire model.”
“The reason the instant commerce category has been questioned is because no other player has figured this out yet. The category is being judged by newcomers who didn’t nail their business model before scaling, leading to high burn businesses that are now in trouble.”
He concluded: “Gopuff continues to be in a category of one. And with that, we plan to continue to revolutionise commerce…..far beyond 15 minute ice cream.”
