Food Rocket, a new mobile app from San Francisco, promises to deliver groceries in certain areas within 10 to 15 minutes. It’s the latest in a line of similar apps to pop up in the US and abroad.
Why it matters: Startups and VCs are far from finished with on-demand services.
How it works: On Wednesday I ordered a few items to try out Food Rocket, which also doesn’t promise delivery charges or minimum order quantities, and announces several time-limited discounts (I even ended up adding a few extra items because my order was initially under $ 2 ). It arrived seven minutes later.
- The company, which raised $ 2 million in April – from AltaIR Capital, Baring Vostok Fund, and the Angelsdeck group of Business Angels including Philipp Bashyan – currently stores its inventory in three locations in San Francisco that are strategically located so that it can hit its 15 minute mark delivery maximum. According to founders Vitaly Alexandrov and Jerrin James, the company has already signed leases to expand into Los Angeles and Chicago.
- Food Rocket’s delivery workers are full-time employees of the company, earn guaranteed income, and ride e-bikes (presumably so as not to get too tired of the hills of the city).
The big picture: A number of these express delivery services are available around the world and in densely populated US cities such as New York.
- The idea is not too dissimilar to so-called ghost kitchens, another growing trend in recent years in which restaurateurs prepare meals that are delivered to their customers without having sales areas for the guests.
Yes but: It’s unclear if these new breed of on-demand delivery startups have margins better than their predecessors.
- Alexandrov admits that an order for a single avocado is unprofitable for the company. And the current discounts and lack of delivery fees are likely to change as the company gets established.
- So it’s a game of volume and scale – the math will only work if and when the company reaches a level of efficiency.
- Of course, Alexandrov assures that it is possible, pointing out that similar companies have been able to make profits in other countries. The company also plans to eventually generate revenue from product ads on its app, he adds.