Fast Grocery Delivery Can’t Make Fast Money

Fast Grocery Delivery Can’t Make Fast Money

In business, one plus one should equal three. So why are venture capitalists pouring billions into rapid-food-delivery startups that yield negative numbers?

Like so many investors these days, they are after the pot of gold at the end of the rainbow.

DoorDash

pegs the addressable market in convenience at $200 billion to $250 billion and grocery at $800 billion to $1 trillion, according to a December report by Gordon Haskett. Buyk, a rapid-grocery-delivery startup, has said its addressable market is $500 billion in just the U.S.



Coresight Research estimates the quick-commerce space generated roughly $20 billion to $25 billion in U.S. retail sales last year, including services from companies like DoorDash, Instacart and Uber Eats. Gopuff, the largest rapid-delivery startup, was valued at $15 billion as of July, and is said to be considering a public offering as early as this year. Investors are betting the convenience of having goods delivered during the pandemic will stick even after we settle into a new normal. The question is whether the economics necessary to support the promise of rapid delivery will ever bring sustainable returns.





The history of rapid delivery has itself been fast and furious, accelerated by the pandemic. First we