Startups aim for a piece of the grocery market by delivery orders in about 20 minutes
A MARTINEZ, HOST:
Groceries are a trillion-dollar market, and right now a whole bunch of startups are hungry for a piece of it. They're promising something new - delivering your groceries within 10 or 20 minutes. Planet Money's Erika Beras set out to see how those companies do it.
ERIKA BERAS, BYLINE: My boss Alex Goldmark lives in Lower Manhattan, and for the last few months, he's been inundated with ads for ultra-fast grocery delivery. So a couple of weeks ago, he tried it out.
MARTINEZ: All right, let's get some groceries. Let's see how fast they can come. Bum, bum, bum (ph).
BERAS: He bought broccoli, a couple bagels, black-seed smoked salmon, chickpeas, bubbly water. To deliver on their promise of speed, these grocery startups have built a whole new kind of store - no checkout lines, no shoppers. Instead, these stores are little warehouses hidden behind darkened storefronts in dense urban neighborhoods. They're called dark stores. Normally, you can't set foot inside, but the night Alex made his order, I did.
ADAM WACENSKE: Hi, Erika. I'm Adam.
UNIDENTIFIED PERSON: Adam.
BERAS: Adam Wacenske runs operations at Gorillas, the place Alex ordered from. Gorilla stores throw just about everything we know about grocery store design out the window. The aisles are very narrow to save space, and they're all one-way to avoid traffic jams, and the shelves are laid out totally differently, too.
WACENSKE: It helps in our picking accuracy. And so in the grocery store when you're looking at the shelves, you want to see all of the seltzer water together, whereas here we actually don't want to see that because, you know, it can lead to mistakes in picking. So we separate those things.
BERAS: They have to pick, pack and deliver orders in minutes. It's all about avoiding errors. So in a dark store, the spaghetti is never next to the linguine, and seemingly random combinations of things wind up on the same shelf.
WACENSKE: There's garbage bags. There's batteries. There's shot glasses. There's a tea towel. There's a gift bag, Reynolds Wrap and foil pans - you know, all of the sort of things that you might need for a party are on this shelf.
BERAS: It's all the things you need for a party, and they're all on one shelf because people order them together, which the store knows because they have data from the app. When Alex's order came to the store, Tyler White, the store manager, grabbed the cart pre-loaded with empty grocery bags.
TYLER WHITE: So we have LaCroix lemon here, so I'm going to go ahead and scan it. Excuse me, Ray. I am coming through, good sir.
BERAS: The bubbly water that my boss Alex added at the end of his order gets bagged first because its heaviest. Within three minutes, Tyler has picked 17 items, and a delivery person loads up Alex's order to take it to his door. In the last two years, venture capital firms have poured billions of dollars into transactions just like this one. And right now most of the companies are losing money. For every order they send out the door, they spend even more on advertising, rent, promo codes and labor. They're betting that once people experience superfast grocery delivery, they'll get hooked. And maybe they're right. Less than a week after Alex placed that first order, it was another cold, dreary day. He needed groceries. So he ordered again.
Erika Beras, NPR News.
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