Source: Gopuff
As GoPuff heads toward an anticipated IPO, the quick commerce company is launching its own line of private label products — a move more in line with Amazon‘s e-commerce business model than Doordash‘s or Uber’s delivery platform.
The lineup will kick off with bottled water under the “Basically” brand, followed by other household items like cleaning products, batteries, paper products and food storage. The company will also add a line of snacks in the coming weeks. In total, Gopuff plans to launch four private label brands and more than 100 products this year.
The private label industry was a $159 billion market in 2020, according to the Private Label Manufacturer Association, and has attracted the likes of traditional and e-commerce retailers like Target and Amazon.
Gopuff’s private label expansion is the start-up’s latest effort to stand apart from other convenience delivery companies. Gopuff owns, operates and stocks its own micro-fulfillment centers with full-time employees, whereas other companies connect customers, drivers and retailers on a platform. According to Gopuff, 30% of Americans are within one mile and a half of a Gopuff fulfillment center.
Gopuff also operates 70 kitchens which prepare food from the company’s own recipes as well as its restaurant partners. Earlier this month, Instacart announced prepared food from grocery stores to better compete with meal delivery companies. Gopuff has raised more than $3.5 billion and it was last valued at $15 billion in 2021. It is currently in the process of raising $1.5 billion in convertible debt, according to a person familiar with the matter who declined to be named discussing confidential information.
Competition in convenience delivery has intensified over the past years, as DoorDash, Uber and Instacart expand their convenience offerings. Doordash launched its own version of micro-fulfillment centers nationally called DashMart in 2020. According to research data firm YipitData, Doordash leads the convenience delivery market share with more than 45%, Gopuff has 23%, while Instacart and Uber have 16% and 15%, respectively.
Investors in the private markets are eager to invest in quick commerce. CoreSight Research estimates investors have poured $5.9 billion to date into this space. But despite the influx of cash from private investors, quick commerce does face challenges, including intense competition, high cash burn and hyper-localization of fulfillment centers, all of which have yet to be tested by public markets.
