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Why talk about delivery services? On the days that I go into office I am reminded of the late 1990s and 2000 with online services marketing, in particular delivery services. The Super Bowl advertising had a plethora of online businesses, Coinbase’s QRcode ad will likely be the Pets.com sock puppet of 2022. (The reason why online businesses are on TV is that it represents the lowest cost per reach for effective brand awareness of any medium, including digital channels).
We also saw a resurgence in growth hacking, trying to get consumers to go from ‘I’ve never heard of you’ to app download as fast as possible. Which usually means thrusting a leaflet with a QRcode into my hand as I leave the tube station on my way home most week day evenings. A lot of these apps are delivery services.
Here’s a list of the on-demand delivery services that have been promoted to me so far:
- Getir – I had a leaflet from Getir one time at the the tube station. It’s purple and yellow brand colours caught my attention because it immediately reminded me of vintage Yahoo! I threw the leaflet in the recycling and paid no more attention until ‘Taxi-gate‘. The company alleged that their agency partner didn’t buy enough taxi advertising for their brand and instead bought advertising for other delivery services. I didn’t realise until I started researching this post that Getir was founded in 2015 by a team in Turkey.
- Uber Eats – Uber Eats had already established itself as a restaurant delivery service to rival Deliveroo and Just Eats. It has also pivoted into grocery deliveries over the past couple of years in my neighbourhood. I would get emails and mailouts from my credit card company with a discount code for use the first time I grocery shopped on Uber Eats.
- Deliveroo – Like Uber Eats Deliveroo had already established itself as a restaurant delivery service and expanded into grocery delivery services as well. I had them actively promoted to me via email, as I had used Deliveroo in the past
- Ocado – This spring Ocado started promoting Ocado Zoom to me promising deliveries of a limited amount of products within two hours of order
- Gorillas – Gorillas is a Getir analogue that was founded in Germany and launched in 2020. I got a number of leaflets from them, they were the most frequent leaflet that I received on my way out of the tube station. The logo was distinctive, but that’s all I could remember about it.
Kozmo.com could be considered to be the American dot com ancestor of online delivery services. Kozmo.com was the brainchild of two investment bankers in the US. It was launched in 1998 serving areas of New York. In July 2000, at the height of its business, the company operated in selected areas of Atlanta, Chicago, Houston, San Francisco, Seattle, Portland, Boston, New York, Washington, D.C., San Diego and Los Angeles. It was popular with young professionals and college students, in the areas that it served. But despite the delivery service’s careful choice of markets served, it didn’t survive the dot.com bust going under in April 2001. While the business had filed for an IPO, it never actually went public.
The UK is likely to be heading into a recession that will be harder and longer than our near peers. There is an inflation and commodity pricing storm that has caused a cost of living crisis currently dominating the political agenda and rising interest rates.
We know from businesses like Uber and Kozmo.com that delivery services are a low margin business at the best of times. We could be staring into another online business bust. This time it will be driven by a wider economic crisis rather than the precipitating incident, but the effect will be the same. Retail investors including pension fund savers will suffer.
It feels that we forget history and are doomed to repeat it. Yes smartphones made ordering more convenient than dial-up, but it still didn’t change the essential business model for these delivery services. These businesses relied on cheap money to burn through in the hope of eventually getting profitable. In this respect it reminds me of the dot.com startups that I used to meet at the start of my agency life who talked about not worrying too much about profitability, but about trying to move at ‘internet speed‘. We’ve already seen this kind of thinking at WeWork and other Softbank businesses.
History is destiny; if we fail to learn the appropriate lessons from it.