A Peek Behind The Curtain: Gopuff’s Unique Business Model
The Power of Vertically Integrated Instant Commerce & What Sets Us Apart
Since Gopuff was founded just eight years ago, we have established the Instant Needs category and rapidly, consistently, and sustainably scaled the business.
Today, Gopuff has hundreds of micro-fulfillment centers, Liquor Barn and BevMo! stores, thousands of employees, and a diverse network of delivery partners who bring products to consumers’ doors across the US, UK, and Europe within minutes of orders being placed. The business has experienced at least triple-digit order and sales growth in each year of its existence, and in 2020 alone, we served more customers than we have in all previous years combined.
The key to our growth is our vertically integrated model and hyper-local fulfillment system. Here’s a deeper look into what makes this model so powerful.
The Importance of Owning and Controlling Inventory
Owning the inventory means Gopuff makes its margin on product category sales. This seemingly simple but crucial differentiator is what powers our unit economics and enables low fees for customers. Because these margins are built into the business model, there’s no need to tack on extra fees to earn a profit. And, as the business scales, the economics continue to improve: The increase in sustainable demand gives us the buying power to win cost savings that can be passed on to customers.
With control over inventory, access to real-time order information, and direct relationships with suppliers, we also have the flexibility to quickly update and localize our assortments to meet changing customer needs. As an example of this, we quickly added COVID-19 test kits to the platform nationwide in response to the pandemic.
Finally, ownership of inventory means Gopuff knows what’s in stock in every micro-fulfillment center right now. This reduces instances of out-of-stocks after an order is submitted, or the need for replacement items, providing a more seamless customer experience.
Why Micro-Fulfillment Centers and Vertical Integration Matter
We carefully select and lease our real estate, then optimize the setup for speed and employee experience. We ensure each micro-fulfillment center has the right amount of physical space to stock roughly 3,000 items and that the location enables speedy delivery to customers. It’s in these micro-fulfillment centers that our own trained employees pick and pack orders. Our team knows exactly where to find each item and our centers are laid out to maximize efficiency and flow.
This differentiated model also enables us to add new verticals that we own and operate. For example, we recently introduced Gopuff Kitchen, a new offering that brings made-to-order hot and fresh food to customers alongside everyday essentials, made possible through our model that features a network of hundreds of our own micro-fulfillment centers, and now, kitchens. This addition represents a new revenue stream for the business, further strengthens the economics of our approach, and enhances the customer experience.
Local Community Ties
With micro-fulfillment centers, employees, delivery partners, and customers in every market we serve, Gopuff is part of the local community and economy. We are dedicated to creating quality, local jobs, partnering with beloved local brands, and investing in our communities.
Thanks to our system-wide coordination of technology and our local teams, we’re able to pick, pack and send out orders in under 90 seconds. The people who make this magic happen inside our micro-fulfillment centers are local full- and part-time employees with access to benefits. Gopuff typically hires about a dozen local employees when opening each new micro-fulfillment center. These openings offer room for personal and professional development and we are inspired by the employees who continue to excel and move from operations associate to site lead to regional general manager and beyond.
Gopuff offers multiple ways to earn with our business. If someone wants to be their own boss and work on their own schedule, they can do so as a delivery partner with Gopuff. For people seeking a more predictable schedule with benefits, they can apply to join our micro-fulfillment center teams or corporate teams as an employee. We know that people value this kind of choice.
As we look to further connect with and support the communities where our customers, employees and delivery partners work and live, we are proud to partner with local brands in addition to established CPGs like Unilever, Mars, Pepsi, and GSK. In fact, we’ve brought hundreds of local brands and more than 1,100 local products to the platform in the last 1.5 years alone.
Eight years after creating the Instant Needs category, Gopuff continues to lead innovation in the space. With a steady focus on our mission to become the world’s go-to solution for immediate everyday needs, we will continue to scale into new countries and invest in our communities and people, add new verticals, cultivate new revenue streams, and launch unique partnerships that improve the Gopuff customer experience.
- micro-fulfillment center