Why the Delivery Startups Won’t Fail Like Kozmo

Apr 30, 2013 | Mobile & Web

Kozmo.com circa 2001

If you’ve been paying attention to the ecommerce scene lately, you’ve probably heard about movements from startups and big retailers alike to get in the game of physical local delivery. Here are just a few examples:

So are they all committing the sins of  Kozmo.com from the 2001 vintage?  I think not.

First, let me note a company that has very little to do with startup or tech, but has done a lot to prove the delivery model economics: Jimmy John’s Gourmet Sandwiches. Our office used to be above a Jimmy John’s store in the SoDo district of Seattle, and we’ve eaten a lot of their sandwiches. While they are known for being “freaky fast,” and I’m very much impressed with the speed of their sandwich assembly (I can get up from my desk, go downstairs, order a sandwich, and get said sandwich and be back at my desk in an average of 2.5 minutes), it’s their delivery service that I found most enlightening. If you think Domino’s Pizza and their 30 mins promise was good, you should know that Jimmy John’s has them beat, hands down. Jimmy John’s uses a fleet of young bicycle messengers, much like Kozmo did, to do the delivery in a timely manner. But I can testify that Jimmy John’s has perfected the management of their team of messengers, and are utilizing the messengers both efficiently in terms of delivery time (also freaky quick), as well as using the messenger resource in a high ROI way.  I’ve seen the whole process of order-taking, sandwich making and the messenger racing out the door to delivery all in 5-minutes!

Second, I think unlike the early 2000’s when the economy was booming and employment was tight, today’s slow economy means there is no shortage of young people willing to take on any employment that may be more of a McJob than a life long career path. So people resources are plentiful, and there’s already a management handbook somewhere that shows  you how to manage these resources.

So what’s happening in the delivery world is that folks are seeing the success of businesses such as Jimmy John’s, or the errand services such as TaskRabbit, and realize that they have an economic and operational model that can be copied or adapted to their own business. For example, the Wal-Mart exploration mentioned above is a direct adaptation of the Zaarly/TaskRabbit model to their retail operation.

Which is a good thing, because we certainly can use more job creation as well as less errand running.




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