Residents of select New York City neighborhoods may feel like they are dreaming, but 15-minute grocery delivery has arrived. JOKR, which has already launched in Mexico City, Lima, Peru, and Sao Paulo, makes its official debut Thursday in the New York boroughs of Manhattan, Brooklyn and Queens.
Founded by German entrepreneur Ralf Wenzel, JOKR utilizes local warehouse facilities to offer a full selection of products with a 15-minute delivery promise on items ordered through its app. Wenzel is known for working with European delivery giant Delivery Hero. He has also worked for Softbank, which is one of the investors in JOKR along with HV Capital and Tiger Global.
Zach Dennett, who worked with Walmart (NYSE: WMT) on both its dry grocery goods and e-commerce business, is leading JOKR’s U.S. efforts. He said the company expects to expand quickly in the U.S. and be operational in at least five additional cities before the end of 2021.
Dennett told Modern Shipper the key to JOKR’s success is its smaller warehouse facilities, select quantities of items and a team of employee delivery riders that will utilize electric bikes.
“We are going to be at scale and the advantage of this is we are going to be covering the entire city … so we’ll be running a supply chain vertically as well,” Dennett said. “The microfulfillment centers will be the last stop in our supply chain.”
The JOKR network is designed to bring goods into a larger warehouse before shuttling those items to local neighborhood locations with sizes in the 2,500- to 3,000-square-feet ranges. This allows the company to hold down rental costs and allows for a quicker flow of product. Each local fulfilment center will be replenished multiple times a day as needed.
Unlike a traditional grocery store that may stock multiple brands of a given product, JOKR will offer “a mix of national items you want as well as some of the local flair and local items that get you quite excited,” Dennett said. ALDI has done this successfully in the grocery space, offering a full range of products but at lower prices in smaller footprint retail locations. JOKR is taking that concept a step further by adding final-mile delivery as well. JOKR locations will not serve as retail locations though, offering only delivery.
“We are able to get the big CPGs (consumer packaged goods companies) that want to ship in a full truckload to send in a full truckload [to the larger warehouse] because we will have the volume,” he said, noting that JOKR expects to be profitable even without charging delivery fees.
“When you look at the legacy grocery stores, they have huge warehouses and huge stores,” Dennett noted, but with only about 2,000 to 2,500 item SKUs, JOKR doesn’t require the same investment in space, saving money that can be diverted to the free delivery model. He added that products are priced competitively with local grocery stores.
All the items are chosen based on hyper-localized and neighborhood-specific data that allows JOKR to meet neighborhood demands. In addition, limiting brands increases volumes for those brands, leading to potentially lower prices.
“From the customer standpoint, the value proposition is pretty [great],” Dennett said. “The team sees a huge opportunity to change retail.”
The JOKR app handles all aspects of the transaction – from ordering to payment – for the consumer.
The other attribute Dennett believes will separate JOKR is the delivery personnel. Most JOKR delivery riders are company employees, complete with company uniforms (including clothing designed for various weather conditions) and company-provided electric bikes.
“We have an employee fleet of riders. We consider that a competitive advantage … as well as the right thing to do for these people,” Dennett said, adding that by controlling its delivery network, JOKR is able to “make sure we give the customer a nice experience.”
The company will contract with third-party delivery providers to handle surge capacity needs.
The riders will have the chance to advance in the company as well.
“We consider them very much part of the team and we [want to] have a career path for them,” Dennett said. “One of the things we’ve discovered with the riders, and we’ve been talking to a lot of them, is they don’t want to be just a rider [they want a career path].”
Dennett said JOKR sees a large opportunity for the service in the U.S. and not just in the nation’s largest cities. Density is important to building a successful business model, he noted, and there are many smaller communities where there are pockets of people that creates the necessary density for profitability.