The blows just keep coming for instant delivery.
Ultrafast delivery poster child Gopuff, which is valued at over $15 billion, plans to shut down or pull back on operations at 22 of its U.S. warehouses, two people familiar with the matter told Insider. The news comes during a week that has seen rival 15-minute delivery startups Gorillas and Getir make significant layoffs, with the latter cutting thousands of workers worldwide.
The unnamed sources confirmed that about half of the 22 facilities would be shutting down, while the rest are being “reassessed” and could follow suit. They added that the facilities in question are mainly low-volume warehouses and said the company would not be pulling out of any markets.
While the sources downplayed the scale of the shutdowns, the closures add to a worrying trend for the instant delivery giant. While Gopuff has grown its global warehouse footprint from 250 facilities a year ago to over 600 today, it also came out earlier this year that the company had iced plans to build new warehouses in 2022.
Then, in March, Gopuff contended with the resignations of several key executives and an ongoing hiring freeze. Those factors culminated in the company’s decision to lay off 3% of its global workforce, or more than 400 employees, that same month.
It isn’t alone. Both Gorillas and Getir also laid off significant proportions of their global workforces this week. And earlier this year, ultrafast delivery startups 1520, Buyk and Fridge No More all shut down. Another firm, Jokr, is rumored to be shopping its business after reports emerged that it was losing $159 per order in the U.S.
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All of this tumult comes after a stretch that had investors thinking 15-minute delivery was unquestionably the future. Jokr, for instance, joined the unicorn club with a $1 billion-plus valuation just eight months after launching. Gopuff itself enjoyed similar success, crossing the $15 billion valuation mark last summer and snatching up investors like Softbank, Blackstone, Guggenheim Investments and even ex-Disney CEO Bob Iger.
But the honeymoon is over. As the pandemic spell begins to wear off, shifting consumer attitudes around delivery are making it difficult to turn a profit. That’s led some companies like Buyk to fold and others like Gopuff to scale back. Despite the headwinds, Gopuff is reportedly aiming for an IPO this year, which would make it the first instant delivery platform to go public.
To do it, the company will need cash, but it’s in a better position than its rivals by that metric. Gopuff reportedly has around $2 billion in capital to deploy, which could help it stay afloat until it figures out a way to capture more demand.