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Pre-IPO Pedia | Valued at $15 billion, the instant delivery giant Gopuff might go public later this year

Moomoo IPO Buzz wrote a column · Aug 12, 2022 03:25
Pre-IPO Pedia | Valued at $15 billion, the instant delivery giant Gopuff might go public later this year
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Currently, we are able to see riders everywhere while walking on the street, since delivery services are becoming more and more common in our daily life. Especially during the pandemic period, a lot pf people have already got used to the routine of "turning on the phone - pick - order - open the door - receive".
Source: Wikimedia Commons
Source: Wikimedia Commons
Since the delivery market has become a hot place to fight for, an increasing number of delivery companies are engaging. Last November, Gopuff, a delivery service provider from the U.S., was chosen as CNBC's Top 50 New Economy Disruptors in 2020 and 2021, and was hailed as one of the fastest growing companies in the post-epidemic era.
Today, IPO Buzz will take you to the story of Gopuff, to find out how it could stand out among a great number of competitors.
What will you do when you have a sudden late-night craving for snacks? Will you choose to go to bed with hunger or will you go out after a long struggle?
Yakir Gola and Rafael Ilishayev, two college students from Drexel University, faced the same dilemma one night in 2013, when delivery services were still underdeveloped.
Rafael Ilishayev and Yakir Gola, co-founders of Gopuff (Source: official website)
Rafael Ilishayev and Yakir Gola, co-founders of Gopuff (Source: official website)
While the desire for snacks takes only a second to come out, it takes minutes to get dressed and go out. "It could not be better if someone buy the snacks for me and deliver them to my apartment," said the two founders.
Since there were hardly any services like this at that time, they decided to set up their own business after discussion. That is how Gopuff was born.
When first established, Gopuff focused on delivering snacks and a few other products to the college students, and was open until 4 a.m.
In December 2015, Gopuff launched a beer delivery service called GoBeer and started offering alcoholic beverage delivery services called goBooze in 2016.
The launch of the alcoholic product delivery services has led to an expanding age group of its users and a more diverse range of user needs. Since then, Gopuff has continued to diversify its offerings. Nowadays, snacks, drinks, alcohol, household products and baby products are all available in the delivery services of Gopuff.
Source: official website
Source: official website
Since the COVID-19 pandemic outbreaks, Gopuff's business has expanded rapidly due to a surge in demand for delivery services.
At the end of 2021, Gopuff announced its plans to expand into North America and across Europe, including seven cities such as London, Liverpool and Birmingham, and plans to expand to 33 cities over the next year.
Founded in 2013, Gopuff is an app-based digital delivery service provider that delivers goods such as over-the-counter medications, snacks, alcohol, etc.
The founders of Gopuff said that their core consumer group is the "impulse buyers". Since their impulse comes and goes so quickly, Gopuff has to make sure that its delivery services are fast enough to satisfy the impulse of consumers.
Therefore, a key feature of Gopuff is that it claims that its services are able to deliver the goods to the consumers 'as fast as possible', usually in 30 minutes or less. Within such a short time, consumers still have the desire for the goods they want.
So how does Gopuff ensure that its products are delivered to consumers in such as short time?
The secret to Gopuff's speedy deliveries is the "huts" it has set up around the city, usually called 'front-end warehouses'.
"Front-end warehouse retailing" means that companies set up warehouses in areas that are close to their consumers or faster delivery.
Gopuff has a number of warehouses in prime locations in the cities where it operates, and has its own delivery team. Each warehouse stocks at least 3,000 items to minimise time-consuming situations such as out-of-stocks and exchanges.
Source: official website
Source: official website
Unlike the "pick by riders" mode of Instacart, the business model of Gopuff is operated smoothly by training its own team in product picking and packaging, in order to optimise staff efficiency to maximise the speed at which each order can be fulfilled.
Gopuff claims to be able to pick, pack and dispatch orders in as little as 90 seconds, thanks to the technical coordination of its entire system and the cooperation of its staff.
SmileFinancial Situation
Since the COVID-19 pandemic, Gopuff has achieved considerable growth in the size of its user base. With 300,000 users in 2019, Gopuff surged to 1.8 million users in 2020, a year in which Gopuff served more users than in its previous years combined. In 2021, this number soared to 2.6 million.
The expansion of users and the surge in demand for deliveries also brought about a significant rise in revenue.
In 2019, Gopuff's revenue was US$200 million. This figure grows to US$340 million in 2020. By 2021, Gopuff's order showed year-on-year growth of 70%, with revenues approaching $1 billion. Between February and April 2022, Gopuff's sales increased by 172%.
Pre-IPO Pedia | Valued at $15 billion, the instant delivery giant Gopuff might go public later this year
While the growth of revenue looks considerable, Gopuff is actually experiencing ongoing losses when high costs are factored in. According to insiders, Gopuff's losses reached US$150 million in 2020 and increased to US$500 million in 2021.
Some people have analysed that the front-end warehouse model is actually a constant money burner. Although it can be replicated quickly and form a scale effect with low operating costs in the early stage, constraints such as large investment in fixed assets and high fulfillment costs also make it difficult to make the model profitable.
Constantly burning money is not an ideal option. Over the years, Gopuff has been trying to find ways to earn more and cut costs.
On the one hand, the company has added an in-app advertisement business as an additional revenue stream, dispersing the revenue focus from the consumer side to the brand side.
On the other hand, news of layoffs has started to come in. In mid-July this year, GoPuff announced plans to lay off 10% of its workforce globally and close 76 warehouses across the U.S. to cut costs. The company said that the cuts were made to help it reach its goal of profitability by 2024.
Since its inception in 2013, Gopuff has completed 10 rounds of funding, raising a total of $3.4 billion. Major investors include SoftBank, Headline and Accel, etc.
Pre-IPO Pedia | Valued at $15 billion, the instant delivery giant Gopuff might go public later this year
Since 2020, Gopuff's valuation has been soaring.
In October 2020, Gopuff received $380 million in funding led by Accel and D1 Capital Partners, valued at $3.9 billion.
In March 2021, Gopuff received $1.15 billion in funding from D1 Capital Partners and other investors, with its valuation soaring to $8.9 billion.
In July of the same year, Gopuff raised US$1 billion from investors such as Blackstone Group and SoftBank, and its valuation soared to US$15 billion, which is a jump of almost 70% in less than six months.
In December 2021, TechCrunch reported that Gopuff announced the opening of a new round of funding of US$1.5 billion, which could result in a valuation of US$40 billion. However, there is apparently much controversy in the market about this valuation.
Some insiders believe that people have seen a lot of instant delivery startups with huge funding and soaring valuations. These startups are developing so fast due to the needs of consumers brought by the COVID-19 pandemic. However, as consumers gradually return to their normalcy, these companies also should prepare for the bubbles to burst.
SmileIPO Rumors
According to Bloomberg, Gopuff has been in discussions with investment banks about its IPO plans and had envisaged an IPO as early as the second half of 2022.
However, August has arrived but there is barely any news on Gopuff's IPO. An insider said that due to market conditions, Gopuff has no intention of raising funds through a public offering in the near future and has not filed the paperwork to start the process.
Mooers, what do you think of Gopuff's prospects? Feel free to comment below.
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