- In 2021, Gorillas, Buyk, and Gopuff opened dozens of rapid-delivery warehouses in Manhattan.
- Investors spent millions. DoorDash entered the crowded 15-minute delivery space in December 2021.
- Amid a collapse in the sector, DoorDash has ceased its ultrafast delivery operation in Chelsea.
DoorDash, which entered the 15-minute grocery delivery space in late 2021, has quietly ceased its pilot ultrafast operation in New York City, the company confirmed with Insider.
DoorDash had been testing the ultrafast service in the Chelsea neighborhood of Manhattan since late 2021, fulfilling grocery orders out of a single warehouse facility known as a DashMart.
“DoorDash no longer targets 15-minute delivery from the DashMart Chelsea location. DoorDash ended the pilot earlier this year, and the site continues to provide access to over 2,000 items with delivery typically under 30 minutes,” a DoorDash spokesperson said.
DoorDash’s exit comes as the ultrafast grocery delivery space has collapsed over the past year after growing wildly in spring 2021. European startups like Gorillas tried to bring their successful ultrafast-delivery service models to the US, luring consumers with 10-minute deliveries of everything from ice cream to cat litter.
By the end of 2021, the list of players in the US included Gorillas, Jokr, Fridge No More, Buyk, Getir, Food Rocket, and Gopuff. Many had spread throughout New York City, Chicago, Boston, and San Francisco.
As these players launched operations in the US, investors poured millions of dollars into the startups. According to CB Insights, investors spent over $12 billion on companies that promised to deliver groceries in under 30 minutes.
DoorDash entered the crowded ultrafast space in early December 2021. The New York DashMart carried about 2,000 items, such as fresh and frozen groceries and snacks.
Because deliveries had to be done quickly, DoorDash put couriers on the payroll to fulfill the deliveries instead of relying on independent contractors. Now that the ultrafast experiment is over, DoorDash said deliveries are now made by gig workers.
“We continue to explore different roles and functions for W-2 workers,” DoorDash told Insider.
When DoorDash launched ultrafast delivery in New York City, DoorDash executive Fuad Hannon told Insider in December 2021 that the company was “excited about this space and how DoorDash can position itself in the market.”
“As we think about customer expectations, they’re really moving in one direction — and that’s just for increased convenience,” Hannon said at the time.
But convenience came at a cost for all these ultrafast players.
Robert Mollins, a Gordon Haskett analyst, wrote in a research note in February of 2022 that the ultrafast model was “very unsustainable” because all the players were offering deep discounts to first-time buyers.
Customers also weren’t ordering enough groceries amid rising inflation. Neighborhoods in New York City also balked at the dark store operations, accusing them of ruining retail enclaves and taking away business from local bodegas.
By the end of 2022, the ultrafast-delivery sector in the US collapsed almost as fast as it built up. Fridge No More, Buyk, Jokr, and 1520 had shuttered operations in the US. In December 2022, Getir bought Gorillas in a deal valued at $1.2 billion.
Investors also walked away from making huge investments. Funding dropped by 72% in 2022, according to CB Insights.
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