The start-up goPuff, supported by Softbank, announced on Thursday that the alcoholic beverage chain BevMo! pave the way for the company's entry into the California market for $ 350 million.
The agreement also means that goPuff, which currently offers on-demand delivery of household goods in 500 cities, will expand its infrastructure by expanding the 161 BevMo! It will expand significantly in California, Arizona and Washington.
The announcement comes less than a month after goPuff raised $ 380 million in a round led by Accel and D1 Partners. Investors also included Softbank Vision Fund and Luxor Capital, bringing the company's valuation to $ 3.9 billion. GoPuff was founded seven years ago by co-founders Yakir Gola and Rafael Ilishayev when they were students at Drexel University.
"We think BevMo! Is an amazing brand. It's an iconic brand, great customer base, great distribution network, and we thought this was a logical step for us and a big step in bringing goPuff to California." said Gola.
According to some industry experts, the deal makes sense especially during the pandemic.
Nielsen data shows that sales of alcohol outside of the company (including grocery and liquor stores) rose 22% during the pandemic period that began in early March compared to the same period last year as customers increased alcohol purchases since they spent more time at home.
"Both home alcohol consumption and food and beverage deliveries have increased, indicating demand," said Darren Seifer, food industry analyst for The NPD Group. "I think the combination of the two, when done well, is a good idea as it helps consumers regain some of the dining experience they were missing."
For BevMo! The partnership is an opportunity to capture more of this increased demand.
"By joining goPuff, a company that has taken a truly differentiated approach and defined the category of immediate needs, we can better meet the changing needs of our consumers, including delivering everyday items right to their doorsteps," said Josiah Knutsen, CEO of BevMo! .
GoPuff's Gola said it was not clear how the company would use BevMo! It would use it to eventually supply the Californians with household items, nor would he disclose a schedule. However, he said the company is currently studying how to best leverage the drinks retailer's stores.
"The idea is to use the infrastructure and the licenses built by BevMo! For spirits, as well as the brand and customer base. How can we use this and use it as a platform to start goPuff in California," said Gola, thinking about some of licenses for issues the company faces when considering a California launch. He said the deal with BevMo! will bring many jobs to California but declined to say how many.
The announcement follows California's passage of Proposition 22 this week, which brought gig economy companies like Uber, Lyft and DoorDash a profit by continuing to use independent contractors.
Gola said while goPuff uses independent contractors as drivers, the staff in its 200 micro-fulfillment centers are W-2 employees. He added that the business model is also different from delivery competitors Instacart, DoorDash and Postmates, who have added partners for convenience stores and drugstores since the pandemic.
For starters, he said goPuff works directly with consumer goods companies to stock items from diapers to wine at its fulfillment centers, which the company rents. This allows goPuff to shop to scale, keep shipping costs at $ 2 per delivery, and make deliveries in 20-30 minutes, according to Gola.
Editor's Note: This story has been updated to reflect that goPuff rents its fulfillment centers.