How a startup aims to topple Wawa
GoPuff is on the move. The 24-hour online delivery service begun by two former Drexel University students is expanding, thanks to a $5 million infusion from its main investor.
GoPuff is on the move.
The 24-hour online delivery service begun by two former Drexel University students is expanding, thanks to a $5 million infusion from its main investor.
The Center City-based service, which runs on apps and is executed by an army of contracted drivers, is now in nine major U.S. cities. It will add Portland, Ore.; Houston; and the Manayunk section of Philadelphia in the next two months and six more - including Nashville and Minneapolis - by the end of the year, taking its total reach to 18 markets.
It wants to double that by the end of 2017.
Co-founders Rafael Ilishayev and Yakir Gola, both 23, planned to announce the expansion on Friday.
The $5 million cash injection comes from California-based Anthos Capital, adding to the $3.25 million that the private equity firm put down last fall to help GoPuff get going.
"We never expected to grow exponentially like this," Ilishayev said on Thursday while he and Gola went through inventory at their warehouse at 424 S. 12 St. "We knew when launching it, it might be a hit, or it might not.
"But those that tried it really fell in love with it," he said. "The retention is super high. We can be at [a customer's] door in 20 minutes, so they don't have to get distracted at work, or while they're studying, to go to the convenience store."
That's the convergence behind GoPuff: a Wawa on wheels, one that can deliver whatever you need: ice cream, chips, batteries, or even beer. It will add beer to its New York City menu in a few weeks using two recently launched subsidiaries - goBeer and goBooze.
"Using the app across multiple cities is really huge for us in all these major cities," Gola said.
Ilishayev and Gola train all regional managers in Philadelphia for four months and fan them out to run new cities that GoPuff enters.
Ilishayev said six regional managers were on deck now, ready to head the next batch of new markets. They add to the existing nine managers.
With the growing demand for GoPuff, the two have had to move three times already within Philadelphia for bigger warehouse space. That might again become an issue - even before the pair move for the fourth time - into a much larger 40,000-square-foot warehouse on Callowhill Street in September.
"We can expand to 50 cities," Gola said. "We want to make sure we are growing in the right way. That's what this new money will help us do."
The company operates from noon to 4:30 a.m. in most markets and charges a flat $1.95 delivery charge, which is waived for orders over $49, with zero surcharges.
Ilishayev said sales had risen 25 percent to 30 percent each month since launching. He said May 2016 sales were 10 times what they were in May 2015.
Millennials are the targeted demographic, with 25 to 26 years of age as the average age of those using the service.
"Our goal is to eliminate the convenience store," Gola said. "There is no need for them."
Said Ilishayev: "A lot of convenience players - which I won't name - have reached out to us for partnerships. It's a conversation we are not interesting in having. Our whole thing is to be the most affordable and quickest delivery service - convenience at no added cost."
Gola said the company hopes to get delivery down from 30 minutes or less to 15 minutes or less by mid-2017 - and to remove the delivery charge.
"We want GoPuff to become synonymous with Philly in terms of tech start-ups," Gola said. "We want to create more time for people. The average time to use our app is one minute.
"That way, they can use the other 29 minutes to spend with their family and kids."
To use the service, visit gopuff.com/ or download the mobile app, type in your address, and scroll through a wide range of products across 20 categories.
GoPuff is available on iOS and Android.
215-854-4184@SuzParmley