GoPuff Business Model: Everything You Need To Know About On-Demand Food Delivery Service

On-demand food delivery services allow consumers to order food from a provider as per their required time and location. The industry has grown rapidly in recent years and the growth has seen even more rapid hike due to stay home restrictions during COVID-19. Some on-demand food delivery services provide a platform where consumers order food from different restaurants or grocery stores and the app contacts the providers after the order is placed. However, other on-demand food delivery services such as GoPuff adopt an inventory based business model.

See Also: 6 Most Efficient Marketplace Business Models To Boost Revenue

History Of GoPuff

GoPuff was launched in 2013 and is headquartered in Philadelphia, Pennsylvania. The on-demand food and grocery delivery platform was founded by two university students, Yakir Gola and Rafael Ilishayev. They started by selling convenience items from the back of their Plymouth Voyager before launching an app in December 2013. The mobile app development was then expanded to Chicago and Washington, D.C. before slowly starting operations across 650 cities in US.

Funding Of GoPuff

• 2016 – GoPuff raised $8.25M in round A funding.
• 2019 – GoPuff raised $750M from SoftBank with a commitment for additional funding up to $250M.
• 2020 – The company raised $380M in funding round led by investors including Accel and D1 Capital Partners.
• 2021 – GoPuff raised $1.15B in a funding round. The funding round was led by investors including D1 Capital Investors, Fidelity Management & Research Company and Luxor Capital.

In 2020, GoPuff announced company’s total value to be $8.9B. Such exceptional growth in a short span after its launch has garnered immense interest from entrepreneurs. If you are also one of the entrepreneurs who wish to launch GoPuff clone, here is an insight into GoPuff business model to help you launch your delivery app like GoPuff.

What Is GoPuff Business Model?

GoPuff business model is an inventory based business model. The on-demand food delivery platform purchases products or goods from different manufacturers. These products are stored in its warehouses. The company has its micro fulfillment centers in different locations to ensure order fulfillment in 30 minutes. Consumers can check the products in the inventory on the GoPuff app to place their order. The price of the products listed on the app includes GoPuff profit and a delivery cost is charged for every order. Let us now discuss different components of GoPuff business model in detail:

GoPuff Business Model

Key Customers: The key customers of GoPuff food delivery app are consumers who cannot step out to purchase food and grocery items for daily use. Such consumers can place their orders at the GoPuff app and receive the products at their doorstep.

Key Resources: The key resources of GoPuff are its website and easy to use app which connect the food and grocery delivery service with its customers.

Value Proposition: GoPuff adds value to its customers, delivery person and the product manufacturers.

Value for customers-

• Convenience of ordering at any location and time including late night.
• Save time with fast delivery.
• A large and expanding choice of products.

Value for manufacturers-

• Brand awareness by listing on their platform.
• Regular purchase of products by GoPuff.

Value for delivery person-

• Earning opportunity by delivering timely orders.

Pros & Cons Of GoPuff Business Model

Thorough analysis of GoPuff business model is important before launching our own GoPuff clone app. So, here is a comprehensive list of pros and cons of the business model.

Pros Of GoPuff Business Model

• Since GoPuff follows an inventory based business model, it has a fair idea of product availability. The company does not have to deal with out of stock issues after accepting an order which may otherwise arise due to lack of coordination with partner supermarkets or restaurants.
• GoPuff employs designated staff responsible for picking up the ordered products and handing them over to the delivery person. This saves time as the driver is not required to sift the shelves of a supermarket for completing an order.
• As GoPuff owns its warehouses, they are kept open late into night. This increases the window of opportunity for GoPuff as it is not bound by operation timings of a partner supermarket.

Cons Or Challenges Of GoPuff Business Model:

• The company has to invest in warehouse space whenever it expands to a new place.
• For selling some products such as liquor, it has to apply for special license.

See Also: Top Seven Challenges Faced By Food Delivery Businesses Going In 2021

What Is GoPuff Revenue Model?

GoPuff revenue model has four revenue streams that help GoPuff earn money. Let us take a look at every revenue stream individually.

• Markup: The first revenue stream of GoPuff is marking up the products. While most of the on-demand food or grocery delivery apps complete their orders by delivering products directly from a supermarket or restaurant, GoPuff purchases products and stores them in its warehouses. When an order is placed, the products are sold directly by the company and the difference between the selling price and the buying plus storing cost is the profit earned by GoPuff.
• Delivery Fees: This is the second revenue stream of GoPuff. Basically, it’s to cover the delivery cost and not actually a take home profit for the company. GoPuff charges a fixed amount of $1.95 for every order and an additional $2 for orders containing alcohol. However, the delivery fees is void for orders above $49 as in such orders, company generates enough marginal profit to cover the delivery cost.
• Membership: GoPuff offers a membership program called GoPuff Fam to its customers at $5.95 per month. This is a major revenue stream for GoPuff and the company motivates the consumers to subscribe to this membership program by offering benefits such as free delivery on all orders and other member only discounts.
• Advertizing: With a large number of consumers every month, being placed first in a product category on GoPuff platform can be extremely valuable for any brand. GoPuff uses this opportunity as a revenue stream by selling priority placements on its on-demand food delivery platform. As per a report by Forbes, GoPuff generated $600,000 by priority placement of Nightfood, a New York based ice cream startup.

See Also:

How To Boost Revenue For Your Food Business Like Uber Eats?

Food Startup Lessons To Take From Grubhub

Summing Up:

GoPuff is an on-demand food and grocery delivery app that has expanded to 550 cities in just 7 years since its inception in 2013. This article sheds light on the inventory based GoPuff business model and different streams of GoPuff revenue model to help entrepreneurs like you in launching GoPuff clone app. Before launching your own on-demand food delivery service like GoPuff, you need to research more about queries such as how to launch an app like GoPuff, features of GoPuff clone and cost of building an app like GoPuff. Fret not! We at Code Brew have answers to all your queries and have all the resources to help you launch your GoPuff clone with advanced features at a low cost. Let’s connect now!