A look at the fight between six rapid grocery delivery startups in NYC, which have raised $5.5B+ since 2020; sources say some are losing $20/order on average
Wall Street Journal
Context & Ripple Effects
In early 2022, six rapid grocery delivery startups were fighting for New York City with more than $5.5B raised since 2020 — and sources told the Wall Street Journal some were losing roughly $20 per order, meaning growth was being bought directly out of venture funds. That warning proved prescient: within months many of these startups had retreated from markets or shut down entirely as pandemic-era demand normalized.
By late 2022 the shakeout had gone global — [[a:983854|fewer than half of the US and European rapid delivery startups launched in the pandemic were still operating]], squeezed by huge losses and a funding drought. A post-mortem a year later traced the boom to $10B+ of VC money spent on ads and promos that created demand from nothing, with app downloads down ~90% once the subsidies stopped.
First-order effects
The six NYC startups are locked in a subsidy war where each additional order deepens losses of ~$20, so scaling up accelerates cash burn rather than reaching profitability.
Second-order effects
With unit economics this negative, continued fundraising becomes existential: startups that cannot raise at prior valuations must retreat from cities or merge, thinning the field exactly as the later coverage shows happened.
Third-order effects
If the pattern holds, rapid grocery delivery consolidates around players who can absorb years of losses or restructure costs, while VCs internalize that ad-and-promo spending can manufacture a market but not sustainable demand — a lesson the sector's ~90% download decline made explicit.
The trend: Venture-subsidized instant delivery is collapsing from a land-grab into a survival contest, as per-order losses and a funding drought force most pandemic-era entrants out.
At least 6 companies are competing to hand deliver $6 ben and jerry's pints and toothpaste in 20 mins in NYC, some without any delivery fee or minimum order btw they're burning gobs of cash every order https://www.wsj.com/...
I was an early employee @ Kozmo back in the day We lost money on every order, but our secret was we were gonna make it up in volume A lot is different now (mobile, internet ubiquity, infra costs) but this makes me remember my days as a paper millionaire https://www.wsj.com/...
I feel like the last decade of startups has already proved that the unit economics of this don't work in the US. Works well in high density + cheap labor cost cities like in India but I don't think it will work in the US sadly. https://twitter.com/...
The end of Kozmo was arguably my introduction to business journalism. (Defining “business journalism” generously here.) https://www.columbiaspectator.com/ ... https://twitter.com/...
Fast delivery, quick losses Fridge No More spent $70 to acquire an average customer, an investment on which it lost $78 loss for every customer who stayed for 10 months 🤯 My latest w/ @eliotwb https://www.wsj.com/...
Fast delivery, super fast burnout. Same whether in India or the US. “Fridge No More spent $70 on advertising to win the average customer, an investment that resulted in a $78 loss for every customer that stayed in the 10 months through September” https://www.wsj.com/... https://t…
The grocery-delivery business is seeing the same kind of loss pressures that ride hailing (Uber, Lift) industry also struggled with. They are also receiving tons of investment (and likely high valuations) with businesses clearly in the red. https://www.wsj.com/...
“The economics are brutal,” said Damir Becirovic, a principal at venture-capital firm Index Ventures, which hasn't invested in any of the startups. Via @eliotwb @Preetika_Rana https://www.wsj.com/...
My favorite summary quotes from this great @eliotwb and @Preetika_Rana story on rapid delivery: “The economics are brutal” and “It's the same story.” @WSJ https://www.wsj.com/...
Founders still out here doing the “sure the margins are terrible, but we'll make it up on volume” shtick like it's 2013, amazing stuff https://twitter.com/...
10-minute delivery apps, last vestige of the millennial lifestyle subsidy: “Some of the companies are averaging a loss of over $20 per order” https://www.wsj.com/...