gopuff-business-model

How Does Gopuff Make Money? The Gopuff Business Model In A Nutshell

Gopuff is a digital delivery service headquartered in Philadelphia, Pennsylvania. Gopuff differs from other delivery services. It purchases, stores, and sells its own inventory; profit is generated when the company can sell an item for more than the cost of purchasing and storing it. Gopuff also charges a flat $1.95 delivery fee, with the company proudly admitting that it does not surge or hike prices. In addition, Gopuff Fam is a monthly membership program offering several free perks. The company also sells advertising to brands in the form of high-visibility product placements.

History of Gopuff

Gopuff is a digital delivery service headquartered in Philadelphia, Pennsylvania.

The service was founded by university students Yakir Gola and Rafael Ilishayev in 2013. Responsible for stocking their college townhouse with snacks and essentials, the pair realized that repeatedly visiting the store to re-supply goods was time-consuming.

What’s more, this process impeded their ability to balance studies with work, family, and friends.

Gola and Ilishayev would spend subsequent nights drafting app mock-ups on the back of their lecture notes. Three months later, they were selling convenience items on campus from the back of their Plymouth Voyager.

An app was then launched in December 2013. To grow the business, they convinced university professors to pitch the app to fellow students by offering free products such as bottle openers and lighters.

Gopuff items are stored and then sold by the company, so the co-founders also needed to convince local distributors to partner with them. Gola and Ilishayev continued to make deliveries as they earned their degrees, using profits to expand into Chicago and Washington, D.C.

In late 2015, the company raised its first round of venture funding. Gopuff now operates over 250 micro-fulfillment centers in approximately 650 cities across the United States. 

Gopuff revenue generation

Gopuff has several revenue generation streams. Following is a look at each.

Item markup

As noted, Gopuff differs from other delivery services in that it purchases, stores, and sells its own inventory

Revenue, and more importantly profit, is generated when the company can sell an item for more than the cost of purchasing and storing it. 

This business model allows Gopuff to manage its inventory levels, reducing the likelihood that a product will be out of stock. Order fulfillment is also much faster, with order pickers having the delivery ready before the courier arrives.

As a direct seller, however, Gopuff must invest in warehousing space whenever it expands. Expensive liquor licenses must also be paid for in the applicable jurisdictions.

Delivery fee

Gopuff charges a flat $1.95 delivery fee, with the company proudly admitting that it does not surge or hike prices.

An additional $2 is added to any delivery containing alcohol. This fee ensures the compliant delivery of alcohol products and associated ID verification.

To maintain a flat delivery fee, each order must have a total value of at least $10.95.

Gopuff Fam

Gopuff Fam is a monthly membership program offering several free perks. 

The most significant of these perks is a free delivery option on all orders for $5.95/month.

Advertising and consumer data

The company also sells advertising to brands in the form of high-visibility product placements.

One notable example is Nightfood, an ice-cream start-up that paid Gopuff almost $600,000 for priority placement on the app. The deal also included Gopuff giving the start-up insights into who was buying its ice cream and when they were buying it.

Key takeaways:

  • Gopuff is an American digital delivery service for common household goods and alcohol. It was founded by university students who noted that continually restocking their college townhouse was time-consuming and inconvenient. 
  • As a direct purchaser and storer of inventory, Gopuff makes money by selling items for a profit. It also charges a flat delivery fee for orders over a certain amount. 
  • Gopuff charges $5.95/month for a membership program offering discounts and free shipping. It also sells advertising placements and aggregated consumer data to brands.

Read Also: How Does Amazon Make Money, How Does Instacart Make Money, How Does DoorDash Make Money, How Does Postmates Make Money, How Does Grubhub Make Money, How Does Uber Eats Make Money, The Walmart Business Model, Last-Mile Delivery: The Anti-Network Effects And Why It’s Such A Hard Problem.

Connected Last-Mile Delivery Business Models

Deliveroo Business Model

deliveroo-business-model
Deliveroo is a British online food delivery company founded by Greg Orlowski and Will Shu in 2013. Shu developed the platform in response to a lack of high-quality food delivery in London. Deliveroo makes money by collecting 25-45% of every order it facilitates. It also charges delivery fees and onboarding fees for restaurants that wish to be featured on the platform. Deliveroo for Business is a service designed for corporate clients needing to order food in bulk. The company also charges a higher commission to businesses that utilize a network of digital kitchens to process orders.

DoorDash Business Model

how-does-doordash-make-money
DoorDash is a platform business model that enables restaurants to set up at-no-cost delivery operations. At the same time, customers get their food at home, and dashers (delivery people) earn some extra money. DoorDash makes money by markup prices through delivery fees, memberships, and advertising for restaurants on the marketplace.

Glovo Business Model

glovo-business-model
Glovo is a Spanish on-demand courier service that purchases and delivers products ordered through a mobile app. Founded in 2015 by Oscar Pierre and Sacha Michaud as a way to “uberize” local services. Glovo makes money via delivery fees, mini-supermarkets (fulfillment centers that Glovo operates in partnership with grocery store chains), and dark kitchens (enabling restaurants to increase their capacity).

GrubHub Business Model

grubhub-business-model
Grubhub is an online and mobile platform for restaurant pick-up and delivery orders. In 2018 the company connected 95,000 takeout restaurants in over 1,700 U.S. cities and London. The Grubhub portfolio of brands like Seamless, LevelUp, Eat24, AllMenus, MenuPages, and Tapingo. The company makes money primarily by charging restaurants a pre-order commission, and it generates revenues when diners place an order on its platform. Also, it charges restaurants that use Grubhub delivery services when diners pay for them. 

Lyft Business Model

lyft-business-model
Lyft is a transportation-as-a-service marketplace allowing riders to find a driver for a ride. Lyft has also expanded with a multimodal platform that gives more options like bike-sharing or electric scooters. Lyft primarily makes money by collecting fees from drivers that complete rides on the platform.

OpenTable Business Model

how-does-opentable-make-money
OpenTable is an American online restaurant reservation system founded by Chuck Templeton. During the late 90s, it provided one of the first automated, real-time reservation systems. The company was acquired by Booking Holding back in 2014 for $2.6 billion. Today OpenTable makes money via subscription plans, referral fees, and in-dining with its first restaurant, as an experiment in Miami, Florida.

Postmates Business Model

postmates-business-model
Postmates is a food delivery service built as a last-mile delivery service platform connecting locals with shops. Postmates makes money by collecting fees (commission, delivery, service, cart, and cancellation fees). It also makes money via its subscription service (called Unlimted – $9.99/month or $99.99 annually), giving free delivery on orders of more than $12.

Uber Eats Business Model

uber-eats-business-model
Uber Eats is a three-sided marketplace connecting a driver, a restaurant owner, and a customer with Uber Eats platform at the center. The three-sided marketplace moves around three players: Restaurants pay commission on the orders to Uber Eats; Customers pay small delivery charges and, at times, cancellation fees; Drivers earn through making reliable deliveries on time.

Main Free Guides:

About The Author

Scroll to Top
FourWeekMBA