Ultrafast delivery is having a moment.
Fridge No More is now offering 15-minute delivery for grocery in two New York City neighborhoods, with plans to expand across the city by building 40 or more tiny fulfillment hubs in the coming months.
Right now, Fridge No More is targeting areas with 25,000 to 30,000 people living within a mile radius. That confines the concept to urban areas mainly, but co-founder Anton Gladkoborodov said he could see the concept scaling into the suburbs with a few tweaks, like switching to cars instead of bikes for delivery.
Fridge No More’s expansion could provide a stress-test for ultrafast delivery demand at a time when grocers are expanding their same-day delivery options. Instacart offers delivery within an hour in many markets while Walmart and FreshDirect have launched “express” delivery services that speed orders to customers’ doors for an upcharge. Is 15 minutes a magic number when it comes to delivery time?
“You place an order and a delivery worker rings your doorbell in just a few minutes,” Gladkoborodov said. “People say it feels like magic."
Fridge No More’s top-selling category right now is produce. It also sells fresh meat and seafood, milk, packaged pasta, bread and baked goods. The company’s dark stores — or “cloud stores,” as it prefers to call them — hold around 2,000 products and will soon scale to 3,000, Gladkoborodov said. On its wishlist are more fresh proteins, sushi and composed salads.
The company optimizes for speed. Each cloud store serves a tight radius of around a mile. Instead of gig workers, it relies on hourly employees riding e-bikes to keep operations as nimble as possible for the small runs to nearby apartments. Inside each 3,000-square-foot store, workers are expected to pick an item every 10 seconds and fully pick most orders within three minutes using software that keeps them moving forward — rather than having to double back and waste steps — through the space. Most deliveries happen between five and eight minutes after an order is placed, Gladkoborodov said, with 15 minutes representing the time it takes to reach the furthest edges of the delivery zone.
Gladkoborodov says Fridge No More, which announced a $15.4 million funding round in March, is focused on offering a curated selection of items localized by neighborhood. Like discounters and other small-store retailers, it may only sell one brand of milk and one type of ketchup. The company experiments with its product lineup constantly and uses software to hone its selections. In Park Slope, Brooklyn, it offers more products for kids and babies to serve the many families who live there. In nearby Williamsburg, where the demographics skew younger, it offers products and sizing that appeal more to couples and singles.
Fridge No More has no order minimums and charges no delivery fees, which significantly bucks the trend established by the majority of grocers operating in the costly space. Gladkoborodov points out the company will deliver a single apple to a shoppers’ home. He positioned this as a competitive necessity and also an effective marketing strategy. Many shoppers in a market like New York City can easily pop into their local corner store for a gallon of milk or wedge of cheese, so Fridge No More needs to compete with that convenience, he said.
Tiny orders are also a way to get customers to try Fridge No More and can quickly lead to larger orders. When the company launched in October, its average order value was $25. Now, that’s climbed to around $40, Gladkoborodov said, with loyal customers ordering three and four times a week instead of doing a fill-up trip at their local grocer.
“We think that we can be part of larger replenishment, but sometimes you need something you can get easily like oatmeal for breakfast, or maybe you just want a Coke in the evening,” he said.
Gladkoborodov, who founded Fridge No More along with Pavel Danilov after seeing the popularity of 15-minute delivery in their native Russia, said each facility needs to make around 180 orders per day for them to be profitable. Admittedly, these can’t all be single-apple orders. Each facility can handle a maximum of 800 orders per day, Gladkoborodov said.
During the pandemic, millions of consumers have turned to online food ordering, including many spur of the moment restaurant orders. Bill Bishop, chief architect with Brick Meets Click, said consumers are becoming more comfortable with on-demand ordering, but he questioned whether 15 minutes is enough to pry a significant number of shoppers away from their regular grocery trips and deliveries. He also questioned the ability of a concept like Fridge No More to scale beyond markets like New York City, given its constrained delivery area and need for very high population density.
“How much demand is there for instant delivery embedded in the population of one mile except maybe if it was in the middle of Manhattan or Seattle or the middle of Washington, D.C.?” Bishop said.
In Europe, startups with names like Weezy, Gorillas, Getirvand Cajoovhave raked in hundreds of millions in funding from investors eager to latch onto the booming food delivery space. In the U.S., goPuff recently announced a $1.15 billion funding windfall for its convenience delivery service.
These companies primarily focus on impulse buys and fill-ins like snacks, alcohol, ice cream and need-it-in-a-pinch consumables like pain relievers. Many offer a limited selection of produce, as well. GoPuff has made its name posting up on college campuses, where late-night cravings can easily translate into sales.
But Gladkoborodov is quick to point out that his company is not like goPuff and others.
“We don’t think that we are a convenience store. We are really a grocery store,” he said.
Correction: A previous version of this story misstated the number of daily orders Fridge No More's cloud stores each need to become profitable. It needs around 180 daily orders to achieve this.