Consumers seeking fast “E-gratification” of their snack and FMCG requirements will have to look elsewhere. US company UrbanFetch.com has announced the imminent closure of its consumer wing offering a one-hour delivery service for products ranging from snacks, books and CDs to electrical and beauty goods.
Launched in New York last October, the company relied on the assumption that the US$70m worth of capital would allow it to weather the loss-making storm until “market conditions” improved.
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No such luck. Despite the fact that the site proved extremely popular with consumers, building a 70,000-strong base of regular users, with each order worth an average of US$40, Urbanfetch.com still made huge losses. And these are now unsustainable.
Analysts have long predicted that the high costs of fast delivery would mean that such companies would struggle to make profits, and many have realised this, curbing expansion plans or attempting to restructure to focus on providing for business customers alone.
Edinburgh and Glasgow’s In60.com is delaying launches in other cities for the time being, Koobuycity.com is attempting to restrict its Parisian role to that of business courier.
Kozmo.com, the main rival of Urbanfetch.com, has similarly suffered from a lack of investor support. Having been forced to lay off 10% of its workforce, and cancel plans for expansion into 11 US cities and floatation on the stock market, talks of a merger between the two market leaders reached an acrimonious stalemate. In March, Kozmo.com reported losses totalling US$26.4m, on revenues of only US$3.5m, but since then both companies have declined to comment on their finances.
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By GlobalDataUrbanfetch.com had outlined ambitious plans for expansion. Upon arriving in London, company president Andrew Tsai had expressed confidence that the convenience of the service would secure its success, but in this, it seems, he also pre-empted its downfall.
CEO of the company, Ross Stevens, stressed that he was proud of the efforts of Urbanfetch.com in the realm of consumer “e-gratification.” From now on, however, the company will be focusing on the business courier wing, which already more profitable than the revenues of the consumer ventures in New York and London put together.
