Retailers

No Joke: How ‘Instant Delivery’ Can Change the Shopping Paradigm

Q&A with Jokr's Zachary Dennett
Photograph courtesy of Jokr

Zachary Dennett, a former Walmart executive by way of its late Jet.com division, has since zoomed off to new adventures. He is a U.S. co-founder of the delivery firm Jokr, which earlier this year launched its entry into the emerging field of “instant delivery.” In the following interview, excerpted from an Aug. 21 conversation, Dennett discusses how Jokr envisions “changing the shopping paradigm” behind a new model of convenience that leverages a tight and precise assortment, low real-estate costs, and expertise in the "last 100 feet."

Jon Springer: This instant-delivery business snuck up so fast we’ve barely had time to write about it. Can you remind me of the background you are bringing to Jokr?

Zachary Dennett: Most recently I was at Walmart. I was VP of merchandising in the dry grocery team, covering omnichannel stores and online. Before that, I had been the VP and general manager of Walmart.com. And I got to Walmart by way of Jet.com. I was just the eighth employee of Jet, joining as vice president of pricing, and I got to work on all the things that Jet did with dynamic pricing and dynamic savings.

So Jokr is new to the U.S. and came via Germany and South America, is that right?

The most accurate way to say it is [that] we’re an international company. We have operations in South America; we have operations in Europe; and now we’re very focused on America. Our global CEO is here in New York; he’s 20 feet away from me. Our global COO is in New York. 

ZachDennett

Zachary Dennett

Why is now the right time for this?

It starts with the business model. And it’s worth mentioning that the business model is remarkably easy to explain—and kind of magical when you get to experience it. The idea is, we are removing the need for planning to change the paradigm of shopping.

It used to be, you’d plan this long shopping trip over the course of a whole week, knowing that there wasn’t a groceries-in-the-moment option. Now, when you need something, you can just order it. You decide you want to cook dinner, throw in a couple of ingredients, and we’ll get it to you in 15 minutes. You’ll have your ingredients before your oven is preheated. You need a breakfast? You need fresh bread? We’ll get it for you.

We do that through small stores located throughout the city. We just call them “stores”— “dark stores” seems too ominous—and we’ve got Jokr employees to pick the orders and deliver them.

What’s interesting to us is the behavior we've seen. We see a lot of people testing it out for the first time by buying something small. And then, all of a sudden, we see that very quickly, they’re shopping multiple times a week. From looking at the order data, it appears that they’re disaggregating what used to be a weekly shopping trip into multiple convenience shopping trips.

That’s interesting, but it raises a lot of questions, too. Selection has got to be limited to fit into a small warehouse. And a cyclist’s bag can only carry so much. So it’s probably not a case of beer. It’s probably not the variety of a traditional grocery shopping trip. Isn’t this more of a convenience store? You guys use the word “grocery” intentionally.

We definitely use the word grocery. In terms of delivery, there’s actually a lot you can fit on a bicycle. By the time you have a bag over the wheels and a bag on the back [of the rider] we can deliver a full order. In terms of selection, what we’re doing is picking out a lot of staples from the traditional grocery store with about 2,500 SKUs for each store.

When you think about a traditional grocery store, there is huge SKU proliferation, and it doesn’t really provide that much in the way of truly incremental ways to meet the customer’s happiness. But we can be really precise about the localization of our assortment. Our assortment in Long Island City is not the same as our assortment in Tribeca. When you say you have 2,500 SKUs for all of New York, you can’t do it. But if you have 2,500 SKUs in Long Island City, and you follow the data, and you’re careful and not duplicative, you can have the right assortment.

So whereas a mainstream grocer probably by default says “yes” to brands A, B and C; we go to brands A, B and C and say: “This is what our customers are telling us. Do you want to be a part of this extreme growth?” Then, all of a sudden, you’re able to get good costs.

COVID convinced a lot of people that they really like the idea of grocery delivery. But a lot of customers also said, 'We really dislike the options we have.’

To what extent is the consumer feeling that the reduced selection is a trade-off they’re willing to make for the convenience?

It’s a great question. I think what we’re seeing is that COVID convinced a lot of people that they really like the idea of grocery delivery. But a lot of customers also said, “We really dislike the options we have.”

They’re either incredibly slow and expensive, or the options aren’t right, with an incredible amount of substitutions. If there’s an app that uses third-party pickers, and you’ve got 100 different types of meat SKUs, you can order ground beef and get a pork shoulder. So does that extra selection really help?

Because we are vertically integrated, Jokr is able to deliver exactly what customers order. And I think that’s a trade-off customers are very happy to make: You get what you ordered when you ordered it.

How does the consumer make distinctions between so many new brands? How would they see the differences among a Jokr, a Gorillas, a Fifteentwenty and a Fridge No More, when they’re all available to them?

There are a couple of differences. First, it’s quite easy to promise 15 minutes. It’s much harder to actually deliver on 15 minutes. We have a team that’s very experienced with last-mile, last-100-feet delivery having done meal deliveries across the world. It’s top-notch operations. The second difference is being more local. As I mentioned, the CEO is here, the COO is here, I’m here. We know New York. So our assortment resonates with the local neighborhoods. We do that not just by being here but by being extremely data-driven. We are constantly doing experiments to figure out which neighborhood needs which assortment.

So it’s by being hyper-local, having great reliability, and having great prices because we’re efficient. If you’ve looked, you’ll notice that our prices are better than your local grocery store, certainly on par with the mainline grocers. And with free delivery, that’s quite a value proposition.

It’s important to be cool in New York. One of your competitors is making a pitch to potential delivery drivers in part by saying they have the coolest-looking gear to wear. And to the extent these guys are moving ambassadors of the brand, they play a part in awareness. What are your thoughts?

We just rebranded, and we’re getting a lot of positive feedback. People are really excited about the new logo, the new look, the new T-shirts, etc.

One point of differentiation we hear from our riders and pickers is to make sure that working at Jokr is something they want to do by treating them well, but also making sure that there’s a real career path within the company. And since we’re growing so fast, we’re constantly opening new stores, and constantly looking for store managers and area managers. We’re able to offer a great career path with rapid promotions, given the speed at which we’re growing.

Personally, I love the Jokr brand. I think it resonates really well. I think it’s fun. It’s playful. We’ve got some new ads coming this week.

If you go back to the beginning, every trend in retail has figured out how to dramatically increase convenience, at good prices, in an economically sustainable way.

What can grocery retailers, even those not in New York, take away from your growth?

My view on the national trends here is that, if you go back to the beginning, every trend in retail has figured out how to dramatically increase convenience, at good prices, in an economically sustainable way. If you do that, you’ll be successful.

What about other markets? This might work in New York, where customers are really dense and you can ride someplace in 10 minutes by bike that might take 30 minutes by car. Does it work in the suburbs?

The economics are interesting because there are a couple of factors. The first is, because we have a limited assortment, we are able to make sure that we are buying well and being efficient in our volumes and getting the best costs. The second is, we don’t need the same real estate than most other stores do—we need something close to the customer, but we don’t need the foot traffic. Then, it’s about the utilization of the riders, and because we have such high volumes, we’ll be able to keep them busy. 

About rider utilization: Sometimes you’ll get a huge order. Sometimes you’ll get two small orders right next to each other. So by being clever about how we batch orders and how we bundle, we’re able to keep our riders busy.

The market potential we have in the U.S. is quite high. We have a data team that’s done an amazing job of taking the data we have—census data, grocery spend, competition, restaurant spend, all that. Fifteen-minute delivery won’t work everywhere, but extremely fast delivery will work in a lot of places.

Finally, a chicken-and-egg question: Is Jokr tapping into a latent demand that consumers have to get everything instantly? Or is it that the technology and model has created demand for it?

If you ask the customer who had never heard of instant grocery delivery, then I’d probably say no. But  when you start listening to customers and asking them, what is the pain in your weekly shops? How do you feel when you run out of toilet paper, etc., you hear a lot of problems that are out there. And so when customers try it, the answer is absolutely yes.

 

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