Yahoo Finance Russian Instant Grocery-Delivery Service Sets Sights on U.S.
(Bloomberg) -- Samokat, Russia’s biggest instant grocery-delivery service by orders, is aiming to be the first of its peers to take a share of the booming U.S. market.
The founders of the St. Petersburg-based company are launching the service, to be called Buyk, in August in New York. They are targeting 10,000 orders a month there by year-end.
“We understand that there are higher costs in New York. But there is also a higher check,” co-founder Vyacheslav Bocharov said in an interview, referring to the average order value.
Grocery delivery boomed globally during the pandemic as customers ordered food while self-isolating and avoiding crowded spaces. In Russia, orders have increased 14 times since 2019, and Samokat is in the top three by sales volume, according to analyst Data Insight.
Crowded Market
Buyk will be entering a crowded and highly competitive American market that includes Instacart Inc., Walmart Inc. and Amazon.com Inc. DoorDash Inc., the U.S. leader in delivering restaurant orders, is pivoting into grocery and other convenience products, too. In New York, FreshDirect, now owned by Ahold Delhaize and private equity firm Centerbrige Partners, is a well entrenched grocery-delivery company with a nearly two-decade history in the city.
Buyk already has agreements for dark stores -- small, centrally-located warehouses that will help it fill orders quickly -- in New York that will open in August.
The company has an advantage in that it knows “how to scale a project very quickly in new cities,” according to Moscow-based Boris Ovchinnikov, co-founder of Data Insight. But “a big challenge will be that it’s impossible to use such a cheap workforce in New York as they’re used to in Russia,” he said.
Samokat pays its couriers in Russia 190 rubles per hour ($1.50) on average. In the U.S., the median hourly wage for food and grocery delivery drivers is about $16, according to Gridwise, which tracks earnings for gig workers.
Buyk will use the same technology as Samokat does in Russia and will also be backed by Russian state-controlled bank Sberbank PJSC, which owns a controlling stake in Samokat together with Mail.ru Group Ltd. It has received $46 million in venture funding including from CM Ventures, Fort Ross Ventures and Citius for the U.S. expansion.
Buyk will offer free delivery and couriers will deliver products by bike within a 1.5 km radius (about 1 mile), it said. Co-founder Rodion Shishkov said the company started to develop its technology three years before its competitors, giving Buyk an advantage. It’s hiring about 100 people for operations and 500 couriers.
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