Russia’s Buyk Raises $46 Million for Instant Grocery App

  • The founders behind Russian delivery service Samokat have raised $46 million for a new instant grocery venture.
  • The service, called Buyk, will launch in New York in August, going up against Instacart and Gopuff.
  • We got hold of the pitch deck Buyk used to raise $46 million.

Rapid grocery delivery apps have exploded.

The pandemic has supercharged services that let users choose convenience store goods via an app, and have them couriered to their door in as little as 10 minutes by an individual rider.

Investors threw $13 billion at the sector in the first half of 2021, according to data from CB Insights.

The high fundraise figures and the emergence of new players mean the sector is highly competitive, especially in the US and Europe.

That’s resulted in consolidation, with US delivery giant Gopuff recently acquiring London-based startup Dija, though the latter is just nine months old.

Europe’s remaining independent players have raised ever-growing piles of cash to win market share, with Turkey’s Getir and Germany’s Gorillas raising above $1 billion collectively. Other well-capitalized players include Germany’s Flink, the UK’s Weezy, and the UK’s Zapp.

Buyk



Buyk


Buyk is the latest on the US scene.

The new venture was set up by Russian entrepreneurs Slava Bocharov and Rodion Shishkov, who cofounded Russia’s biggest grocery delivery service Samokat and sold it to Mail.ru in 2020.

The pair have raised $46 million to go stateside, with Buyk set to launch in New York later in August. 

We asked cofounder Shishkov to walk us through Buyk’s pitch deck, and why investors are throwing money at a sector with famously low margins:

Buyk



Buyk


“We have years of experience,” Shishkov told Insider, referring to the experience of building Samokat in Russia.

He acknowledged that retail margins are much lower than software margins. “As you grow, you can grow to be huge but if you don’t manage to make the economics work then you will have huge losses, easily billions of dollars in yearly losses.”

Buyk



Buyk


Insider has previously reported that retail margins are around 4%, with one Bain retail expert telling us that “it is literally impossible to make money” through standard online delivery.

Grocery apps hope that consumers buying pricier convenience items, plus efficiencies with their micro-fulfilment centers, can drive that up to as much as 7%.

Buyk



Buyk


These services involve customers downloading an app, picking out their chosen groceries and convenience store items, placing an order, and the startup in question will deploy a rider to ferry out the items.

Buyk



Buyk


Grocery delivery startups generally operate a network of fulfilment centres or “dark stores” to ferry out goods on a tight timeframe. These are smaller than big grocers’ warehouses, are located in cities, and have more limited stock, all of which are billed as helping efficiency.

Buyk



Buyk


Buyk believes its prior experience in the grocery sector will differentiate it from its rivals, although many startups make a similar pitch.

Buyk



Buyk


“We operate much closer to an offline chain in terms of economics,” Shishkov said.

“Our cost structure is such that we spend less on real estate, and have less waste and spoilage. Our couriers are better paid than cashiers at physical stores.” 

Buyk



Buyk


When quizzed on transplanting the success of the company’s model in major Russian cities like Moscow and Saint Petersburg, where average basket sizes come in at around $8, Shiskov told Insider that making the economics work with smaller checks was harder because the margin cost for delivery was slimmer.

Buyk



Buyk


But in New York, the average spend per order comes in at around $30.

Buyk



Buyk


Even with a bigger basket, Buyk will face higher costs. The company pays its couriers in Russia around $1.50 per hour on average. But delivery couriers in New York can expect to earn an average of $16, according to research by Gridwise cited by Bloomberg.

Buyk



Buyk


“Why is this model attractive to investors?” Shishkov said. “It’s simple. In comparison to something they already know in terms of offline retail, we can show how to make it profitable, we are operationally profitable in six months in each new market and this is our superpower.”

Buyk



Buyk


The Buyk cofounder said there will be a lot of “newcomers crashing and burning” in the sector but that it will not be a “one player market.”

Buyk



Buyk


The firm’s backers include Moscow’s CM Ventures, Silicon Valley investors Fort Ross, and Citius.

Buyk



Buyk


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