Gopuff

Recapping my time @Gopuff

Gopuff is an everyday needs delivery service (think groceries, snacks, and phone chargers) currently valued at $15 billion. They are truly innovator in the delivery services space thanks to a vertically integrated supply chain and last mile delivery powered by hundreds of micro fulfillment centers. With this infrastructure, Gopuff can offer customers fast delivery times of ~20 minutes and in-store pricing.

After shutting down my startup, I had the opportunity to join Gopuff in October 2021 as a Manager in the BizOps and Strategy team. I was captivated by the opportunity of solving last mile delivery because of my firsthand experience in e-commerce drop shipping while building The Workshop. The industry tailwinds were also clear and exciting: retailers offering same day delivery, influencer branded products, cannabis legalization, etc.

The BizOps and Strategy team was new to the organization. Our mandate was to identify strategic initiatives, coordinate cross functional execution, and measure performance. In my role, I partnered directly with the executive team to drive key projects while managing two junior analysts. Below is a summary of a few of these projects.

Business development deal desk

One of the pillars to Gopuff's growth strategy is strategic partnerships. Millions of new users were acquired through major deals with brands like Chase and McLaren Formula 1.

When I I joined Gopuff, there was little analytical rigor applied to existing or prospective deals. Nobody knew how to tell if a deal was good or bad for the business. To fix this, I was tasked with creating the structure, process, and standardized analysis to evaluate new deals as part of BizDev's $20 million annual budget.

I put together a cross functional team consisting of leaders from from BizOps, BizDev, Legal, and the CFO. Each week we would prepare and review materials for new deals. These materials covered three areas 1) strategic rationale, 2) financial analysis, and 3) deal terms.

Once the deal desk was in place, I participated on the deal desk by performing financial analyses and business reviews of LOIs for major deals. One of the deals I enjoyed working on most was our pilot partnership with Hyatt in which we offered hotel guests free delivery and promotion spend at 13 locations. We acquired customers at a +50% discount compared to paid media with higher retention levels.

OKRs and business reviews

Gopuff is a large and operations-heavy business. There are hundreds of micro-fulfillment centers across the U.S. stocked with inventory, on-site kitchens, packers, delivery drivers, and a diverse user base. In order to provide customers with a world class experience, the company needed clear goals, timely performance measurement, and a mechanism to dynamically allocate resources. Unfortunately, prior to the formation of our BizOps and Strategy group, this did not exist. It was my job to transform this complex operation into a well-oiled machine.

As a first step we put in place a framework for setting company-wide goals that tied back to our mission and strategy. Working with the leadership team, we drafted objectives and key results (OKRs). Most of the key results had an underlying metric and target attached (eg. revenue, P90 delivery time, gross profit, etc). Our team built a bottoms-up 12 month operating model by location to derive these target metrics.

With clear goals set for the company, the next step was to track our performance against these goals. I worked closely with major departments including supply chain, driver operations, marketing, finance, and product to identify the most impactful KPIs driving the business. Then I created an automated report which queried our database, calculated our metrics, and visualized trends on a weekly basis. Before distributing the report each week, I would analyze these reports and write commentary highlighting key insights.

To ensure dynamic resource allocation and decision making, I coordinated a weekly business review meeting with the leadership team and heads of each business unit. During this weekly meeting, we would review the report and discuss what action items are needed for each business unit. This report would also be the source of ideas for strategic initiatives to optimize the business as highlighted in the following section.

Driver supply optimization

As part of our weekly business review, the most important KPIs were discussed. Analyzing trends in this data was a great source for identifying business optimization opportunities. One such analysis I did was to triangulate optimal delivery times across each market we served.

The ongoing claim was that faster delivery times resulted in higher order frequency. To test this theory I ran a regression analysis on a segment of customers plotting their avg. delivery time vs. number of orders in the last 30 days. I made sure to clean the data by removing orders discounted with promotions and first time Gopuff users.

The resulting graph clearly confirmed the standing hypothesis. It showed a strong indirect correlation between order frequency and delivery time. Interestingly, the correlation however seemed to vanish at the tails of delivery times. Digging in further, a key insight emerged: orders that arrive earlier than 25 minutes do not have any impact on order frequency.

Next, I took a look across our driver network to see how many orders each month were delivered in less than 25 minutes and the nature of these orders. Many of these fast deliveries turned out to be drivers delivering a single order from a facility. Ideally, we could batch every delivery with 2-3 orders improving the unit economics of each delivery.

This was a great opportunity for our business to capture incremental value. Rather than prioritize speed for every delivery, we proposed delaying the delivery of each order until it is either a) batched with at least one other order or b) has reached a set holding period to increase likelihood of batching while ensuring ~25 minute delivery times.