Digital convenience store GoPuff is spending $350 million to buy liquor store chain BevMo!, a move that will quickly establish its presence in states like California.
The company’s first major acquisition comes a month after Accel, Softbank Vision Fund and other investors piled $380 million into the Philadelphia-based company, valuing it at $3.9 billion. GoPuff has raised total funding of about $1.4 billion since it was started in 2013.
The acquisition will give GoPuff a foothold in California, Arizona and Washington, states where it has previously lacked a significant presence. It plans to use the company’s 161 stores as fulfillment centers, from which it can pack online orders for alcohol, snacks and other essentials and deliver them in (ideally) 30 minutes or less.
It also gives the company the ability to immediately sell one of its best-selling products: alcohol. Otherwise, GoPuff would face the task of securing liquor licenses in new markets one by one. It has taken this approach in the past, but local authorities are slow and sometimes reluctant to grant the company a liquor license. It currently has liquor licenses in about half of its markets.
GoPuff was started by two college students in 2013 to deliver late-night junk food to their classmates. It has expanded to 500 cities and offers 3,000 items—ranging from ice cream and beer to over-the-counter medicine and laundry detergent—delivered in around 30 minutes for a flat $2 fee. It fulfills orders out of its own network of 200 micro-fulfillment centers. It generated an estimated $250 million in revenue last year, but the company remains unprofitable.
The company faces intense competition in a crowded delivery space, which is dominated by larger players like Amazon, DoorDash, Postmates and Instacart. It has increasingly come up against these players as it has expanded beyond college campuses, which now represents just 20% of its business.
by Lauren DebterForbes Staff