November 8, 1999

FutureWeb:
Kozmo.com: At Your Doorstep In One Hour

By Clinton Wilder

At A Glance:

Kozmo.com City: New York Top executive: Joseph Park, co-founder and CEO Year founded: 1998 Employees: 500 Amount of venture funding to date: $32 million Business: One-hour door-to-door delivery of Web-ordered video rentals, food, and convenience items

oseph Park likes to think big. The 28-year-old co-founder and CEO of Kozmo.com Inc. says he has hit upon the right formula for what he calls the next generation of E-commerce: Web orders delivered to your door in less than an hour.

"I love Amazon.com, but when I get to their delivery options page, I'm looking for the 'I want it now' button," Park says. "All of E-commerce today is basically electronic mail-order catalogs. But we think that we can provide the Holy Grail--combining the convenience of Web shopping with speed of delivery."

Best known for one-hour delivery of video rentals in Manhattan and Brooklyn, the New York company has ambitious plans to expand locations and product categories. Kozmo.com already offers CDs, books, magazines, games, and food items that range from sandwiches to frozen pizzas to movie snacks. In fact, Kozmo.com sells more Ben & Jerry's ice cream than any supermarket in New York.

The company recently branched out to Seattle and San Francisco, will add Boston and Washington this month, and plans to be operating in 30 U.S. cities by the end of next year. Next month, Kozmo.com will add convenience-store items such as diapers and over-the-counter drugstore products. Next year, it plans to add gifts, flowers, pet supplies, and consumer electronics. "We'd like to eliminate the word 'errands' from the language," Park says.

Like its well-funded and well-publicized counterpart, Webvan Group Inc., Kozmo. com's business model is very capital-intensive. The company needs a 10,000-square-foot distribution center in each city, video return boxes in coffee and sandwich shops, and a small army of delivery employees--300 in New York alone--to fulfill orders by car, bicycle, and motor scooter.

"We worked on our distribution model for two years; it's the core of our business," Park says. "Once we build it nationally, the pipe is in place, and we can sell basically anything. Video rentals are just the Trojan horse."

Park admits that the company's nationwide plans will cost a lot more than the $32 million in venture capital the company has received, most of it in a $28 million round last month. Park, a former Goldman Sachs analyst and corporate finance specialist, is looking for more--and he'll get it if he can sell his next-big-thing vision. Says Park, "We have the ability to make every commodity-selling brick-and-mortar store obsolete."

continue on to the next company: Arbinet

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