ECOMMERCE
The idea behind kozmo.com is almost irresistible: a Web convenience store that delivers. New York-based kozmo rents videos and sells snacks, magazines, CDs, and other impulse items online, then brings them to you free within the hour. Since its launch in 1997, kozmo has expanded to Seattle, San Francisco, Boston, LA, and Washington, DC. By year's end, the company plans to be in 30 cities.
The quick buildout is one sign that instant gratification may be the next big ecommerce trend. Urbanfetch.com is now battling kozmo for the one-hour market in New York's upscale neighborhoods; LA's Pink Dot promises 30-minute grocery delivery for $2.99. Homegrocer.com and barnesandnoble.com are test-marketing same-day delivery, and Amazon.com is said to be looking into same- or next-day service.
"We're not a fad - we're a solution for a lot of people," says Joseph Park, kozmo's 28-year-old chair and CEO. Already, kozmo sells more pints of Ben & Jerry's than any other vendor in New York City. Red Vines and Milk Duds are also top sellers.
Given the fare, more than one observer has suggested that kozmo's early adopters are mostly baked-out stoners. "We don't track the number of households that own bongs," laughs Ken Casser, an analyst for Jupiter Communications, "but that's definitely a major driver for kozmo."
Kozmo doesn't deny courting friends in high places. Soon after the site added Krispy Kreme doughnuts to its munchie-laden menu, Park boasted to the media, "I bet we feed half the potheads in New York." Of course, kozmo is also courting busy professionals, parents with young kids, lazy preteens. But considering the number of busy professionals who unwind with a spliff after work, kozmo may have hit on a unique intersection of target demographics.
Even so, it'll be a challenge making kozmo profitable. The margins on many of its items are razor-thin, and delivery costs, which kozmo absorbs, further cut into earnings. There's also insurance for daredevil delivery personnel who must race through traffic to beat the deadline. And bigger players may yet enter the market and eat kozmo's junk-food lunch.
But CEO Park figures he'll have people hooked once they've sampled his brand of instant gratification. And he can send virtually any product down the pipe. Kozmo plans to add over-the-counter pharmaceuticals, pet supplies, and consumer electronics to its menu later this year. Before long, it should be clear whether kozmo can appeal to a mass market or is just blowing smoke.
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