Sounding the Alarm on 'Real-Time Retail'

A siren blares three times, and it’s on.

A shopper in a magenta-and-yellow soccer-style jersey wheeling a two-level cart outfitted with a mounted cell-phone holder and carrying shallow numbered plastic bins with paper grocery bags inside them, races around a corner to a bank of dairy coolers, picks a carton of milk, scans its barcode from a reader worn on her right ring finger, places it in one of the paper bags, and backs out toward wire racks of dry groceries—they’re next, according to a list displayed on an app on the mounted screen.

In minutes—two, to be precise—an efficient route through the small maze of shelves and fridges has filled three bags in three bins, including one holding a separate insulated bag with a pint of ice cream picked from a coffin-style freezer. These are loaded directly from the shopper’s cart into a waiting and wide-open backpack-style cooler, its inner compartments snug fits for the incoming totes. A virtual pass-off is concurrently taking place as barcode data from the bins has now populated an app on a cellphone strapped to the forearm of a colleague who’s about to take over.

He’s wearing the same colorful jersey, along with a matte black cycling helmet. He zips the cooler shut, straps it on his back, grabs one of 10 waiting KBO Hurricane model pedal-assist electric bicycles parked by the door, and disappears north up Amsterdam Ave.

Related:Get On Your Buyk and Ride

Minutes later the cyclist returns, flips the bike around so its front wheel faces the door, returns the cooler to its shelf, zips it wide open again, and returns its now-empty bins to shelves alongside it.

While he was away, the app guided him turn-by-turn to his destination, a nearby Upper West Side apartment building, where he passed off the bags, from the bins, to a customer, who, roughly 10 minutes before, triggered the siren that started it all by pressing the “purchase” button on their own cellphone.

This simple, efficient and almost elegant ballet—more complex versions of which have become common in grocery stores answering the omnichannel alarm—would occur five times over the course of my 40-minute visit to a 2,400-square foot “dark store” fulfillment center operated by Buyk, only the latest “instant delivery” grocery provider to have invaded New York in recent months.

Buyk soft-launched late last month, and held its official opening day Sept. 14 at this and several sister microstores across Manhattan from which the company has ambitions to bring what it called “real time retail” first to New Yorkers, and then to everyone.

From Russia ... With Experience

Leading my tour at the delivery hub is Yana Pesotskaya, who is head of retail operations for Buyk, newly established this year by co-founders and former owners of a similar service—Samokat, which zoomed to 700 of these kinds of delivery hubs in less than two years in Russia. Pesotskaya explains that her career until now has primarily involved helping American companies, including Burger King and Under Armour, establish themselves in Russia and Eastern Europe, making this something of a reverse mission.

Yana Pesotskaya (center) previously helped U.S. companies break into Russia. At left is Buyk store manager Alina Pedraza. 

Pesotskaya acknowledges that Buyk is joining this field as several would-be competitors with roots in Europe are also establishing themselves—its cyclists now share city bike lanes with counterparts representing JOKR, Fridge No More, Gorillas, Fifteentwenty and others like Getir and the American company GoPuff, expected to soon arrive. She believes consumers choosing among them will ultimately gravitate to Buyk based on its execution, prices and offer (no delivery fees), but that the real source of share in the larger field will not necessarily be one another, but the walk-in stores they bypass on the way—including grocery stores, drugstores and merchants playing to current demand for small-trip convenience, like corner stores and bodegas.

“This market is big,” she says of New York. “We know that we’re going to have our place here in the market because we’ve got an experienced team of managers and we’re developing fast. We’re very good at assortments. And I think we’re really good for the customer.”

The hub I visited—located in a mid-block storefront between 108th and 109th Streets on Amsterdam Ave. on that Tuesday morning had a small staff on hand: two cyclists, two cart-pushing pickers, an on-site manager, and a worker seated at a desk observing the varied activity on a desktop monitor. Staff size is intended to flex with hourly and daily volumes: In periods of high demand, workers may be asked to report to the next-nearest hub. 

The warehouse currently carries about 1,800 skus, but Pesotskaya says that figure will likely also expand to 2,500 to 2,700 over time. Assortment—quite low on raw fresh ingredients, and on brand and pack sizes—was geared toward a delivery neighborhood that includes much of Columbia University’s campus as well as Morningside Heights residences and their small kitchens and pantries. Functional beverages, alternative meats, candy and snacks, and foodservice items like salads and sandwiches from the Queens-based Bimmy’s Kitchen commissary were well represented. Beer was not available.

Prices are only on the app, not on the shelves here, but I found myself looking anyway. Buyk is offering area shoppers $20 off their first order on a minimum $21 purchase, a threshold they will get to quickly, as it’s pricey to shop for food almost any way in Manhattan.

For the time being, Pesotskaya says, Buyk’s efforts will be on expansion and scaling up its offering but notes its growth plan would also include assortment evolution including an affordable private label option, and promotions as needed. Many more delivery hubs—and a new fleet of bikes better suited for coming winter weather—are on their way as well, she says.

An Opportunity Bigger Than… Walmart?

From the efficient layout and routing technologies, to the small staff and tight assortment, to its ambition to win through a combination of small bites of sales and big shifts in the customer experience, to the arresting four-letter brand name that’s a pun on the word “buy” pronounced “bike”—the vibe at Buyk is something of a brightly-colored, future-focused mashup of Aldi and Amazon, intended for busy and spontaneous shoppers. Buyk’s founders have ambitions at least that big.

A Buyk shopper prepares an order; he'll hand it off in minutes to a delivery teammate. WGB Staff photo

“Buyk is a new entrant to the U.S. market, but one that possesses a deep experience and expertise that other players simply cannot match. From our experience building Samokat, we know how to rapidly scale our business, implement the technological solutions needed to optimize margins, and crucially, turn unit economics positive in a market where current players are witnessing significant losses,” Rodion Shishkov, co-founder and chief product officer, said in a release this week.

The same document argues that the addressable market for a fast-delivery offering in the U.S. is a mind-boggling 40% of the $1 trillion U.S. grocery market as estimated by the Institute of Grocery Distribution. For perspective, Walmart’s total U.S. sales last fiscal year was slightly less than that at $370 billion. Small and medium sized grocers, Buyk predicts, will be its largest share donors, a scenario that if comes to pass could presumably create its own real estate as it goes, but that will be a very long haul made up of many, many short trips.

The heady potential of real-time retail has gained the attention of investors—Buyk has raised $46 million so far, according to Crunchbase. Established grocers are reacting too, and in a way that appears to contrast with the wait-and-see posture they took toward other threats of the recent past, like meal-kit companies.

They quite suddenly have my attention too.

Before I departed home (by bike, of course) to meet Buyk’s debut, I wrote about a fresh release detailing Kroger’s new partnership with Instacart opening up 30-minute delivery options for its shoppers: That’s about as fast as I’d reckon any retailer’s stores in parts of the country less-dense than its big cities would dare to promise, and it will be interesting to see how, if at all, this disrupts the growth curve of more affordable full-shop options that take more time to arrive, which Kroger is also investing heavily behind. The omnichannel playbook would suggest they be indifferent: A trip is a trip is a trip.

Other such partnerships, a lot of consolidation among players new and old, and wailing sirens every few blocks are likely also to be on the way if Buyk’s promise is to be realized.