In its second-largest acquisition, Amazon buys the company for $970 million.
Catering to “instant gratification for the time-starved,” New York City-based Kozmo.com is revolutionizing how consumers shop for and receive their goods. In 11 cities, including Boston, Chicago, New York and Los Angeles, Kozmo’s free delivery for such items as candy, drinks, CDs and more in less than one hour is a retail coup the U.S. has not seen since the debut of the pizza delivery man.
The business plan was born out of 28-year-old chairman Joseph Park’s frustration with expensive quick-delivery options for online shopping. Today, the 3-year-old company has deals with major video distribution companies-Columbia TriStar, Universal Studios, Warner Bros., Dreamworks and Twentieth Century Fox, all of whom are investors-as well as Amazon.com, which had a deal with Kozmo to deliver the first copies of the latest Harry Potter adventure story the minute they went on sale. It plans to replicate its Harry Potter coup with “The Beatles Anthology.”
Geri Spieler, analyst with the Gartner Group, says such deals are helping Kozmo redefine online retailing and delivery. “I was impressed with their business plan. They have deals with suppliers that allow them to compete on cost. Over time this will be sustainable,” she says, noting that the quick-delivery model still is a challenging business model.
While battling competition in this quick delivery space, Kozmo is in a good position. With a bank full of financing, A-list investors and Kozmo’s fresh plan to conquer delivery delays with instant service via bike messengers and vans that dole out goods from Kozmo’s own warehouses, the company is at the forefront of a new wave of e-retailing. Spieler says the jury is still out but “if they stay with the model and continue to go after the retailer as well, they could be the 800-pound gorilla in the market place.”
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