Of GoPuff, Bolt, and Cameo, if I could only invest $1 million into one of the companies, I would choose GoPuff. Although all three companies boast impressive platform-based businesses, GoPuff has the most long-term potential due to its vertically integrated model that allows for recurring demand and stronger pricing/margin control.
GoPuff’s business model is primarily micro-fulfillment. Unlike marketplaces, GoPuff owns its own inventory and small warehouses distributed locally to control pricing, speed of delivery, and overall margins. Customers can order food, snacks, drinks, and household items. The company makes money through the markup of products sold, delivery fees, subscriptions, and brand collaborations. By cutting out the middleman, GoPuff takes a greater slice of the transaction. Additionally, they stand to capture more value over time if scaled correctly, as demand for convenience products is highly repeatable. Revenue is also more stable than discretionary services.
Bolt has a ride-share marketplace business model. Bolt connects riders and drivers and earns commissions from each ride. I used Bolt frequently while studying abroad in Porto, Portugal. While the rides were initially super cheap, which drove me to use the app, prices increased if you rode with them three or four times. I believe this was a penetration pricing strategy to build a customer base, and then they slowly increased prices as they gained you. This experience left me frustrated as a consumer and lost trust. This also exemplifies how razor-thin margins are in the ride-share industry. The pricing power is also extremely volatile, as the model is based on. There are many alternatives, regulations incoming, and low switching costs.
Cameo is a cool concept, but it heavily relies on celebrity and discretionary spending. Demand is not as repeatable if a celebrity falls out of favor or during uncertain economic times.
I would invest in GoPuff because they own more of its value chain. The product that they sell satisfies recurring needs and has more defensibility in the long run vs. a marketplace. Not only will they capture more margin on each transaction, but they can continue to build subscriptions and scale that operationally.
