Buyk officially ceases operations as the invasion of Ukraine takes its toll on Russian-funded ultrafast startups.
Buyk and Fridge No More have stopped deliveries.
Both ultrafast startups faced financing issues brought on by the Ukrainian-Russian conflict.
The competitive ultrafast landscape will be permanently impacted, according to one analyst.
A whirlwind week in the rapid-delivery space has ended with two startups collapsing. Both Fridge No More and Buyk have ceased operations citing financing issues brought on by the Ukrainian-Russian conflicts.
Yesterday, Insider reported DoorDash had reversed course on a deal to acquire Fridge No More. In an interview Friday, Buyk's CEO told Insider the company had ceased operations but had managed to find bridge financing to pay all employees through this week.
"The single most important thing is that we want to get our employees paid and taken care of," CEO James Walker said. Although Buyk has ceased operations, Walker said he's actively looking for employment for his team and ways to offload assets like warehouses.
"Funding from our founders became very, very difficult, not specifically because of the sanctions — our founders are not sanctioned — but Vladimir Putin has put restrictions on Russians in general and their ability to send money," Walker previously told Insider.
"Where we sit today the events that brought about this specific issue with Buyk were unforeseeable," Walker said.
"The events that transpired on February 24 and thereafter happened very very rapidly, and I'm not sure there were ways we could have anticipated that series of events and how they unfolded," Walker added, referring to the conflict in Ukraine.
Robert Mollins, a Gordon Haskett analyst, said the Russian funding issues that doomed Buyk and Fridge No More only accelerated the inevitable burst in the rapid delivery sector as startups had been burning through investor money.
"It was bound to happen," Mollins told Insider. "The amount of money that these companies had to spend to attract customers, and the payback that was required, was incredibly high."
Buyk launched its dark-store operation in New York City in mid-September. Two months later, it appointed Walker, a restaurant-industry veteran, to lead the fast-growing company. At the time of Walker's appointment, Buyk had more than 20 microfulfillment locations in New York, a city teeming with rivals including Getir, Gopuff, DoorDash, and Jokr all of which promised delivery of convenience store goods in 30 minutes or less. Most in the space are heavily funded by venture capital.
"The closure of Fridge No More and Buyk is a wake-up call to the rapid grocery delivery industry," Brittain Ladd, a retail consultant who follows the delivery industry, told Insider. "The days of easy capital raises are over."
Still, Walker says he's "still very bullish on ultra-fast grocery." He pointed to Getir, Gopuff, and Instacart as "three groups that really understand how to be successful in this space." He added: "I would keep an eye on those players."
Mollins said more closures will happen as the industry consolidates. In fact, he already thinks he knows the next ultrafast player on the chopping block: "I would say Jokr would be the next one to either close up shop in the United States or try to sell itself. And in this market, I don't see anyone really buying."
Going forward, Mollins said to expect more closures in rapid delivery as it follows the same path as restaurant delivery, where the strongest players emerge.
"If I were saying who's gonna win going forward Gopuff is clearly the industry leader there. DoorDash is going to do pretty well, I think just because of historical precedent with what they've done with restaurants," Mollins said.
Do you work in or with ultra-fast delivery companies and have a story to share? Reach out to Alex Bitter at abitter@insider.com or via Twitter direct message @abitterjourno or Nancy Luna at nluna@insider.com or via Twitter at @fastfoodmaven.
