- The Fast Delivery area has attracted players selling 7-Eleven-style goods and groceries.
- But startup FastAF has found an ideal place for next-gen shoppers – deliveries for Shopify brands.
- Brands in the app state that FastAF gives them a fast delivery option that isn’t available to Shopify merchants.
Startup FastAF has discovered a secret weapon to survive in the volatile space for ultra-fast delivery: Shopify stores.
Rather than selling 7-Eleven-style merchandise like its competitors Gopuff and Gorillas, FastAF has formed partnerships with companies that use Shopify’s platform. FastAF delivers same-day items like Maude sexual wellness products, Ghia alcohol-free elixirs and trendy Evolvetogether face masks.
FastAF offers 1,600 curated articles. Of the 600 brands featured in the FastAF app, half are businesses built on Shopify, the company says.
Lee Hnetinka, the startup’s CEO and founder, said these companies tended to hit a “strike zone,” which resonated with the Gen Z demographic, who are tech-savvy and looking for enterprise-centric brands.
“The strike zone is you completely reinvent a category. You’re mission-driven, values-driven, and what you’re building is a better alternative to what came before,” Hnetinka said.
FastAF offers merchants a fast delivery option that is not available on Shopify
San Francisco-based FastAF differentiates itself from other rapid-delivery startups like Getir and Gopuff by partnering with niche brands and offering on-demand, two-hour delivery. Scheduled deliveries allow the startup to batch or bundle multiple orders into one delivery, which FastAF says is a more sustainable business model than the typical ultra-fast startup practice of delivering pint of ice cream to a consumer in under 15 minutes.
FastAF, whose value hit $200 million in December, is bulk buying inventory from brands like Maude, Ghia and Evolvetogether. Products are then sold from its dark warehouses in New York, San Francisco and Los Angeles.
For small and medium business owners using Shopify, FastAF gives them faster fulfillment selection than what’s available through the ecommerce platform.
Shopify announced in February that it plans to expand its fulfillment network, with a focus on giving merchants the ability to offer two-day delivery in more than 90% of the United States.
But if merchants want their goods delivered the same day or within two hours, they’ll have to turn to a third-party partnership like the one with FastAF for now.
Evolvetogether’s medical masks have been listed on the FastAF app for almost two years. Without FastAF, a typical order placed through the company’s Shopify platform can take up to seven days to deliver, the company said.
“We want our customers to be able to receive all of our products immediately. So as a brand, we’re definitely looking for a solution,” Cynthia Sakai, co-founder and creative director of Evolvetogether, told Insider.
Maude, which has just 11 full-time employees, said the partnership with FastAF has helped it accelerate its plans for quick deliveries while launching international sales on its own. FastAF sells Maude latex condoms, personal massagers and lubricants.
“We’re now shipping to 33 countries — it’s been a big undertaking,” Lily Sullivan, Maude’s senior manager for brand marketing and content, told Insider. “We figured we didn’t need to add a bit to that.”
Julia Gasser, director of business operations at clean hair brand Ceremonia, told Insider that FastAF has enabled the company to reach a new customer base while “bridging the gap” that direct-to-consumer brands typically do if customer orders are received after the holiday shipping deadlines.
Rick Watson, the CEO and founder of RMW Commerce Consulting, said small businesses could use apps like FastAF to test the sales impact of on-demand delivery and outsource all logistics to a third party.
“If you really increase your delivery speeds, how many orders can you still get?” said Watson.
Watson added that another benefit of experimenting with startup marketplaces like FastAF is helping the brands get discovered by buyers, which launched in November 2020.
“We give these brands a discovery platform”
Brand interest in FastAF is increasing. Hnetinka said brands are lining up to be listed on the FastAF app. Along with Maude, Evolvetogether, and Ghia, the Shopify brands on the app also include hair care brand Olaplex, which recently went public.
“We give these brands a platform to discover, to sell as a service. And, you know, that’s not what you see on these standardized platforms,” Hnetinka said, referring to ultra-fast players like Gopuff and Getir.
Evolvetogether’s Sakai said she can’t track direct sales resulting from FastAF purchases. But she said when a retail channel with “really good curation” like Nordstrom or FastAF sold the company’s products, “it always increases our visibility as a brand.”
The same goes for Maude. Showcasing its products alongside more established brands is invaluable, the company said.
“We also just love the other brands that started stocking them,” Jessi Hong, Maude’s senior manager of wholesale marketing and sales, told Insider. “I think it’s definitely a great presence for our brand that we’re sitting next to other great brands like Nike and Aesop and maybe the loyal Nike customer can buy more products.”
Hong said it’s too early to tell how the partnership will impact the brand’s sales. Maude started offering fast delivery services with FastAF late last year.
Goods of higher value lead to higher order volumes
FastAF is backed by Luxor Capital, former Benchmark partner Scott Belsky and NBA star Baron Davis. One investor told Hnetinka that FastAF is like a modern day Whole Foods as it serves as a launch pad for brands that improve consumers’ lives.
Hnetinka said the startup’s choice of premium goods has placed it in a strong economic position in a rapidly thinning space. Three rapid-delivery startups have shut down in the last four months, reflecting analyst concerns about the sustainability of the quick-commerce model.
But Hnetinka again points to FastAF’s premium range of goods, which triggers an average shopping cart size of $142. That outperforms leading e-commerce grocery suppliers like Gopuff and Instacart. In February, Gopuff cost an average of $26.07, according to transaction data tracked by Earnest. The average order size for grocery e-commerce giant Instacart was $108.30 in February.
“It really put us in a position of strength compared to the other guys that have standardized and undifferentiated products,” Hnetinka said.
As for the company’s endgame? The aim is to reach around 200 camps in a few years. At this scale, FastAF can “reach 2% of the population and achieve a $42 billion run rate” over the next four years. “That’s the plan we’re working on,” Hnetinka said.