Can rapid reaction home delivery companies repeat the success of Stateside operations? Gillian Law talks to some of the ambitious start-ups determined to stick with it until profits start to appear The customers stagger in bleary eyed and unwashed soon after dawn, looking for a toothbrush, razors and even a clean shirt to wear before turning up at the office. Or there are the Saturday morning hangover-heads who've discovered the fridge contains nothing but mouldy cheese. But they won't need to come to your shop any more because now they can order what they need, by phone, WAP or internet, and have it delivered to their door. The big American one hour delivery companies, Urbanfetch and Kozmo, are testing out the London market and several home grown companies are starting up too. Each offers a different range of products and services, but most are based in central London and they all cater to the customer who wants things fast. Costs are high ­ many don't yet charge delivery or demand a minimum order so it will be some time before they start to make a profit. Can the model be made to work here as well as in the States? Andrew Tsai is president of The UK business ( started in June and is growing, he says, "fantastically fast". The service has over 5,000 customers already, claims Tsai, without any formal marketing having been done yet. He's certain the business here will be just as successful as its American parent. Growth has been from word of mouth so far, he says, and he puts this down to a focus on the customer experience'. "We spend a lot of time and money on [that]," he says, "with couriers in livery and Urbanfetch vans." Couriers are not allowed to take tips, he says, because their role should be more than just that of a delivery boy ­ they are the face of the company. Urbanfetch offers wine and food ­ mainly snacks for the moment, but with partnerships with premium restaurants for ready meals and food hampers. Along with the food and drink, videos, books and electronics are all popular. "We sell a whole lot of Palm Pilots every week," says Tsai. But wine is his pick for the most popular product. "Wine stores close early, and it's heavy to carry home. We're already selling hundreds of bottles a day." Urbanfetch's 40,000 sq ft London warehouse and automated systems haven't come cheap, says Tsai, but that's been the key to New York success and it's worth making the same investment here. "We could have launched sooner than we did but we wanted to be ready. We built up the system and warehouse, took on around 100 local staff and are building up the product range slowly to get it right." Urbanfetch's US competitor Kozmo has been talking of a move into the UK and is also reportedly trying to buy Urbanfetch. However, management troubles within the company may have put both moves on the back burner. Debts of £18m saw senior management demoted and staff laid off. Kozmo's offer is similar to that of Urbanfetch but a decision not to set a minimum order has been blamed for its financial troubles. On the homegrown front, was set up this year but it has really been around since 1998, says md Thomas Fitch, as a video rental service. "I've been developing it gradually. We have to be careful because with increased awareness and coming into winter, it could really accelerate. I've been using the quieter summer months to set up the mechanisms and make the deals. I'll have a fuller range in two to three months." Currently queuejumper offers videos, books, CDs and DVDs with a limited range of food products. He has been approached by some "very big retailers" interested in working with him on the concept, he says, so the offer is likely to grow fast. Zipround's web site went live on August 1 and only operates in three London postcodes so far: SW6, SW11 and SW18. It's different to the others, says director Peter Wright, in that while one hour delivery is available, Zipround will also let the customer choose a delivery time. "It's about choice, not speed," he says. Customers can choose a slot up to a week away, and that will soon be extended to a month. Films, music, gifts, health and beauty and baby products are all offered as well as food and drink. Although Zipround has the smallest customer area at the moment, Wright has big plans. It will grow "organically" in London, he says, and then spread across the UK. Within 18 months, he says, he'll be able to offer service to 85-90% of the population. Alcohol sales will be key to the company's success, says Wright, because it offers a timeframe that off licences can't. So long as the order is placed between 8am and 11pm, the product can be delivered at any time. Traffic has been light, he says, because there's a limited range at the moment and there has been little promotion, but he hopes it will grow in the coming months. Bags of Time is another company slowly building up a range. The idea was conceived on New Year's Eve, but it took until March to get started, says chief executive Bob Hitching. While it started off selling non-grocery items, the food side has grown enormously, he says. "The demand for food out there is huge, much more than we can meet at the moment." A minimum order of £10 encourages people to spend, he says. "We had one woman admit she was buying a book because she wanted us to bring her some chocolate." His longer term business model is to be a "rapid convenience marketplace" with partnerships with lots of manufacturers and retailers. "We'll be a new delivery channel for them," he says. Up in Scotland, has just expanded from its home town, Edinburgh, to offer a service in Glasgow. Again, in60 provides videos, books, snacks and drinks to customers who don't want to get off the couch. Set up in May by Debbie and Ian MacCallum, the company's order book has grown by about 25% every week since it was launched. In60 recently added David Bremner, former boss of Sainsbury Supermarkets, to its board, although Bremner insists he will be there in a purely non-executive capacity. All these services are useful, but for the true dirty stop-outs (or truly hung over), getting to a PC isn't always easy. What will make it much easier? Ordering through their WAP phone of course. WapitOver went live at the end of August. "When I first got a WAP phone," says founder Elliott Ronald, "I started thinking about all the things it could do. I was talking to friends about how difficult it is when you stay out over night and have nothing with you" ­ and the idea for WapitOver was born. The service will be available over the internet, too, but Ronald sees WAP as the real answer. "The internet is a more developed platform, yes, but it's not the logical thing when you find yourself needing something quickly." There are over 700,000 WAP mobiles in use in the UK, he says, and estimates say there will be two million WAP phones in use by the end of the year. "So it's useful to get in early, while the demand is low, and grow with it." Already the company's web site is receiving 20,000 hits a day "and we're not even open yet! It's quite amazing." Don't expect to be able to WAP-order a loaf of bread and some milk for your tea: WapitOver will concentrate on the gourmet end of things for now. A deal with food company Deliverance means they can offer food cooked to order and ready to cook meals such as organic fresh pasta and sauce. So when will all these companies actually start to make money, or are they going to be yet another crowd of dotcoms with Amazon-style finances? Tsai expects to see a profit by the third quarter of 2001, while most of the others expect a longer two to three year timeframe. Urbanfetch doesn't charge a delivery fee, and has waived its minimum order for the first few months in London which will make its margins very tight. In New York the minimum is $10 but the average customer spends $45 anyway. In London the order size is around £30 and increasing weekly, says Tsai, so the minimum order size won't be a problem. Bags of Time is already achieving an average order of £30 and Hitching expects that to rise as more retail partners come on board. Queuejumper plans to run with no delivery charge or minimum order size for as long as possible, says Fitch, although he recognises that may need to change in future. Zipround offers free delivery on the first order, but after that it charges. Free delivery just isn't sustainable in the long term, says Wright, unless prices are ludicrously high ­ "and we try to keep our prices in line with the shops". Financed by an "accelerator" company, he won't expand on the time it will take to make a profit but is confident it won't take too long. Other UK cities may have to wait a while before they see a delivery service of their own. London is the best city after New York because of its internet penetration, says Tsai, and the population concentration. "Dense urban areas are what we need," he says, and further growth is likely to be in other European countries. Zipround has the most ambitious plans, with UK wide coverage planned but with wider timeframes in less populated areas. In60 plans to stay in Scotland initially, Bags of Time "may go to other cities, depending on partners and growth" says Hitching, and WapitOver, like Urbanfetch, will look at different areas by postcode and move to those with sufficiently concentrated demand. All except Bags of Time and WapitOver use their own drivers exclusively, which pushes up costs in these early days when orders are low. Order volumes and values will have to grow fast to cover costs, and of course most are fighting for the same inner London areas. Success will come down to efficiency, service, and how much capital they've got to prop them up until they start to turn a profit. {{FEATURES }}