Exclusive: Inside Gopuff's Amazon-inspired investor pitch

Gopuff is telling prospective investors that its model is more Amazon than Uber, as it seeks to fill out a $1 billion convertible note offering, according to confidential materials viewed by Axios.

Why it matters: There's widespread skepticism that instant delivery can profitably scale, despite massive investment and customer adoption.

By the numbers: Gopuff generated more than $2 billion in revenue last year, with around a $500 million EBITDA loss.

• It had 578 micro-fulfillment centers at year-end, up from 383 in 2020, including 38 outside the U.S. and 98 that are in the process of being converted. Opening a new MFC costs Gopuff around $200k, including cap-ex and inventory.
• The Philadelphia-based company also says it has more than three million users who bought within the past year, and that its service covers around 30% of the U.S. population.
• It has more than 400 alcohol licenses in over 30 states, Given that the number of alcohol licenses is typically fixed, it could mean something of a moat for Gopuff against Amazon and Walmart. On the other hand, we're also in an environment when lots of restaurants are going under, thus putting their licenses back on the block.

Pricing: Gopuff was most recently valued by VCs at $15 billion, and the new note comes with a convert price of up to $40 billion.

• Previously undisclosed investors include Alibaba co-founder Joe Tsai.

The argument: Gopuff is pushing hard on its vertical integration, harkening back to the Amazon vs. eBay model debates. In this case, Gopuff is Amazon (own warehouses, etc.) and Uber/DoorDash are eBay (third party sellers).

• The materials claim that all of its MFCs launched in 2017 or earlier are generating at least 10% quarterly EBITDA (Philly is above 15%). The figure is 66% for MFCs launched in 2018, 34% for 2019 and 26% for 2020.
• It also claims a 14.2% per order profit for the 2017 and earlier markets, working out to $3.67. For 2020, those figures are 4.9% and $1.32.

The bottom line: Every delivery company has hyped mature market profitability, and argued that losses are tied to new growth. The question going forward for investors is if Gopuff has actually cracked the code, particularly as the pandemic may have permanently changed some consumer shopping behaviors.