1520 was an instant grocery delivery startup that promised deliveries in 20 minutes or less. Launched in January 2021, it quickly expanded to Chicago by September. Despite initial success, 1520 ceased operations due to high customer acquisition costs and intense competition, directing users to rival service Getir.
What Was 1520?
1520's main product was an instant grocery delivery service, promising deliveries in 20 minutes or less with no delivery fee. Its unique value proposition lay in its "super-efficient" approach to logistics. Notable achievements include raising $7.8 million in seed capital and expanding rapidly within New York City and Chicago.
What Happened to 1520?
The story of 1520 is a compelling narrative of rapid growth and sudden decline, marked by several key phases:
Initial Launch and Expansion: 1520 launched in January 2021, promising grocery deliveries in 20 minutes or less. By September, the company had expanded from New York City to Chicago, showcasing its rapid growth and ambition.
Seed Capital and Growth: In April 2021, 1520 raised $7.8 million in seed capital, which fueled its expansion and operational capabilities. This funding allowed the company to scale quickly and establish a presence in multiple locations.
Intense Competition: Despite its early success, 1520 faced fierce competition from other ultrafast delivery services like Jokr, Buyk, and Gopuff. These competitors had raised significantly more capital, making it difficult for 1520 to maintain its market position.
High Customer Acquisition Costs: The costs associated with attracting and retaining customers proved to be overwhelming. Despite turning a profit on a per-order basis, the high customer acquisition costs were unsustainable in the long run.
Exhaustion of Funding: Ultimately, 1520 ran out of funding, leading to the cessation of its operations. The company's app now directs users to download Getir, a rival service, marking the end of 1520's journey in the ultrafast delivery market.
When Did 1520 Shut Down?
1520 shut down in early December 2021 after running out of funding. The company is now directing its customers to use Getir, a rival ultrafast delivery service.
Why Did 1520 Shut Down?
Running out of funding: 1520 closed its doors after exhausting its financial resources. Despite initial success and rapid expansion, the company could not secure additional funding to sustain its operations. This financial shortfall ultimately led to the shutdown in December 2021.
High customer acquisition costs: The costs associated with attracting and retaining customers were overwhelming. Although 1520 managed to turn a profit on a per-order basis, the overall expenses for customer acquisition were unsustainable, contributing significantly to its downfall.
Intense competition: 1520 faced fierce competition from other well-funded ultrafast delivery services like Jokr, Buyk, and Gopuff. This competitive pressure made it difficult for 1520 to maintain its market position and grow its customer base effectively.
Lack of scale and brand recognition: Co-founder Maria Daniltceva noted that 1520 struggled with scale and brand recognition compared to established retail chains. This lack of market presence hindered their ability to negotiate better terms and attract a larger customer base.
Expansion without sufficient funding: The decision to expand to Chicago in September 2021 without securing enough funding to support this growth was a strategic misstep. This expansion strained the company's already limited financial resources, accelerating its path to closure.
Lessons Learned from 1520's Failure
Secure Adequate Funding: Ensure sufficient financial resources before expanding operations to avoid running out of capital during critical growth phases.
Manage Customer Acquisition Costs: Develop cost-effective strategies for attracting and retaining customers to maintain long-term sustainability.
Understand Competitive Landscape: Analyze competitors thoroughly to identify unique value propositions and avoid markets with overwhelming competition.
Build Strong Brand Recognition: Invest in marketing and brand-building efforts to enhance visibility and customer loyalty.
Scale Responsibly: Expand operations cautiously, ensuring that growth is supported by adequate funding and infrastructure.
Strategic Planning: Prioritize strategic planning to align expansion efforts with available resources and market conditions.
We Shut Down Startups
1520's rapid rise and fall highlight the complexities and challenges of the startup world. If you're facing a similar situation, Sunset can help you navigate the winding-down process smoothly.
Sunset takes care of all the legal, tax, and operational burdens, allowing you to avoid penalties and reduce liabilities. Book a demo today to see how we can assist you in moving on to your next venture.
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