Andrew Tsai, head of Urban fetch, the “within one hour” e-commerce and delivery company that announced its London closure this week, predicts that “one day someone will make a lot of money in this space”.
In its first foray outside the US, New York-based Urbanfetch had only been operating in London since the summer, but it quickly acquired a reputation for customer service excellence and ease of use. Although aimed at fairly affluent urbanites, its products were pitched at high-street prices with free delivery.
Its product line included DVD and videos, gifts, selected food items, electronic goods, books and music. Tsai says the company had been doubling sales week on week towards the end, but the expected $20m to 25m (&£14m to 17m) in fresh funding failed to materialise – despite six months of negotiations with unidentified third parties. “We came
very close on several occasions to securing the money, but in the end it didn’t happen.”
Urbanfetch’s US management have decided to move out of the business-to-consumer market – in New York as well as London – and focus their efforts on the business market, acting as a “rapid fulfilment” specialist under the name of Urbanfetch Express for clients such as Condé Nast, Sony, PricewaterhouseCoopers and Ernst & Young.
Carrying corporate documents for such companies means Urbanfetch is effectively a glorified courier company. Tsai says that had it secured the extra capital, the
London operation would have been profitable by the end of next year. He adds that the company, which had relied solely on viral marketing and word of mouth for its UK launch, had recently started its first conventional marketing campaign – including direct marketing, door- to-door and newspaper ads. “It showed us that by adding just a little bit of fuel to the fire, the response was overwhelming.”
He says the current economic climate means that “the financial markets are effectively closed. What’s happened over the past few weeks makes the slump in March look like a walk in the park. Until the herd comes back into the markets, people are afraid to stick their necks out.”
But, he adds: “I firmly believe that London is a good city for this model and that someone will make money out of it.”
Urbanfetch had been mooted to merge with New York rival Kozmo.com in recent weeks, but the talks were called off at the eleventh hour. Kozmo has no immediate plans to enter the UK.