Kozmo.com was a venture-capital-funded online company that promised free one-hour delivery of "videos, games, dvds, music, mags, books, food, basics & more" and Starbucks coffee in several major cities in the United States. It was founded by young investment bankers Joseph Park and Yong Kang in March 1998 in

New York City New York, often called New York City or NYC, is the most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the most densely populated major city in the Un ...

, and was out of business by April 2001. The company is often referred to as an example of the

dot-com bubble The dot-com bubble (dot-com boom, tech bubble, or the Internet bubble) was a stock market bubble in the late 1990s, a period of massive growth in the use and adoption of the Internet. Between 1995 and its peak in March 2000, the Nasdaq Compo ...

. In January 2013, the brand was bought by Yummy.com and announced that they would relaunch soon. In March 2018 Kozmo was relaunched as a warehouse club.

Model

Kozmo had a business model built around the delivery of small purchased goods within an hour by bicycle, car,

truck A truck or lorry is a motor vehicle designed to transport cargo, carry specialized payloads, or perform other utilitarian work. Trucks vary greatly in size, power, and configuration, but the vast majority feature body-on-frame constructi ...

, or

public transport Public transport (also known as public transportation, public transit, mass transit, or simply transit) is a system of transport for passengers by group travel systems available for use by the general public unlike private transport, typi ...

ation for no delivery fee. The model was criticized by some business analysts, who pointed out that one-hour point-to-point delivery of small objects is extremely expensive and were skeptical that Kozmo could make a profit as long as it refused to charge delivery fees. The company countered in part that, in their target markets, savings due to not needing to rent space for retail stores would exceed the costs of delivery.

History

Kozmo.com's headquarters was located in New York City. According to documents filed with the Securities and Exchange Commission, in 1999 the company had revenue of $3.5 million, with a resulting net loss of $26.3 million. The company raised about $250 million, including $28 million from a group of investors in 1999 which included

Flatiron Flatiron or flat iron may refer to various things, often in the shape of a wedge: Objects *Clothes iron * Hair iron Places * Flatiron Building, New York City, at the intersection of 5th & Broadway **Flatiron District, New York City, named afte ...

Oak An oak is a tree or shrub in the genus ''Quercus'' (; Latin "oak tree") of the beech family, Fagaceae. There are approximately 500 extant species of oaks. The common name "oak" also appears in the names of species in related genera, notably ''L ...

and

Chase Chase or CHASE may refer to: Businesses * Chase Bank, a national bank based in New York City, New York * Chase Aircraft (1943–1954), a defunct American aircraft manufacturing company * Chase Coaches, a defunct bus operator in England * Chase Co ...

and $60 million from

Amazon.com Amazon.com, Inc. ( ) is an American multinational technology company focusing on e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence. It has been referred to as "one of the most influential econo ...

in 2000. It entered a five-year co-marketing agreement with Starbucks in February 2000, in which it agreed to pay Starbucks $150 million to promote its services inside the company's coffee shops. This included up to 500 Starbucks locations to host drop-boxes in-store for video returns. Kozmo.com ended its deal in March 2001 after paying out $15 million. In July 2000, at the height of its business, the company operated in

Atlanta Atlanta ( ) is the capital and most populous city of the U.S. state of Georgia. It is the seat of Fulton County, the most populous county in Georgia, but its territory falls in both Fulton and DeKalb counties. With a population of 498,715 ...

Chicago (''City in a Garden''); I Will , image_map = , map_caption = Interactive Map of Chicago , coordinates = , coordinates_footnotes = , subdivision_type = Country , subdivision_name ...

Houston Houston (; ) is the most populous city in Texas, the most populous city in the Southern United States, the fourth-most populous city in the United States, and the sixth-most populous city in North America, with a population of 2,304,580 i ...

San Francisco San Francisco (; Spanish for " Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the fourth most populous in California and 17th ...

Seattle Seattle ( ) is a seaport city on the West Coast of the United States. It is the seat of King County, Washington. With a 2020 population of 737,015, it is the largest city in both the state of Washington and the Pacific Northwest regio ...

, Portland,

Boston Boston (), officially the City of Boston, is the state capital and most populous city of the Commonwealth of Massachusetts, as well as the cultural and financial center of the New England region of the United States. It is the 24th- mo ...

, New York,

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San Diego San Diego ( , ; ) is a city on the Pacific Ocean coast of Southern California located immediately adjacent to the Mexico–United States border. With a 2020 population of 1,386,932, it is the eighth most populous city in the United State ...

and

Los Angeles Los Angeles ( ; es, Los Ángeles, link=no , ), often referred to by its initials L.A., is the List of municipalities in California, largest city in the U.S. state, state of California and the List of United States cities by population, sec ...

. Kozmo had filed an IPO with

Credit Suisse First Boston Credit Suisse First Boston (also known as CSFB and CS First Boston) is the investment banking affiliate of Credit Suisse headquartered in New York. The company was created by the merger of First Boston Corporation and Credit Suisse Group in 1988 ...

, but it never went public. The company was the subject of an April 2000 report by MSNBC.com reporters Brock Meeks and Elliot Zaret claiming that Kozmo was redlining sections of the cities it served that were populated primarily by

African American African Americans (also referred to as Black Americans and Afro-Americans) are an ethnic group consisting of Americans with partial or total ancestry from sub-Saharan Africa. The term "African American" generally denotes descendants of ens ...

s. Kozmo denied that race played any part in its decision on what zip codes to deliver to, asserting that they choose market areas based primarily on Internet penetration rates. The Equal Rights Center (ERC), the

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-based civil rights group referenced in the article, pursued the company about the allegations. Later in the year, the ERC announced a joint initiative with Kozmo and stated that "Kozmo's initial service area was not motivated by racial discrimination," and Kozmo committed $125,000 toward increased Internet availability for underserved communities. While popular with college students and young professionals, the company failed soon after the burst of the

, laying off its staff of 1,100 employees and shutting down in April 2001. Employees of the company in many of their 18 locations nationwide found out about the shutdown only after arriving to work their scheduled shifts, and finding the doors locked. Those locations, as well as their Memphis distribution center, were soon liquidated by a veteran entertainment wholesaler from Florida.

Post-Kozmo

The documentary film ''

e-Dreams ''e-Dreams'' is a 2001 American documentary film directed by Wonsuk Chin portraying the rise and fall of Kozmo.com, an online convenience store that used bike messengers to deliver goods ordered online within an hour. The movie follows Joseph ...

'', released in June 2001, depicts the growth and fate of the company. In April 2005, former CTO Chris Siragusa launched ''MaxDelivery'', a Kozmo-like service in downtown

Manhattan Manhattan (), known regionally as the City, is the most densely populated and geographically smallest of the five boroughs of New York City. The borough is also coextensive with New York County, one of the original counties of the U.S. state ...

specializing in the delivery of food, wine, DVDs and essentials, and is still in business as of November, 2018. Joseph Park, former co-founder and CEO, went on to co-found Askville in 2006, which is now part of

. Park left Amazon.com in June 2009 to become president of BibleGateway.com, which is owned by

Zondervan Zondervan is an international Christian media and publishing company located in Grand Rapids, Michigan. Zondervan is a founding member of the Evangelical Christian Publishers Association (ECPA). They are a part of HarperCollins Christian Publ ...

, a Christian publisher that is a unit of

HarperCollins HarperCollins Publishers LLC is one of the Big Five English-language publishing companies, alongside Penguin Random House, Simon & Schuster, Hachette, and Macmillan. The company is headquartered in New York City and is a subsidiary of News ...

(which is owned by News Corp.). Yong Kang, former co-founder, returned to Wall Street, and as of June 2008 listed his occupation as investment banking at

Lehman Brothers Lehman Brothers Holdings Inc. ( ) was an American global financial services firm founded in 1847. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Goldman Sachs, Morgan Stanley, a ...

(now

Barclays Capital Barclays () is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services. Barclays traces ...

). Some grocery-store delivery chains offering online ordering with same-day delivery survived the dot-com bust, and in the 2010s various competing same-day delivery services started in larger U.S. cities.

References

External links

Archived versions of kozmo.com
at the

Internet Archive The Internet Archive is an American digital library with the stated mission of "universal access to all knowledge". It provides free public access to collections of digitized materials, including websites, software applications/games, music, ...

(Original Kozmo.com site predates June 1, 2001). {{DEFAULTSORT:Kozmo.Com Retail companies established in 1998 Internet properties established in 1998 Retail companies disestablished in 2001 Internet properties disestablished in 2001 Defunct retail companies of the United States Online retailers of the United States Companies based in New York City Defunct online companies of the United States Dot-com bubble

Model

History

Post-Kozmo

See also

References

External links