Kozmo.com was a

venture capital Venture capital (VC) is a form of private equity financing provided by firms or funds to start-up company, startup, early-stage, and emerging companies, that have been deemed to have high growth potential or that have demonstrated high growth in ...

–funded online company that promised free one-hour delivery of "videos, games, DVDs, music, mags, books, food, basics and more" and

Starbucks Starbucks Corporation is an American multinational List of coffeehouse chains, chain of coffeehouses and Starbucks Reserve, roastery reserves headquartered in Seattle, Washington. It was founded in 1971 by Jerry Baldwin, Zev Siegl, and Gor ...

coffee in several major cities in the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

. It was founded in March 1998 by young investment bankers Joseph Park and Yong Kang in

New York City New York, often called New York City (NYC), is the most populous city in the United States, located at the southern tip of New York State on one of the world's largest natural harbors. The city comprises five boroughs, each coextensive w ...

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

dot-com bubble The dot-com bubble (or dot-com boom) was a stock market bubble that ballooned during the late-1990s and peaked on Friday, March 10, 2000. This period of market growth coincided with the widespread adoption of the World Wide Web and the Interne ...

. 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 A warehouse club (or wholesale club) is a retailing, retail store, usually selling a wide variety of merchandising, merchandise, in which customers may buy large, wholesale quantities of the store's products, which makes these clubs attractive ...

. The Kozmo.com website is offline as of July 2023.

Model

Kozmo had a business model built around the delivery of small purchased goods within an hour by bicycle, car, truck, or public transportation for no delivery fee. The model was criticized by some business analysts, who said 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 delivery costs.

History

Kozmo.com's headquarters was in New York City. According to documents filed with the

Securities and Exchange Commission The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...

, in 1999 the company had revenue of $3.5 million, with a resulting net loss of $26.3 million. The company had raised probably 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 after ...

Oak An oak is a hardwood tree or shrub in the genus ''Quercus'' of the beech family. They have spirally arranged leaves, often with lobed edges, and a nut called an acorn, borne within a cup. The genus is widely distributed in the Northern Hemisp ...

and

Chase Chase or CHASE may refer to: Businesses * Chase Bank, a national American financial institution * Chase UK, a British retail bank * Chase Aircraft (1943–1954), a defunct American aircraft manufacturer * Chase Coaches, a defunct bus operator in ...

and $60 million from

Amazon.com Amazon.com, Inc., doing business as Amazon, is an American multinational technology company engaged in e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence. Founded in 1994 by Jeff Bezos in Bellevu ...

in 2000. It had entered a five-year co-marketing agreement with

in February 2000, in which it agreed to pay Starbucks $150 million ($ in ) 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 ). In July 2000, at the height of its business, the company operated in

Atlanta Atlanta ( ) is the List of capitals in the United States, capital and List of municipalities in Georgia (U.S. state), most populous city in the U.S. state of Georgia (U.S. state), Georgia. It is the county seat, seat of Fulton County, Georg ...

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San Francisco San Francisco, officially the City and County of San Francisco, is a commercial, Financial District, San Francisco, financial, and Culture of San Francisco, cultural center of Northern California. With a population of 827,526 residents as of ...

Seattle Seattle ( ) is the most populous city in the U.S. state of Washington and in the Pacific Northwest region of North America. With a population of 780,995 in 2024, it is the 18th-most populous city in the United States. The city is the cou ...

Portland Portland most commonly refers to: *Portland, Oregon, the most populous city in the U.S. state of Oregon *Portland, Maine, the most populous city in the U.S. state of Maine *Isle of Portland, a tied island in the English Channel Portland may also r ...

Boston Boston is the capital and most populous city in the Commonwealth (U.S. state), Commonwealth of Massachusetts in the United States. The city serves as the cultural and Financial centre, financial center of New England, a region of the Northeas ...

New York New York most commonly refers to: * New York (state), a state in the northeastern United States * New York City, the most populous city in the United States, located in the state of New York New York may also refer to: Places United Kingdom * ...

Washington, D.C. Washington, D.C., formally the District of Columbia and commonly known as Washington or D.C., is the capital city and federal district of the United States. The city is on the Potomac River, across from Virginia, and shares land borders with ...

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, and

Los Angeles Los Angeles, often referred to by its initials L.A., is the List of municipalities in California, most populous city in the U.S. state of California, and the commercial, Financial District, Los Angeles, financial, and Culture of Los Angeles, ...

. Kozmo filed an

IPO An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...

with

Credit Suisse First Boston Credit Suisse First Boston (also known as CSFB and CS First Boston) was 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 1 ...

, but never went public. The company was the subject of an April 2000 report by

MSNBC.com MSNBC is an American cable news channel owned by the NBCUniversal News Group division of NBCUniversal, a subsidiary of Comcast. Launched on July 15, 1996, and headquartered at 30 Rockefeller Plaza in Manhattan, the channel primarily broadcasts ...

reporters Brock N. Meeks and Elliot Zaret claiming that Kozmo was

redlining Redlining is a Discrimination, discriminatory practice in which financial services are withheld from neighborhoods that have significant numbers of Race (human categorization), racial and Ethnic group, ethnic minorities. Redlining has been mos ...

sections of the cities it served that were populated primarily by

African American African Americans, also known as Black Americans and formerly also called Afro-Americans, are an Race and ethnicity in the United States, American racial and ethnic group that consists of Americans who have total or partial ancestry from an ...

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

Washington, DC Washington, D.C., formally the District of Columbia and commonly known as Washington or D.C., is the capital city and Federal district of the United States, federal district of the United States. The city is on the Potomac River, across from ...

–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 at many of the company's 18 locations 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 Jose ...

'', released in June

2001 The year's most prominent event was the September 11 attacks against the United States by al-Qaeda, which Casualties of the September 11 attacks, killed 2,977 people and instigated the global war on terror. The United States led a Participan ...

, 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 ( ) is the most densely populated and geographically smallest of the Boroughs of New York City, five boroughs of New York City. Coextensive with New York County, Manhattan is the County statistics of the United States#Smallest, larg ...

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 Askville was a user-driven research site founded by Amazon.com. It was opened to the public on December 8, 2006, and shut down on October 25, 2013. History Askville was co-founded by Korean-American former investment banker Joseph Park, prev ...

in 2006, which is now part of

. Park left Amazon.com in June 2009 to become president of

BibleGateway.com BibleGateway is an evangelical Christian website designed to allow easy reading, listening, studying, searching, and sharing of the Bible in many different versions and translations, including English, French, Spanish, and other languages. Its m ...

, which is owned by

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

, a Christian publisher that is a unit of

HarperCollins HarperCollins Publishers LLC is a British–American publishing company that is considered to be one of the "Big Five (publishers), Big Five" English-language publishers, along with Penguin Random House, Hachette Book Group USA, Hachette, Macmi ...

(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 Inc. ( ) was an American global financial services firm founded in 1850. Before filing for bankruptcy in 2008, Lehman was the fourth-largest investment bank in the United States (behind Goldman Sachs, Morgan Stanley, and Merril ...

(now

Barclays Capital Barclays PLC (, occasionally ) 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 ...

). 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 Package delivery, or parcel delivery, is the delivery of shipping containers, parcels, or high-value mail in single shipments. The service is provided by most postal systems, express mail, private courier companies, and less-than-truckload shipp ...

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 501(c)(3) organization, non-profit organization founded in 1996 by Brewster Kahle that runs a digital library website, archive.org. It provides free access to collections of digitized media including web ...

(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