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Russian Grocery Delivery Startup Eyes US Market, And Its Higher Costs

Russia’s busiest provider of instant grocery deliveries is planning to launch a U.S. service, beginning in August in New York, Bloomberg News reports.

The Saint Petersburg-based company, Samokat, reportedly plans to call the U.S. service Buyk.

The managers of Buyk hope to reach a volume of 10,000 orders per month by the end of December, according to Bloomberg.

“We understand that there are higher costs in New York. But there is also a higher check,” co-founder Vyacheslav Bocharov is quoted as having told Bloomberg in an interview.

As is the case in the United States, grocery delivery in Europe boomed during the COVID-19 pandemic, Bloomberg reported.

In the United States, Buyk will square off against Instacart Inc., Walmart Inc. and Inc., among other companies. Moreover, DoorDash Inc., the top U.S. deliverer of meals from restaurants, is embracing the grocery and convenience goods markets.

New York also has longtime market participant FreshDirect, which is owned by Ahold Delhaize and private equity firm Centerbrige Partners.

According to Bloomberg, Buyk has finalized agreements with centrally-located warehouses in New York from which orders will be dispatched.

As for why the company expects to do well in such a crowded market, Boris Ovchinnikov, co-founder of Data Insight, reportedly told Bloomberg the Buyk managers know “how to scale a project very quickly in new cities.” But he acknowledged: “a big challenge will be that it’s impossible to use such a cheap workforce in New York as they’re used to in Russia.”

Buyk’s parent, Samokat, Bloomberg reports, pays delivery team members in Russia the equivalent of $1.50 per hour. Meanwhile, according to Bloomberg, gig worker earnings tracker Gridwise found that comparable workers in New York make about $16 an hour.

Buyk reportedly is hiring about 100 operations workers and 500 couriers, some of whom will deliver groceries via bicycle.

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