Kozmo.com Is Making a Comeback, and It Just Might Work

Moneybox
A blog about business and economics.
Sept. 25 2013 12:15 PM

Kozmo Is Returning, and the Time for It Is Right

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By unanimous consent, Pets.com has gone down in history as the ultimate exemplar of dot-com boom excess. But for those of us who lived in the right cities at the right time of our lives in the right year, nothing will ever beat Kozmo. Kozmo's business proposition was simple. It was a website where you would go and order stuff. Kozmo would then send a deliveryman to bring you the thing that you'd ordered. It could be something as banal as a pint of Ben & Jerry's ice cream. And he'd bring it to you fast—more like pizza delivery than parcel delivery.

And the best part was that they didn't charge any higher than standard retail price. They were providing an invaluable service—same-day home delivery—and not charging for it.

It was truly a dot-com miracle. And like many other magical attributes of America's best decade, it could not last. It was a classic 1999 "lose money and make it up in volume" business. It was ridiculous. And I think bringing it back is a wonderful idea.

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There are a whole bunch of factors at work today that I think could make Kozmo 2013 succeed where Kozmo 1998 failed.

First and foremost is that buying things on the Internet has been normalized. In the 1990s a lot of people were a little spooked by the basic idea of online credit card transactions. That made it basically impossible for an e-commerce site to charge more than a brick-and-mortar store, no matter what service it was offering. Today, though, online purchases are normal. In the meantime, the labor market has deteriorated enormously.

Kozmo launched in the middle of an awesome labor market boom. Wages were rising, and because wages were rising, employers whose business models depended on cheap labor had to really reach down into the stack and start hiring people who'd be considered unemployable today. The current environment is the opposite. Lots of able-bodied people can't find work. Lots of young people aren't entering the labor force at all. Wages haven't risen in forever. This is terrible news for America, but great news for a company looking to hire a bunch of guys to run around town delivering stuff.

Third, Amazon and Walmart. Amazon has pretty clearly articulated an aspiration to do same-day delivery, and Walmart hopes it can fend off Amazon's growth by leveraging its network of stores into this business. But neither of them has actually done it. That means that a company that's put together workable same-day delivery would be an appetizing takeover target even if it weren't really making a profit. You can't just bleed money like old-school Kozmo, but you don't need impressive margins to make a fortune.

Fourth, Seamless is a successful business even though it doesn't actually deliver food—it just tells restaurants that you want food and they should deliver it. A company that actually did what Seamless only appears to do could blow it out of the water.

Last but by no means least, Kozmo is a great brand. Lots of people probably don't know what it is. But those of us who used it as a mechanism to funnel VC money into sweet sweet consumer surplus recognize it instantly and love it. I don't know what, specifically, the new company is planning to do. But the time is right for someone to try to same-day delivery business again, and reviving an iconic brand is a great way to do it.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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