December 28, 1999 4:55 PM PST

Kozmo.com may expand offerings with medications

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October 27, 1999
Kozmo.com, a fleet-footed provider of videos, CDs and books, may add nonprescription medication to its list of same-day deliveries as early as this week.

Sources said the plan has been under serious study, but the company declined to comment. "I can not confirm or deny [this possibility]," marketing and sales manager Keith Gill said.

Future items also may include liquor and cigarettes if Kozmo can obtain the appropriate licenses, other sources speculated.

Analysts are closely watching companies such as Kozmo and UrbanFetch.com that have ventured into the hotly competitive same-day delivery business. Their methods--which include scattering legions of deliverymen across cities in vans, motor scooters and bicycles--could help alleviate one of e-commerce's biggest handicaps: delivering goods quickly.

This holiday season, e-tailers such as Toysrus.com, eToys and Amazon have struggled as they tried to fulfill a deluge of customer orders--sometimes too late.

The problem of delivering goods has plagued e-tailers for some time.

If they are successful in providing timely same-day deliveries, companies such as Kozmo and UrbanFetch.com, along with online grocers Webvan and Peapod, could generate additional income by becoming the delivery arms of brick-and-mortar retailers.

"They could be the total logistical solution for online retail," Thomas Weisel Partners e-commerce analyst Chris Vroom said. "They can fulfill the 'last mile' problem."

If it goes forward, Kozmo's plan to provide over-the-counter medication is a wise way to expand its offerings, according to Vroom. He estimates the nonprescription medication market to be somewhere near $80 billion annually.

Kozmo operates in cities such as New York, Seattle and San Francisco, and plans to serve 30 cities by the end of the year.

The privately held financiers include Flatiron Partners, Oak Investment Partners, Chase Capital Partners, Hambrecht & Quist, Thomas Weisel Partners and New York City Investment fund, among others.

 

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