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Kozmo.com was founded in 1997 by two young Wall Street professionals, Joseph
Park and Yong Kang. Park had been an analyst in the corporate finance division of
blue-chip investment bank Goldman Sachs & Co., while Kang was an assistant vice
president at Society General in the media and communications group.

KOZMO had a business model that promised to deliver small goods free of charge
within an hour by bicycle, car, truck, or public transportation. 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. KOZMO was an internet
startup from 1999-2001 that delivered grocery store items and videos directly to
consumers in about an hour.

I get the obvious, which are small deliveries from many locations to be probably
very cost prohibitive. However, many forms of small-dollar deliveries thrive - pizza,
burgers and food among the cheapest and likely highest volume. At slightly higher
dollar levels, wine, groceries, and other items are becoming increasingly popular as
delivery items. Is this about centralization of inventory? What makes one form of
delivery work vs. another, and is there some tweaked way in which the basic
KOZMO concept (huge inventory of products not constrained by one vendor/seller
delivered to your door) can work?

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 A number of the bikers were selling drugs on the side and the board was
told that there's a chance they could be considered to be part of a
conspiracy to distribute drugs.
 KOZMO failed because it did not charge enough. More specifically, it did
not charge a delivery fee. The other small form delivery services charge a
delivery, or more appropriately named, convenience fee.
 KOZMO sold stuff like a retail store with the added benefit of free local
delivery.

KOZMO'S products were innately low margin. The problem was that the
cost to deliver items was much higher than the profit KOZMO could make
on the slim margins of their products. To succeed, a delivery service needs
to target a more affluent consumer, set a minimum order size for delivery,
establish procedures that will allow the service to fill delivery routes and
deliver other kinds of goods that require rapid delivery, such as items from
medical labs or machine parts.
 KOZMO is purposely neglecting mainly black neighborhoods in the six cities
it covers. In other words, the report concludes, KOZMO'S armada of bike
messengers is pedaling junk food and movie videos to the doors of white
customers, but not to black neighborhoods. The report has spurred at least
one set of lawsuits.
 KOSMO·S greatest error with their customers occurred when they stopped
catering to their main client base of middle class college-students. This was
done so that they could target more upscale clients who would order
expensive products. ? Indeed, KOZMO is recklessly trying to ditch its
college-student customers, who last year made up 76% of its business, in
pursuit of those who will pay a premium to have thousands of items. Kozmo
offered free delivery and charged competitive prices when it launched in
New York. Though customers loved the service, the costs of delivery were
high.
 Kozmo.com had expanding their business to 11 cities. Some business analysts
said that KOZMO.COM·S business model only can run efficiency in the
packed and hustler city. They also commented that the services can work in
only a few other cities around the world, such as London and Paris.