By AMY MCCULLOUGH
Reporter with Silicon Hills News
Aseem Ali was a carless freshman at the University of Texas at Austin living in an apartment complex. When he could work around friends’ schedules and borrow cars to get to the grocery store, he could get fresh food and produce. But due to the inconvenience, he found himself eating a lot of Ramen noodles. And he got tired of it.
Thus, the seeds of online grocery delivery service Burpy.com, for which Ali now serves as CEO, were planted.
Burpy has had fast success: It officially launched in Austin in fall 2013 and will become profitable this quarter. Burpy also serves San Antonio, Dallas and Houston and plans to expand elsewhere in the Southern United States.
While Burpy has some Austin competitors, like Couch Potato and Munchy Mart, those services only offer convenience store products on wheels, while Burpy will bring you anything you can find at Costco, HEB, Wal-Mart and Whole Foods, including meat and fresh produce. In addition to groceries, Burpy also delivers products from Office Depot.
Ali, now a senior in mechanical engineering, said many of Burpy’s consistent customers are “elderly folk, young professionals—people that don’t have the time (to shop)–and working mothers.”
When Burpy began, it charged a delivery fee of $15 to $20. More than two months ago, the fee was dropped. Now, profits come from product markup. Customers can select items from more than one store with a minimum order requirement of $35 per store.
“Let’s say I order products from Costco and Whole Foods. If you order $35 from Costco and $35 from Whole Foods, there won’t be any charge,” Ali said. “We’re seeing a trend of more and more people coming back using the site. The biggest challenge (to getting customers) initially was when we did have a delivery fee. People were hesitant to pay a delivery fee and a markup. Now we only have a markup fee, and people are getting addicted.”
One satisfied downtown Austin customer recently praised the company in a Yelp review for the store and product variety it offers. “Jose A.” wrote on Feb. 2:
“We’ve used (Burpy) several times so far for delivery to our downtown office and have been very pleased. Drivers communicate status and ask you questions about substitutes via text/e-mail, and if there are delays, they’ll let you know. And we LOVE the fact that you aren’t limited to one particular store, or to a bunch of local, organic stuff (we do order that too, though) when someone wants Diet Coke!
“Growing pains? Maybe a few. I’ve noticed a few minor website glitches, but I know they’re a growing startup and have always listened to our feedback. It can only get better from here, and everyone in our office has become huge fans!”
Nationally, there are competitors more similar to Burpy: Instacart is an online grocery business that serves Boston, Chicago, D.C. and San Francisco, and FreshDirect serves New York City.
Ali said Burpy is able to be successful because of today’s technology. Many well-funded grocery startups failed in the 1990s because of pricey investments in infrastructure like delivery vehicles and warehouse space. Now, “everyone has a strong piece of technology in their back pockets now. Drivers have smart phones. … Whenever an order comes in, we send out texts to shoppers in an area with the order number, zip code, cost of delivery. There’s an accept or decline button. If they accept, a text comes with a link to shopping orders and delivery information.”
Burpy launched its beta version targeted at UT students in March 2013. During its official launch in Austin in September 2013, Burpy brought in $4,500 in revenue. The company has grown every month and will be profitable this quarter. They are on track to bring in more than $80,000 this month.
So far, the company has had only one investor—Azim Makanojiya—who has put $500,000 into Burpy. Ali and Makanojiya met threw a family connection, and like Ali, Makanojiya became an entrepreneur as a college student. While at the University of Houston, he first entered the e-commerce space in 2007, with wrist-band.com, a manufacturer of custom-made silicone wristbands. He now also serves as CEO of CorporateRecycles.com, which recycles and disposes of company IT appliances.
Makanojiya is not surprised at Burpy’s success and plans on participating in a Series A funding round that will likely occur this year.
“The hardest part about startups is actually grinding it out for a good year,” he said. “You lose motivation. A lot of roadblocks come your way—things you never even anticipated. … I always though if Burpy was actually executed correctly and done correctly, it would be a great success. … I think the execution was the big X factor in this business, and I think the team is doing a phenomenal job with that.”
In addition to Ali, Burpy’s management team comprises students who worked together in a UT Longhorn Startup class: CTO Sharez Prasla, CFO Safan Abdul, COO Alishah Momin and CMO Azim Momin.
In addition to finding more delivery drivers, a challenge for Burpy is finding the best payment platform for its employees. The company tried a direct-deposit method but dropped it due to the two-to-three-day transfer time. Burpy also tried prepaid VISA debit cards, but, like PayPal, the inherent fee structure made it unpopular with drivers. Burpy is currently working with Google Wallet, which provides about 80 percent of the features they want.
“I think technology in the next year or so will catch on and cater to these type of business product lines where there needs to be a platform where an instant transfer of funds can happen,” Makanojiya said.
Editor’s note: This story first appeared in the Silicon Hills News print magazine which debuted at SXSW Interactive.
A Longhorn Startup company, Burpy, is among the latest crop of Techstars Austin companies selected to participate in its three month long accelerator.
