Dive Brief:

• Instant grocery delivery startup 1520 has inaugurated service in selected parts of Chicago, marking its first foray outside its New York City base, according to Jonathan Gass, the company's head of operations.
• 1520 is initially making deliveries in several Chicago neighborhoods, including the West Loop, Gold Coast, Old Town, River North, Lakeview and Lincoln Park, and is preparing to further ramp up its presence in the city, Gass said.
• The company's expansion to Chicago comes as it continues to build its operations in New York, where it jumped into a competitive field of firms providing on-demand grocery delivery.

Dive Insight:

1520's decision to put down roots in Chicago reflects its sense that the city offers many of the same characteristics that have made New York City an ideal location for the company to refine its business, including high population density and a concentration of customers that are open-minded about the concept of ultra-fast grocery delivery, Gass said in an interview. 

In addition, Gass said he has been able to tap connections he built working in Chicago for Whole Foods Market to rapidly find people to join 1520's team in the city as it scales up its operations there.

"I'm moving as quickly as I can to get into [new] markets and get customer loyalty before other competitors can move in," Gass said. After serving in distribution and operations roles for Citarella Gourmet Market, which runs stores in New York and Connecticut, Gass joined 1520 this spring and is leading the company's efforts to put down roots outside New York in addition to overseeing its daily operations.

"Obviously some [of what 1520 sells in Chicago] is going to be different, given the market and what we can get from different vendors and such, but it's the exact same business model" as 1520 is following in New York, said Gass.

As it does in New York, 1520 is relying on dark stores and bicycle couriers to stage and deliver orders in Chicago. The company currently operates two dark stores in Chicago and is close to opening a third one, Gass said, adding that 1520 expects to need as many as five of the street-level fulfillment facilities in the city in the "immediate future."

A key difference between 1520's operations in the two cities is that the online delivery company is relying on pedal assist bicycles in Chicago instead of the fully electric bicycles it uses in New York because of speed-based restrictions in the Midwestern city, Gass said.

1520, which promises to bring orders to customers within 15 to 20 minutes and does not charge delivery fees or have a minimum order size, faces pressure from a host of other companies, including startups such as Jokr, Gorillas, Buyk and Fridge No More, that are also looking to profit from customer demand for ultrafast grocery delivery.

Gass said 1520 is already considering expansion possibilities beyond Chicago, although he declined to say where it might launch operations next. "We have definitely got our eyes set on a variety of different cities," he said. Co-founder Maria Daniltceva said in an August interview that 1520 plans to soon begin service in New Jersey in Hoboken and Jersey City.

The e-commerce company is also looking into how it might operate in areas that do not offer the density that is central to the instant delivery model, Gass said. "Where do we go outside of urban markets down the road is definitely a thing to think about," he said. "Obviously you can't do suburban markets in 15 to 20 minutes."

1520, which was bootstrapped by its founders, raised $7.8 million in seed financing in April. The company expects to seek additional capital to fuel its growth, Daniltceva said.