Minneapolis-based Buncha aims to lower grocery delivery fees

Driving around the Twin Cities, you might have noticed a growing number of bright yellow bags on neighbors' porches.

The totes are from the newly-rebranded Minneapolis grocery delivery service Buncha, formerly called Pikup. In the past year, Buncha has significantly grown its staff and expanded outside of Minnesota.

With so many grocery delivery options out there, Buncha CEO Bharat Pulgam said his company's strategy is to make grocery delivery more affordable and sustainable through scheduled, aggregated deliveries shared between neighbors. The concept is similar to how a milkman used to deliver milk, he said.

"I would say that there's actually a really massive market of people that have been priced out of grocery delivery," Pulgam said. "By making our service more affordable at just $1.45, we can actually increase the size of the grocery delivery market."

Through the company's mobile app, customers can select weekly deliveries from local stores like Kowalski's Markets at pre-scheduled times.

Customers pick their items from the store and can adjust their orders up to a couple hours before delivery. A Buncha driver shops for multiple orders and drops them off in yellow insulated bags. Those bags can be picked up and reused for future orders.

Customers are charged a $1.45 delivery fee and can also tip the driver. There are no subscriptions or product markups, Buncha leaders say. Because orders are grouped together, Buncha has a capacity limit per delivery, which customers can track through the app. Buncha makes a percentage on each order.

The grocery delivery market saw a rush of demand during the pandemic. In an August Gallup poll, 28% of U.S. respondents said they order groceries online for pickup or delivery at least once a month, up from 9% in 2017.

Buncha grew from the startup that Pulgam and co-founders Sam Lerdahl and Josh Chang launched in 2017, called Runerra, which focused on delivering group orders on college campuses. But at the start of the pandemic in the spring of 2020, the company had to pivot when many campuses were shut down. Company leaders decided to apply their communal delivery approach to residential neighborhoods.

To date, Buncha, which participated in the Target+Techstars accelerator program, has raised $2.7 million in venture capital. The startup has yet to turn a profit, but Buncha leaders say their goal is to first make delivery as cheap as possible and then work with retail partners to cover the costs.

The company is also trying to improve its brand recognition. This April, Pikup announced its name change to Buncha, largely to make sure customers don't confuse the company with buy-online-pickup-in-store services.

"We wanted to pick a name that spoke to what we did which is bringing a bunch of neighbors together on weekly deliveries and help them save a bunch of money," Pulgam said. "We thought it was fun and uniquely Midwestern."

At the end of last year, the startup had a handful of employees. Now it has grown to a staff of about 40, including a technical support office in New Delhi, India. Around the same time as the rebranding, Buncha moved its headquarters into a larger space in an office building near Loring Park.

Earlier this month, Buncha began to conduct deliveries in Denver. Buncha leaders say they want to be in 20 geographic markets by the end of next year.

"One of the benefits about Buncha is that we don't really need to have a large ground presence to launch a market because our labor is efficient," Pulgam said. "Unlike Instacart where a driver might be only doing one or two deliveries an hour, one of our drivers can accomplish dozens of deliveries because we are able to route and aggregate effectively."

Buncha orders are mostly done by full-time employees who are paid by the hour instead of by order. They use refrigerated vans to make deliveries.

Buncha has started to offer scheduled restaurant deliveries in some areas. In the future, Pulgam said he could see Buncha providing additional services, like delivering flowers or picking up returns.