Today, TechCrunch’s Leena Rao reports that LicketShip (renamed Delivery Edge) has entered the deadpool.  As one of us (me) is an alumnus of Kozmo, thought we’d offer our 2 cents.

First of all, it seems that this model of immediate gratification delivery, despite its many incarnations, really only seems viable in small a handful of markets (and perhaps just one NYC).

While at Kozmo, it is worth noting that NYC was actually generating an operating profit for some period.  Unfortunately, Atlanta, Dallas, and Los Angeles were never going to do anything but be huge money vacuums and so served to drain the company of the obscene amount of venture capital money it raised ($260 million).

NYC had what would seem to be fairly obvious characteristics that suited the delivery model:

1. large population with high population density
2. high disposable income (maybe not after this financial meltdown)
3. extremely convenience oriented (NYC’ers order delivery from the restaurant across the street)

Other US markets just don’t have these characteristics.

Even if LicketyShip or Delivery Edge could have worked in a single market, the model also suffers from major scalability issues.  From an investor perspective, I’m not sure this is a model that can get you a multiple that is all that interesting.

FreshDirect is probably the best example of how to make the delivery model work and use technology to enable it.  They’ve focused on NYC and instead of going broad geographically, they’ve gone deep and extended their offerings within one large market.