From The Web To Your Door

By Anita Hamilton

It all started when Joseph Park wanted to buy the latest John Grisham novel. He logged on to Amazon.com found the book in seconds and proceeded to checkout. But the list of delivery options and shipping charges left him so nonplussed, Park says, that he eventually gave up and drove to a bookstore to buy it in person.

That was four years ago. Since then, Park founded Kozmo.com a one-hour urban delivery service that lets people place orders online and receive them by messenger--without a delivery fee. "I decided to take all the advantages of the Net and marry them with instant gratification," he says.

Today Kozmo serves 300,000 customers in 11 cities, rushing to their doorsteps with everything from Palm computers and MP3 players to snack food and video games. The only pothole in Kozmo's bike path is the same one that has upset so many Web ventures: the money drain. While it nabbed $250 million in capital from investors, including $60 million from Amazon and an additional $25 million from Starbucks, Kozmo posted a loss of $26 million last year and laid off 10% of its 3,300 employees this summer. Analysts point to the high cost of operating a "last mile" delivery service, combined with the low $15 average order, as the service's biggest flaws. Yet Park, 28, claims the business plan is on track and says the layoffs were a result of increased efficiency. If things were dire, he counters, why would he have opened a branch in San Diego just weeks after layoffs elsewhere? "I'm more confident about our business model today than when we first started," he says.

No matter how you do the math, Park's Grisham-spawned revelation still makes sense. Services are needed to bring goods from the Net to people's front doors. He just hopes the messengers will be wearing Kozmo's blue-and-orange uniforms.

--By Anita Hamilton