- The Washington Times - Friday, April 13, 2001

Kozmo, a speedy Internet-based delivery service, has run out of fuel.

The New York-based firm, known for its one-hour delivery of food, videos and other merchandise, closed up shop Wednesday night after unbearable market conditions and bad management decisions.

About 1,100 employees including 71 workers in the District of Columbia are being laid off.

"Given more time and more hospitable market conditions, Kozmo would have succeeded in rounding the corner and would have continued to grow," Gerry Burdo, president and chief executive of Kozmo, said in a statement. "However, some decisions made early in the company's development combined with current market conditions prevented Kozmo from overcoming the challenges associated with conquering the last mile."

Kozmo said its membership doubled in the last year from 150,000 to 400,000 and its average order size grew to $25 from $10 in July 2000. The company even turned profits in December in three of its nine markets: Boston, New York and San Francisco. Kozmo also had services in the Atlanta, Chicago, Los Angeles, Portland, Ore., and Seattle markets.

Company officials had planned last year to begin service in 30 more markets. Plans to go public were put on hold.

Kozmo hit the Washington market in fall 1999 and opened a 10,000-square-foot warehouse at 14th and S streets NW that held everything from CDs, movies and books to snacks, medicine and bath products.

Employees darted around the city in cars, on bikes and even orange scooters to complete deliveries within an hour after the orders were placed.

A year ago, the company was slapped with a class-action lawsuit accusing it of not delivering to certain neighborhoods in the District because they had higher black concentrations.

Kozmo, one of a handful of Web-based "urban delivery" firms, follows in the footsteps of competitor Urbanfetch, which closed in October. Delivery service companies such as PDQuick are still surviving. The company, formerly known as Pink Dot, delivers items within 30 minutes to its customers in Southern California.

Kozmo, founded in 1998, will liquidate its remaining assets and pay off creditors. Most of its 1,100 employees were delivery staff or workers at Kozmo's 16 distribution centers. A small transition team will stay on to close down the operations.

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