Rumors have swirled for weeks that the two Web retailers, locked in a year-long duel for New York's home-delivery market, were in negotiations to combine the companies, which deliver convenience goods to customers' doors in about an hour.
Kozmo is the larger of the two companies. Backed by Amazon.com, Kozmo has attracted more than $250 million in private investment and has expanded into 11 cities, including San Francisco, Chicago and Los Angeles, over the last year.
At the same time, Urbanfetch moved into London. Both companies have earned headlines for dispatching delivery people on bicycles, motor scooters and vans to transport goods such as videos, CDs and potato chips.
Both companies have cut their staffs recently, and last month, Urbanfetch surprised industry watchers by announcing it was dropping videos from its product offerings.