[ad_1]
Demand for grocery delivery services surged during the 2020 COVID-19 regulatory period, allowing new startups to attract huge investments to expand their operations. His two Berlin-based grocery delivery apps, Gorillas and Flink, have both managed to achieve unicorn status in his 2021.
Meanwhile, Turkey-based competitor Getir has expanded into Germany, France and the Netherlands. Getir also became his second unicorn in Turkey, with a valuation reaching his €12 billion ($12.7 billion).
The quick commerce sector, or Q commerce for short, typically aims for delivery within an hour. However, as inflation spiked throughout 2022, customer demand for fast delivery declined overall.
Perhaps more importantly for these startups, investors are becoming more wary of millions. With investment capital dwindling and quick delivery businesses struggling to prove profitability, it looks like the grocery delivery bubble has finally burst.
A year of acquisitions and big valuations
This year has seen widespread restructuring in the grocery delivery sector, with businesses dropping out or being rapidly acquired.
In May 2022, Gorillaz laid off about half of its headquarters staff and withdrew from Italy, Spain, Denmark and the Netherlands. A Gorillas spokesperson told his DW at the time that the company is focused on building a profitable business through the early stages of growth.
In hindsight, that moment may have been the beginning of the end of the Q-commerce boom. In the same month, Getir also laid off employees and Flink acquired French competitor Cajoo.
At the end of 2022, Getir signed an agreement to acquire Gorillas, effectively merging two of Europe’s biggest competitors and increasing Getir’s dominance in the European market. However, the terms of the deal mean that the valuations of both companies will be significantly reduced.
Integrate anyway?
As reported by financial timesAt the time of the acquisition, Gorilla was valued at $1.2 billion, less than half the $3.1 billion valuation it received after its final funding round in September 2021.
The high cost of acquiring new customers, coupled with record inflation, is a challenge many grocery delivery startups have been unable to meet. Gorilla quickly drained his $1.3 billion investment, apparently looking for a buyer before going bankrupt completely.
Getir is valued at $10 billion, lower than its March valuation despite acquiring all of Gorillas’ businesses.
According to reports, Gorillas investors will receive approximately $40 million in cash and a stake in Getir’s ongoing business. Gorillas CEO and founder Kagan Sümer is expected to leave the company in a multi-million dollar payment.
Gorillas did not respond to DW’s request for comment.
A Getir spokesperson said the acquisition “underscores how Getir leads integration in this space.” Getir founder Nazim Salur said in a written statement:
Why buy a failed company?
Getir’s acquisition of Gorillas was whispered among employees and business savviers weeks before the acquisition was completed. Many wondered why Getir would risk buying a company that appears to be in the red.
Gorilla’s real estate may be worth more to Getir than the company itself. Gorillaz has managed to expand rapidly across Europe through his 2021, thereby establishing a network of delivery warehouses, sometimes referred to as “dark stores.” As of May, the company operates 70 of these warehouses in 23 cities.
Since 2020, dark stores have popped up in every district of central Berlin and other major European cities. The stores soon drew complaints from locals who were outraged by the noise, increased traffic on delivery trucks, and groups of loitering employees.
In response to these complaints, several Dutch cities have already enacted temporary bans on new dark stores. Establishing a new Dark His store is likely to become increasingly difficult going forward, so it’s possible that Getir was eager to acquire the one Gorillas had already set up.
Precarious working conditions with no prospect of improvement
Industry consolidation isn’t necessarily helping delivery workers and warehouse workers who claim fast food stores create unsafe working conditions and exploit workers.
It’s unclear at this time what Getir’s acquisition of Gorillas means for employees. One of his former Gorillas delivery workers told his DW that many of his co-workers felt uneasy about their current jobs: They said that in the weeks leading up to the acquisition, managers would lay off employees. I added that I was looking for some reason to do so.
The former Gorillaz employee has requested anonymity as he is suing the company for unpaid wages.
Who’s left to deliver groceries in 2023?
As 2022 draws to a close, there are only three major players left in the fast grocery delivery sector in Europe: Getir, Flink and US-based GoPuff. All of them still face the challenge of marketing to a customer base that increasingly chooses savings over convenience.
However, some smaller start-ups have managed to attract further investment despite the challenging market outlook.
Norway-based Oda successfully raised around $151 million in December to further expand its operations in Norway, Germany and Finland. Hamburg-based Circus has also found 11 million euros for him to continue developing his meal delivery business. However, it is unclear who will be entrusted with grocery deliveries at the end of 2023.
Editing: Tim Rooks
[ad_2]
Source link
