Is the quick delivery bubble about to burst?


Getir, the leading quick-commerce market leader, is set to reveal yet more job cuts, and this has led to industry experts questioning whether the speedy grocery delivery market is sustainable in the long run. Vineta Bajaj, the ex-Ocado finance director and current CFO of the pan-European online grocery firm Rohlik Group, has taken a closer look at this market to determine its future prospects.

The desire for speedy delivery has been a prominent feature in big cities for many years, but the pandemic-driven lockdowns of 2020 saw a seismic shift in consumer behavior, with convenience becoming the new normal across the country. This rapid change in consumer behavior created an opportunity for tech startups to capitalize on our need for speed.

Tech startups, particularly those in the speedy grocery delivery space, saw an influx of investment in 2021, with European grocery startups receiving $5.5 billion in funding. This massive influx of capital allowed many startups to hire en masse, grow revenues, and expand into new markets at breakneck speed.

However, in 2022, things took a turn for the worse. The Russian invasion of Ukraine, the global cost-of-living crisis, and soaring manufacturing and shipping prices impacted the economy significantly, resulting in rising inflation and leaving consumers with less disposable income. Consequently, the demand for convenience took a hit, and the industry suffered in May 2022, with German grocery app Gorillas, Turkish app Getir, and British app Zapp laying off workers, followed by news of market exits.

Getir, in particular, has been hard hit, with the company announcing an all-company meeting in its UK office next week, where hundreds of job cuts are expected to be announced. Despite its acquisition of rival Gorillas last year, both companies saw cuts to their valuations in the deal terms. Gorillas had no other choice but to sell as the path to profitability was going to take longer than the burn rate allowed. Getir became the only realistic acquirer and swapped a cash deal for a stock-only deal.

The rapid growth of these companies also meant an increase in recruitment of head office staff, the need for fleets of drivers, rising fuel costs, and running costs of office space, wages, and advertising, resulting in slimming margins and less than expected returns for venture capitalists.

One key indicator of the consumer’s waning desire for speedy delivery is the reduction in downloads of the apps these businesses depend on. All the major speedy grocery apps, including Getir, have seen year-on-year dips in their download rates. According to data from Transport for London, grocery companies paid for 238 ad campaigns on London transport in 2021. By November 2022, they had booked just 23. The market is unsurprisingly reliant on constant reinforcement to drive consumer use. Still, the companies appear to have slashed their marketing budgets, which could be a significant contributor to the reduction in app downloads.

With the financial outlook for consumers looking grim and investor excitement on the wane, the speedy delivery model faces a challenging road ahead. The year ahead may see a period of consolidation, where startups focus on profit over growth, and we may see more partnerships between traditional, non-food retailers and food aggregators.

Despite the challenging circumstances, there are some bright spots on the horizon. Berlin-based Flink aims for its core German business to be profitable by the end of 2023, and the company has raised more than $700 million from backers, including US delivery company DoorDash and Prosus, a top investor in food apps, allowing it to defy the sector’s funding crunch that has forced rapid-delivery peers, including Europe’s Gorillas, Weezy and Cajoo, and US-based Buyk and Fridge No More, to sell or shut down. Other startups like

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