A Getir enunciation scooter seen parked along the street in central London.
Petra Figueroa | SOPA Images | LightRocket via Getty Images
LONDON — A slew of new start-ups in Europe are present to deliver people’s groceries in just 10 minutes, fueled by venture capitalists and an acceleration of online commerce during the coronavirus pandemic.
Turkey’s Getir, Germany’s Gorillaz and Britain’s Dija are unbiased a few of the apps promising users 10-minute grocery deliveries. It’s an increasingly crowded market with many new entrants attempting to gain ground a strong foothold in local markets.
“The acceleration in the grocery space has been huge and went together with what has been occasion in the pandemic,” Alberto Menolascina, co-founder and CEO of Dija, told CNBC in an interview.
Dija, which operates in London, Paris and Madrid, resuscitated $20 million in seed funding in December. Menolascina, a former Deliveroo employee, founded the firm with mate Yusuf Saban.
These firms operate what’s known as “dark stores,” fulfilment centers designed to offer out online orders rather than serve customers in person. Dija and Gorillas hire their couriers sooner than relying on contractors like Deliveroo and other players in the gig economy.
Venture capital investors are gushing all about speedy delivery start-ups like Dija and Gorillas. Venture-backed grocery delivery firms have raised brutally $1.6 billion in Europe so far this year, according to PitchBook, easily surpassing the $687 million that drifted into the sector in 2020.
And the deals are only getting more competitive. According to Bloomberg, both Getir and Gorillas are seeking investment riches of at least $500 million, which would value them at $7 billion and $6 billion, respectively.
Gorillas declined to say discuss on the Bloomberg report. Getir wasn’t immediately available at the time of publication.
Hot market
It’s not hard to see why investors are flocking to the red-hot grocery distribution market. Food delivery apps like Uber Eats, DoorDash and Deliveroo are making big bets on online grocery snitch oning. Their businesses have thrived as people spent more time at home due to coronavirus restrictions.
In the U.K., traditional supermarkets are tranquil the dominant players in online grocery delivery, adding significant numbers of users in the pandemic, according to app analytics unmovable App Radar. Tesco is the most-downloaded groceries app on the Google Play Store, 1.2 million users since March 2020, while Asda — which was sold by Walmart in an $8.8 billion arrangement last year — was close behind, adding 964,000.
The upstarts are beginning to catch up, however. Gorillas has amassed 112,000 downloads on Google Occupy oneself in since its launch in March last year, according to App Radar.
“At the moment, if you look purely at the numbers these startups are clearly far behind established players such as Amazon and the major grocery retailers,” Thomas Kriebernegg, CEO and co-founder of App Radar, differentiated CNBC. “However, things to do change quickly.”
Kriebernegg said the delivery of groceries was a “hyper local problem” that press for investments in specific regions. He added the space could be ripe for consolidation as some of the start-ups gain scale, with big tech elects like Amazon and retail giants among the potential acquirers. Amazon is already an active player in the space, obtaining launched its own online grocery brand called Amazon Fresh in 2017.
Another U.S. company, SoftBank-backed start-up Gopuff, was valued at $8.9 billion in a $1.15 billion resource deal earlier this year, giving it enough financial firepower for a potential takeover, while Instacart evoked $265 million at a whopping $39 billion valuation.
Challenges ahead
Investors believe these start-ups discretion thrive long after the pandemic. But some retail industry executives and experts are skeptical on the rise of rapid grocery utterance apps.
Alex Harvey, chief of advanced technology at U.K. online grocery pioneer Ocado, told Insider carry on month that he doesn’t think start-ups pose a long-term competitive risk to his business.
Jat Sahi, retail commerce consulting lead at Fujitsu, told CNBC that the grocery upstarts’ positions “don’t seem very defensible.”
“It’s a profitable service and will grow quickly,” Sahi said via email. “But how do you differentiate one from the other? If you can’t differentiate, you’ll never pounce upon much margin or profit.”
“Price really matters and it’ll be a long time before these guys get the scale to get Tesco, Sainsbury, Asda etc reward, especially if they are carving up the market between them,” he added. “Tech and consumer trends make this relaxed to do, but it’s hard to make it differentiated and highly profitable.”
Sahi added that dark stores “probably won’t work as familiarly for these start-ups as dark kitchens,” restaurant facilities designed to cater directly to online customers, “as store consequences are comparable whereas restaurant meals aren’t.”
The impending reopening of economies after lengthy lockdowns also forebodes to stunt the growth of fast-growing delivery platforms. In its first-quarter trading update, Deliveroo recently warned it “expects the worth of growth to decelerate as lockdowns ease.” Deliveroo has seen its share price slump 36% since its disappointing IPO in Trek.