Getir’s Gorillaz to develop food delivery in Europe
2022.12.11 11:54
Getir’s Gorillaz to develop food delivery in Europe
Budrigannews.com – The $1.2 billion acquisition of rival Gorillas by grocery-in-minutes company Getir is a significant step toward consolidation in the European food delivery market, where businesses are struggling in the wake of the COVID slowdown.
After experiencing rapid expansion, these businesses were impacted in March by falling demand for deliveries caused by lockdowns and rising interest rates, as investors turned their backs on loss-making tech companies.
In an effort to become profitable, the food delivery companies quickly combined, cut costs, and left markets where they were weak.
The painful retrenchment is expected to continue, according to businesses and industry observers, but survivors are beginning to see signs of improvement.
Citi expert Catherine O’Neill said consolidations and cost-slicing to eliminate abundance limit were occurring surprisingly rapidly and unit financial aspects, including request size per conveyance, are getting to the next level.
However, she stated that Europe’s squeeze on living costs remains a major drawback.
“We haven’t yet seen how these businesses will survive a recession.”
During the pandemic, numerous venture capital-backed quick commerce companies raced to establish “dark stores,” which are delivery hubs in major cities used to quickly transport groceries to customers. Getir, based in Istanbul, and Gorillas, based in Berlin, were among these companies.
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The business model of dark stores is fundamentally different from that of established companies like Uber and Just Eat Takeaway (NYSE:). Eats, which delivers meals and takes orders for restaurants, despite being frequently viewed as rivals.
With the acquisition of Gorillas, Getir becomes the largest quick commerce company in Europe.
Due to its strong position in Turkey, where it is based, analysts estimated that Getir was worth approximately $8.8 billion in Friday’s transaction, which was approximately seven times higher than Gorillas.
Both Gorillas and Getir did not respond to inquiries for clarification.
Flink, based in Berlin, and Philadelphia-based GoPuff, which operates both in Europe and the United States, are two additional consolidators.
“Gorillas and Getir are directly competing with us in Germany. Boris Radke, a spokesperson for Flink, stated, “All of the others have vanished.”
Gorillas has 180 dark stores, whereas Flink has 190.
According to Radke, Flink’s success can be attributed to its close relationships with German supermarkets REWE and Carrefour (EPA:). in France, the two of which are investors in the organization.
A dark store hub becomes profitable, according to analysts, at 500-1,000 daily orders.
Radke stated that during the downturn, “we closed down a few hubs that were not profitable and we definitely put aside any kind of bigger expansion plans.”
However, sales are rising “consistently month after month,” and the number of profitable Flink hubs is rising, he stated.
Since the middle of 2021, more than a dozen smaller European quick commerce businesses have either failed or been acquired.
According to PitchBook data, venture capital firms invested $125 million in two deals in the sector in 2022, down from $1.3 billion in thirteen deals in 2021.
The remaining companies in the grocery and food delivery industries have reduced their spending on vouchers and promotions as a result of less competition and less new capital entering the market.
Both types of businesses are now cooperating more frequently, a sign of things to come, despite the fact that the majority of food companies have experimented with quick commerce.
Getir and Just Eat Takeaway agreed to list Getir’s groceries on the Takeaway app last month.
That will result in additional high-margin orders for Just Eat Takeaway, while Getir will see an increase in deliveries and sales from its dark stores.
Larry Illg, head of food businesses at technology investor Prosus (OTC:), predicted, “I expect we will see more activity either in the form of M&A or deep commercial partnerships.” which is the owner of a stake in Delivery Hero.
Europe’s listed meal delivery companies have all established formal goals for earnings before interest, taxes, depreciation, and amortization (EBITDA), even though profits may still be far off for the privately held quick commerce companies.
Just Eat has stated that it is already EBITDA-profitable. Delivery Hero claims to be there by 2023, while Deliveroo in the United Kingdom should be there by the first half of 2024 at the latest.
The European delivery companies’ shares have traded sideways since June, despite a 60% decline from a year ago.
Due to the success of their U.S. operations, Uber and DoorDash have both reported growth in their European subsidiaries.
Caspar Nixon, a spokesperson for Uber, stated, “We continue to see strong demand for grocery and we continue to see grocery being a growth driver for our overall business next year.”
He stated that quick-service grocery stores are “absolutely available on the app,” but that “we don’t believe it makes sense to own the entire supply chain” like Getir does.
The criticism of quick commerce, according to Sajal Srivastava, co-founder of TriplePoint Capital, which provided Flink with venture debt funding, has been exaggerated.
Consumers continue to use it. He stated, “The economy is improving and the numbers are still rising.”
Accordingly, “all the naysayers saying “quick commerce is over” – No.” The data indicate that it will persist.
