Food conveniently delivered to your front door within minutes – delivery services are experiencing a boom, especially during the pandemic. However, some providers now have only one way out to mitigate the post-pandemic slump. The industry is on a tough consolidation course.
Fusion fever is rising among European express delivery services. According to experts, the multi-billion dollar purchase of gorillas by Turkish rival Getir is not the end of the road. Because the industry, which experienced a boom during the pandemic, is now struggling with flagging demand and high costs. However, the survivors of this wave of consolidation could look forward to good business. Companies are cutting spending and excess capacity faster than expected, says Citigroup analyst Catherine O’Neill. At the same time, the value of the goods per delivery increases. However, the gloomy economic prospects remained a risk factor. “It is still unclear how these companies will survive a recession.”
Gorillas had already cut jobs months ago and withdrew from some countries. DoorDash, the mother of rival Wolt, is also shedding jobs. Investors are also becoming more cautious. According to data provider Pitchbook, venture capitalists pumped a total of $125 million in fresh capital into the sector in two deals this year. Last year it was $1.3 billion, spread across 13 deals.
In addition to mergers between direct rivals, he also considers increased cooperation with classic food suppliers to be possible, said Larry Illg, who is responsible for the food sector at technology investor Prosus. Lieferando customers can already order all Getir products through the German subsidiary of Just Eat Takeaway.
With the gorillas deal, Getir has become a quasi-monopoly among fast food suppliers, says Silvio Peruci, managing director of the analysis company App Radar. With a total of 28 million downloads in the Google Play Store alone, the Turkish company is the undisputed leader. In addition, the Gorillas app has been downloaded 2.4 million times. If Getir weathers the current economic downturn, the company will become a powerful force in the grocery and logistics markets. The biggest direct competitors are the US company GoPuffs and Flink from Germany.
Bring it, Gorillas
The two supermarket chains are also Flink shareholders. Against the background of the difficult environment, Flink has closed some unprofitable bases and is proceeding more cautiously with expansion, says company spokesman Boris Radke. However, the number of profitable “dark stores” is growing just as steadily as sales.
According to analysts, a base makes a profit from 500 to 1000 orders per day. Experts disagree as to whether “quick commerce” pays off in the long term. Uber sees its food division Uber Eats as a growth driver in the coming year. However, the transport service provider is skeptical about concentrating on deliveries within minutes. Some investors are also questioning the business model. Sajal Srivastava, co-founder of the venture capitalist TriplePoint, which is involved with Flink, among other things, points to the growth of the industry and the improved profitability. “All pessimists who say that ‘quick commerce’ is over should be told: No, it will happen, and the data shows it.”
