In a $1.2 billion deal, Turkish grocery delivery company Getir acquired German rival Gorillas, merging two of the last businesses in Europe to promise “groceries in minutes.”
According to a Financial Times report, the deal is worth $1.2 billion for Gorillas and now the combined business values at $10 billion.
This represents the most recent elimination of rivals in the rapid delivery sector, which rode a wave of investment early in the pandemic but has struggled to expand in the United States.
A closer look
Getir originally launched its service in Turkey in 2015. Over the past couple of years, many people started ordering groceries online because of lockdown restrictions. Getir, Gorillas, Flink and a cohort of startups tried to popularize a new model for grocery deliveries.
Getir has strengthened its position as one of the few remaining ultrafast delivery companies in the U.S. and Europe by acquiring one of its main rivals. However, it’s unclear how much more room for expansion there is in the high-priced, fiercely competitive industry.
Ultrafast grocery delivery in the US has so far had difficulty growing outside of a very small number of major cities. While Getir offers delivery in three boroughs of New York City, Gorillas operates in about 20 neighborhoods. Getir also offers delivery in Chicago and Boston.
Both businesses operate across a number of nations in Europe, including France, Spain, Germany, and the United Kingdom, where densely populated cities, lower operating costs, and an enthusiastic customer base have all contributed to the region’s growth.
Getir’s main competitor in the US will be Gopuff, which serves college campuses as well as suburban and urban markets all over the country.
There may be some layoffs in some cities where both services are currently available because of the substantial overlap between the two businesses. Having fewer dark stores could also improve the company’s financial situation.
Quick commerce today
Q-commerce services rose to prominence in the startup scene as more consumers were encouraged to shop online over the course of the previous two pandemic years. Since Q-commerce is a quicker and more practical option for purchasing necessary groceries, these customers won’t be reverting to their old behaviors anytime soon.
Q-commerce is situated at the nexus of last-mile delivery innovations and e-commerce apps. Due to the convenience of shopping and the availability of last-mile delivery, this shift in consumer behavior during the pandemic is anticipated to be persistent.
Growing ecommerce penetration, rising income, youth comfort with technology, rising urbanization, shifting consumer lifestyles, and affordable delivery fees are all growth drivers for Q-commerce grocery delivery companies. Competitors provide same-day delivery of replacements due to poor quality or delivery damage, flexible returns policies, and cash-back programmes.
However, compared to next-day delivery, 10 to 30 minute quick delivery typically necessitates a higher last-mile delivery cost and a smaller selection of products that can be delivered.
Grocers will improve their digital and delivery capabilities during the bear market. They will take benefit of their advantages in supply chain access, closeness to consumers, customer loyalty, and a wide range of products.
Are there opportunities to thrive in this new model?
To begin with, many leading grocery delivery companies have shut down within a few months of launch. In light of this recent drama, young players are left wondering whether they should adopt this model or keep their distance?
In a recent interview conducted by McKinsey, experts from the team of Getir were asked about the future opportunities potential in this industry for the other players, to which they replied “Initially it was considered a niche or luxury service, but more and more we observed that retailers are realizing that this is an inflection point for the industry and the future of how people consume. They are experimenting and looking into the model and partnering up with different players. There are certainly opportunities for these companies to reinvent themselves.”
Young and local players can take advantage of the bigger players falling out of the market. Companies can take advantage of few key revenue and cost levers to lift profitability and expand service lines.
Players have started consolidating on a global scale to improve operations. To manage the arising logistical challenges and to keep costs under control, they are expanding their portfolio with new offerings like scheduled delivery and pick-up options. In order to increase volumes, players are also optimizing their dark stores by expanding the coverage area.
Another supportive statement that was made by the founder of Getir, Nazim Salur, upon this acquisition was “Markets go up and down, but consumers love our service and convenience is here to stay. The super fast grocery delivery industry will steadily grow for many years to come and Getir will lead this category it created 7 years ago”.
To bridge the gap in the market, young players must design, optimize, and set up their processes as such to provide better customer service, thereby improving customer satisfaction and retention.
It can be crucial for companies to have the right product range to meet the needs of Q-Commerce shoppers. Late-night munchies, last-minute party snacks, or party essentials, for example, could be explored by brands.
Jungleworks is helping businesses to smoothen their fast delivery processes with their hyperlocal stack that allows businesses to build a powerful, feature-rich & easy-to-use platform for their customers.
How can you implement Q-commerce for your business?
- Set up local hubs
- Carefully choose your stock
- Ensure you have the right software in place
However, there may be a number of points where this business model finds it difficult to conduct operations properly. There is no doubt that the rise of q-commerce will result in more products being delivered to customers.
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