Getir/delivery apps: fast food, slow returns
Venture capitalists cannot seem to get enough of grocery apps. Istanbul-based Getir’s latest $550m funding values the start-up at $7.5bn. Four-month-old Flink, from Berlin, has snagged $240m in new funds. America’s Instacart is worth $39bn.
This is odd for a sector that burns cash, belches carbon and is drowning in competition. Couriers bearing Day-Glo food storage boxes are a street staple from Chicago and Shenzhen to Sheffield. Hailed as innovative tech, it is not a million miles from the grocery lad delivering post-war provisions from corner shops. Except ordering is via smartphone, there is more packaging, and the 1950s youth probably had better job security.
As with meal delivery, models vary. Getir has its own “dark stores” to store and distribute goods. Supermarkets offer rapid delivery from their own stores. Instacart sends 500,000-plus pickers to third-party stores but is plotting its own line of mini-fulfilment centres. In an early, abortive, scheme, Uber filled drivers’ car boots with sandwiches.
Lazy consumers have plenty of options. Alongside groceries there are ready-to-eat meals from restaurants (Deliveroo, Uber Eats), start-from-scratch groceries (Gorilla, Zapp) and DIY meal kits (HelloFresh, Mindful Chef). Jostling for a share of bellies means plentiful spending on marketing and promotions. Getir adverts are all over YouTube. China’s Pinduoduo, the biggest grocery delivery service of all, is illustrative. Last year’s gross profit — and more — was swallowed up in sales and marketing expenses.
Investors know the drill. Some may have already been burnt in expensive shared bike scheme start-ups and, after that, e-scooters. Yet crazy valuations need not scream dumb money. Smart consolidation, across the panoply of food and at-home offerings, will leave some winners at the table. Look at China’s Meituan. It bought restaurant review app Dazhong Dianping in 2015 and now delivers everything from flowers and food to movie tickets. Sequoia, invested in both, is backing Getir alongside a smorgasbord of rivals. It may yet deliver profits along with those bananas.
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