Rapid delivery startups scooped billions in venture capital cash during the low-interest rate-induced funding boom. The pandemic’s stay-at-home restrictions gave a shot in the arm to the market, which aims to bring groceries to customers’ doors in 20 minutes or less.
But in 2023, the market is in a very different place. Mergers, closures and a funding slowdown have reshaped the rapid delivery space, leaving fewer players standing. Many of those remaining are scaling back operations and pulling out of geographical markets.
Getir, the Turkish rapid grocery delivery giant, recently cut 2,500 jobs just over a month after its UK staff were asked to help clear out a number of warehouses as a cost-cutting measure.
Analysts have long claimed that the low margins of rapid delivery make it incredibly difficult to make a profit.
“Let’s be perfectly clear about this. You cannot make money delivering groceries ‘in minutes’,” said Anthony Miller, co-founder of TechMarketView.
With Getir’s uncertain future once again signalling trouble in the industry, UKTN looks at the rapid delivery startups that are still operating in the UK, and those that were gone in a jiffy.
It has been a tough summer for the Istanbul-headquartered delivery giant. A cash shortage, layoffs and warehouse closures in the UK have marked a significant downfall from the dizzying heights of Getir’s rise to prominence.
Founded in 2015, Getir grew steadily for a few years until 2020 when its in-demand service netted the company a $38m Series A round. Over the next two years, its total funding raised would jump from a little over $40m to more than $1bn.
Among its primary growth tactics was an acquisition spree that saw Getir snap up startups in different regions to accelerate its international expansion. They included Spanish grocery startup BLOK, UK rapid delivery firm Weezy and just last year, the company’s German rival Gorillas.
All that growth put some pretty lofty expectations on the company to perform as it grew to 23,000 employees across five countries. However, Getir continues to lose money on every order, burning through its mountain of capital.
It was reported last month that Getir’s UK arm was auctioning off motorbikes, helmets and even fridges in an attempt to mitigate cashflow issues. Staff were also asked to go door-to-door offering discounts and free merch to boost sales.
“Getir will continue to operate in Turkey, the UK, Germany, the Netherlands, and the US,” the rapid delivery firm said in a statement at the time. “The company remains fully committed to the future of the industry it pioneered eight years ago and will continue to lead it in the future.”
The company has now secured $500m in fresh financing at a post-money valuation of $2.5bn – a significant reduction from its $11.8bn valuation when it last raised in 2022.
Status: Acquired (Getir)
Founded in London in 2019, Weezy picked up more than $20m funding in less than two years. While those numbers might not compare much with its rivals, it remains an impressive feat for a UK startup.
As a relatively early figure in British rapid grocery delivery, Weezy’s most notable legacy as of now is providing Getir with its first consolidation of the UK market. In its time as an independent startup, Weezy never made a profit, however, its acquisition by Getir spared it from facing the bursting rapid delivery bubble.
Status: Acquired (Getir)
At one time the principal rival to Getir, Berlin-headquartered Gorillas burst onto the scene in 2020 and raised over $1bn in two years. Gorillas launched in London in 2021, with an aggressive marketing campaign and fast-paced establishment of dark store locations that quickly cemented it as a major player in the UK rapid grocery delivery scene.
Gorillas’ success would, however, be short-lived as a sharp decline in revenue forced the company to drop out of several European markets and lay off hundreds of staff.
In 2022, Getir acquired the business at a valuation far off from its 2021 peak of $3.1bn.
Founded in 2020, Zapp in many ways reflects the high growth that rapid delivery startups enjoyed during the pandemic. Less than a year after launching, Zapp raised $100m (£78m) in its Series A round, followed by a $200m (£156m) Series B less than a year later.
Zapp has sought to distinguish itself from the competition with a premium model in which it focuses on serving more affluent areas (currently the firm only operates in the London area). Costs for consumers are also higher, based on the idea that the products being purchased are of a better quality.
The company believes the rapid delivery model works best as a luxury purchase – the average order for Zapp is an industry-high £35.
Zapp’s focus on specific locations and more expensive prices may lead to more favourable margins than its competition.
It reported losses of £76.2m on turnover of £11.5m in 2021, its most recently available financial results. An insider told UKTN that the firm is confident that it is on the path to profitability.
Founded in 2013, the American firm entered the UK market in 2021 through the acquisition of Newcastle-based startup Fancy. GoPuff garnered a major war chest throughout the years, raising more than $3bn in funding since launch that, like Getir, was put towards an acquisition shopping spree, including the UK’s Dija.
GoPuff has enjoyed its fair share of public recognition through high-profile partnerships with brands like McLaren. However, it has been far from immune to the financial complications that have impeded its competition.
Last year, the company laid off 1,750 employees across two rounds of firings alongside the closure of 76 warehouses in the US.
Status: Left the market
Founded in London in 2020, Jiffy quickly picked up funding, though not quite on the level of the rest of the list. Jiffy had all of the trappings of the archetypal rapid grocery delivery startup, offering supermarket products sent straight to consumer’s homes in minutes from dark store locations.
In 2021, Jiffy made just under £2m in revenue compared with pre-tax losses of £9.5m. While the startup was in no way unique for failing to profit from this service, rather than double down with more funding and more growth, Jiffy pivoted away from its consumer-facing delivery business to focus on providing software to other ecommerce brands.
In an effort to compete with the startups that came to dominate grocery delivery at the start of the 2020s, many of the UK’s major supermarkets moved to offer their own version of the service. These include Tesco’s Whoosh, Ocado’s Zoom and the Chop Chop service from Sainsbury’s.
These services are parallel to the companies’ main business, which remains more traditional supermarket services. Should the market for startups focused solely on rapid delivery continue to dry up, it is unclear whether these brands would continue.
What is clear is that major supermarkets must grapple with the same razor-thin margins that have made it so difficult for rapid delivery startups to survive.