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Groceries in 10 Minutes: Delivery Start-Ups Crowd City Streets Across Globe

Groceries in 10 Minutes: Delivery Start-Ups Crowd City Streets Across Globe
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Groceries in 10 Minutes: Delivery Start-Ups Crowd City Streets Across Globe

Groceries in 10 Minutes: Delivery Start-Ups Crowd City Streets Across Globe

LONDON – Traveling through central London, among the bikes and scooters of Uber Eats, Just Eat and Deliveroo, is a new entrant promising almost instant gratification for your craving for a bar of chocolate or a pint of cream iced: Getir, a Turkish company that says it will deliver your groceries in 10 minutes.

The speed of Getir’s deliveries, from a network of nearby warehouses, matches the astonishing pace of the company’s recent expansion. After five and a half years of pioneering the model in Turkey, it has suddenly opened in six European countries this year, bought out a rival, and by the end of 2021 is expected to be in at least three US cities. , including New York. In just six months, Getir raised nearly $ 1 billion to fuel this explosion.

“We have accelerated our plans to go to more countries because if we don’t, others will,” said Nazim Salur, founder of Getir (the word is Turkish for “to bring”). “It’s a race against time.

Mr. Salur is right to look over his shoulder. In London alone, five new rapid grocery delivery companies have taken to the streets in the past year. Glovo, a six-year-old Spanish company that delivers restaurant meals as well as groceries, raised more than half a billion dollars in April, just a month after Philadelphia-based Gopuff raised 1 $ 5 billion from investors, including SoftBank’s Vision Fund.

Closed at home for months during the pandemic, millions of people have started using online grocery delivery. Delivery subscriptions for many things, including wine, coffee, flowers and pasta, have jumped. Investors have seized this moment and are supporting companies that will get you everything you want, not just soon, but in minutes, whether it’s baby diapers, frozen pizza or a chilled bottle of champagne.

Fast grocery delivery is the next step in the wave of venture capital-subsidized luxury serving a generation accustomed to ordering taxi services in minutes, vacationing in inexpensive villas through Airbnb, and to always have more entertainment available on demand.

“It’s not just for the rich, the haves, who have money to waste,” Mr. Salur said. “It’s an affordable premium,” he added. “It’s a very inexpensive way to have fun.”

The road to profitability has been elusive in the food delivery industry. But that hasn’t stopped venture capitalists from investing around $ 14 billion in online delivery grocery stores since early 2020, according to PitchBook data. This year alone, Getir completed three rounds of fundraising.

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Is Getir Profitable? “Yes and no,” Mr. Salur said. After a year or two, a neighborhood can be profitable, he said, which doesn’t mean the business as a whole has been profitable yet.

Alex Frederick, an analyst at PitchBook who studies the food technology industry, said the industry seemed to be going through a period of blitzscaling, a term coined by Reid Hoffman, who helped create PayPal and founded LinkedIn, to describe a company that short to serve. a global customer base ahead of any of its competitors. And right now there is a lot of competition with little variation between companies, added Frederick.

“It’s a race to get market share at the expense of profitability,” he said.

One of Getir’s first major investors was Michael Moritz, billionaire venture capitalist and partner of Sequoia Capital, famous for his early bets on Google, PayPal and Zappos. “Getir has piqued my interest because I have yet to hear any consumer complain that they received their order too quickly,” he said.

“Ten-minute delivery sounds deceptively simple, but newcomers will find fundraising the easiest part of the business,” he said. Getir spent six years – “an eternity in our world” – solving its operational problems, he said.

Yet the streets of cities around the world are cluttered with upstart grocery delivery services. As the competition grows fiercer, fast delivery companies in London – with names like Gorillas, Weezy, Dija and Zapp – are offering extraordinarily high discounts. At one point, Getir offered 15 pounds (about $ 20.50) of food for just 10 pence (about 15 cents).

This is without counting the take-out delivery services that have set up in grocery stores (such as Deliveroo). And then, although at slower speeds, there are the supermarkets and convenience stores now delivering, and Amazon’s supermarket service.

Will users develop a strong enough habit or enough brand loyalty after the promotions end? The potential pressure for profits means that not all of these companies will survive.

Mr Salur says he’s not afraid of competition for fast grocery delivery, expecting there to be multiple companies in each country, just as there are competing supermarket chains. Pending in America is Gopuff, which is already in 43 states and is said to be looking for a valuation of $ 15 billion.

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Entrepreneurship is an end of career decision for Mr Salur, 59, after years of selling closed industrial factories. Since then, he has focused on speed and urban logistics. He founded Getir in Istanbul in 2015 with two other investors, three years after creating a taxi call app that got cars to people in three minutes. In March, when Getir raised $ 300 million, which valued the company at $ 2.6 billion, she became Turkey’s second-largest unicorn, the term for a company valued at over $ 1 billion. Today, the company is valued at $ 7.5 billion.

In his early days, Getir tried two ways to reach his 10-minute goal. Way 1: He stored the company’s 300-400 tenders in vans that were always on the move. But customers demanded more product than the vans could hold (the company now estimates the optimal number is around 1,500 items). Delivery of pickup trucks has been discontinued.

The company opted for lane 2: delivery via e-bikes or mopeds from a series of so-called dark stores – a hybrid of warehouse and small supermarket without customers – with narrow aisles lined with packed shelves. grocery items. In London, Getir has over 30 dark stores and has started shipping to Manchester and Birmingham. He has opened around 10 stores a month in Britain and hopes to have 100 by the end of the year. More customers means more stores, not bigger ones, Mr. Salur said.

The challenge is to find the properties – they have to be close to people’s homes – and then deal with different local authorities. For example, London is divided into 33 such councils, each issuing licenses and planning decisions.

In Battersea, southwest London, Vito Parrinello, manager of several dark stores that until recently ran Italian restaurants, is determined that delivery people do not disturb their new neighbors. The dark store is under a railroad arch, hidden behind a new apartment development. On either side of the standby electric scooters are signs that read “No smoking, no screaming, no loud music”.

Inside, you hear the intermittent sound of a bell, notifying staff of an incoming order. A preparer selects a basket, collects the items and packs them in bags for the rider. One wall is lined with refrigerators, one of which is filled only with champagne. At any given moment, two or three pickers ply the aisles, and in Battersea, the atmosphere is calm and tranquil, believing that their movements are measured down to the second. Recently, the average time it took to pack an order was 103 seconds.

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Saving seconds on a delivery requires efficiency in stores – it shouldn’t depend on the runners running to the customer, Mr Parrinello said. “I don’t even want them to feel the pressure of running in the streets,” he added.

Remarkably, most of Getir’s employees across the company are full-time employees with paid time off and pensions, as the company has avoided the odd-job economy model that has attracted lawsuits against it. Uber and Deliveroo. But it offers contracts for people who want flexibility or are only looking for short-term work.

“There is this idea that if this work is not contractual, it cannot work,” Mr. Salur said. “Please defer, it will work.” He added, “When you look at the supermarket chains, all these other businesses, they employ people and they don’t go bankrupt. “

Hiring employees rather than contractors generates loyalty, but it comes at a cost. Getir buys its products from wholesalers and then charges 5-8% more than the prices in a large supermarket. Importantly, the prices are not much more expensive than those of the small local convenience stores.

In Turkey, 95% of dark stores are independent franchises, Salur said, adding that he believes this system produces better managers. This is a model that Getir could bring to its new markets once they are more established.

But it has been a busy year. Until 2021, Getir operated only in Turkey. This year, in addition to the cities of England, Getir has expanded to Amsterdam, Paris and Berlin. At the beginning of July, Getir made its first acquisition: Blok, another grocery delivery company, present in Spain and Italy. It was only founded five months earlier.

“It’s growth, growth, growth,” Mr. Salur said. “This is what we are breathing right now.

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