A cut-throat competition has begun in the major German cities. Grocery delivery services such as “Gorillas”, “Getir” and “Flink” are vying for market share in the metropolitan areas. They are looking for new investors and are laying off numerous employees in order to survive.
Who doesn’t know it: After a hard day’s work, standing in a long line at the supermarket because you still have important errands to run. Why do you still do this stress after work? Because there has long been an alternative: food delivery services on two wheels.
The delivery of groceries by bicycle or scooter is a business model that experienced its breakthrough at the latest with the beginning of the corona pandemic. A bitter battle for market share is now raging between the providers. Employees are laid off and investors are sought. If you want to survive, you have to make tough decisions and keep financiers happy.
“Anything you want. Delivered in minutes.” That is the promise of the delivery service start-up “Gorillas” from Berlin. Among the better known are “Getir” and “Flink”. There are also other local providers. They all want groceries delivered to their front door within 10 to 20 minutes. They are brought by a “rider”. That’s what the drivers of the services are called.
Shopping by mobile phone or computer and a “rider” brings the order: many investors once recognized that this model had potential. They pumped billions of euros into the young companies. As reported by “Zeit Online”, the delivery service “Gorillas” alone raised over one billion euros in autumn 2021.
The problem, however, is that the grocery store is expensive. For one thing, it doesn’t yield much for the big food companies like Metro, Rewe or Edeka. That comes from surveys by the consulting firm Alvarez
As a result, large investments in this area cannot be made. However, the riders and the packers also have to be paid, as well as the immensely expensive rents in the inner-city department stores.
The consequence of the capital-intensive business model: employees are laid off. In the case of “Gorillas”, for example, they are again looking for financiers to reposition the start-up. According to a statement from the delivery service, the company wants to intensify its focus on long-term profitability.
According to this, “Gorillas” is planning to withdraw from four countries and to concentrate on “the five strategic core markets of Germany, France, the Netherlands, Great Britain and the USA”.
As a result, 300 employees of the company will be laid off. “With this difficult decision, Gorillas ensures that it can expand its own position both financially and strategically in the long term,” it continues. According to “Zeit Online”, only 25 of the delivery service’s 230 warehouses worldwide are currently working profitably.
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And “Getir” and “Flink”? Things are going a little better with the competition. Around 700 million euros were recently collected from “Getir” and “Flink” is pleased about the participation of the market giant Rewe. But here, too, a lot of money is devoured and the profit is limited.
Ultimately, the following applies to all delivery service start-ups: wait and see the market. If consumers do not change their purchasing behavior in the long term, i.e. towards shopping via smartphone, and are also not willing to pay a surcharge for it, then it will be particularly difficult for “Getir” and “Gorillas” to survive on the market.
In particular, the easing of the corona measures made life difficult for delivery services. The shares of companies like HelloFresh or Delivery Hero lost value rapidly with the easing. Inflation and rising interest rates do the rest on the stock market.
The mood within the food delivery services is not exactly rosy either. Riders from a wide variety of companies get together and fight again and again for better working conditions. In Berlin, the “Gorillas” drivers even went on strike for several weeks.
So what is a good thing for the consumer actually eats up a lot of money and is often at the expense of the employees. However, the delivery service start-ups will continue to fight for capital and market share. Because the market potential remains large. The eviction competition is in full swing.
