Why are rapid grocery delivery companies ‘reinventing the wheel’?

It’s been a busy month for the quick commerce sector, with three rapid grocery companies – Getir, Gopuff and Zapp – announcing strategic partnerships with leading food delivery platforms Just Eat and Uber Eats.

As a result, the quick commerce sector is undergoing the process of “reinventing the wheel,” as the companies merge together, forming strategic alliances and combining strong customer bases with quick commerce expertise.

Turkish-based startup, Getir – which was valued at a whopping £10 billion earlier this month – announced a tie-up with Just Eat Takeaway.com (JET). The deal will see Getir’s entire product portfolio being merged into JET’s marketplace and delivered directly by Getir couriers.

Quick commerce giant Gopuff has also partnered with Uber Eats in the UK, a move which allows customers to order its wide range of everyday essentials direct from the Uber Eats app.

Shortly afterwards, Zapp and Uber Eats announced a similar Europe-wide deal, with company chief commercial officer Ajay Lakhwani saying the deal allowed them to: “reach even more Londoners as we further our mission to delight customers with things that make them happy, the moment they want it.”

While the timing of the deals seemed like something of a coincidence, it points towards a potential shift in the direction of the quick commerce sector as a whole.

Is there enough demand for the ‘rapid’ service?

While most consumers are used to a lot of choice when it comes to picking a provider of a rapid delivery service, what the industry is seeing now, isn’t new.

“It’s not a recent decision they’ve made, and actually if you look back to the beginning of when q-commerce kicked off. Most companies kicked off working with these firms,” ex-Jiffy head of delivery operations and q-commerce expert Quaid Combstock tells Charged.

“Arrogantly a lot of them actually went and left the platform, and other all going back. So this isn’t technically news – they’re just reinventing the wheel because they realise they screwed up last time.”

Combstock believes that the reasoning behind the U-turn has come from the stale consumer demand for the rapid delivery product.

“The second thing we’ve got here is that these companies are simply not getting enough orders on their own and they need order volume to survive,” he explains.

The issue for some of the sector’s newer players such as Zapp, Getir or Gorillas is that they entered into a space where well-established players with the technology and platform already existed, such as Uber Eats or Deliveroo.

The only difference between the sector incumbents and the newer startups is that the latter started offering the ‘rapid delivery’ service, which, in Combstock’s eyes, isn’t necessarily what customers need or particularly want.

Consumer attitude

“I don’t think most people care whether they get their deliveries in 20 minutes or 60,” he told Charged back in September.

“There are a lot of customers out there who don’t want to shop via Getir or Zapp for example, because they’re happy with Uber Eats and Deliveroo as they have been for years.”

“Often, psychologically speaking, you’re not thinking about buying food from Uber Eats, in fact, you’re looking at Morrison’s, Tescos and all the different various grocers on there. Why would I trust Getir over going to Tesco or Morrison’s?”

On the need for many different convenience apps, Combstock said: “Why wouldn’t I use one app where I can get my taxis, my food delivery, my groceries and other things all in one?”

Why are Q-commerce firms making the switch?

The major benefit for q-commerce firms such as Zapp and Getir is they are gaining access to a large, and well-established consumer base and therefore orders.

“At Jiffy, all the orders that came through Uber went straight to us and we treated it like any other delivery,” Combstock reveals.

“If you look at Zapp for example, Uber Eats couriers come to collect the orders and it is a separate aspect of the business. It is interesting, because shows me is that the order volume is too sporadic – Zapp don’t want to pay money for the riders because they don’t think they are going to make any money back, which then undermines the entire business model.”

“From the q-commerce side, it makes a lot of sense that these guys work for them because you’re increasing the volume growth while they get brand awareness.”

Getir’s regional general manager Turancan Salur tells Charged that the cooperation of two strong international brands is an “absolute win-win situation for both”.

“Just Eat Takeaway.com customers can choose from a wider range of grocery and convenience products, and at the same time, Getir will benefit from accessing the large consumer base and continue to grow across Europe,” he says.

Industry errors

The concept of online grocery has been around for years, but Combstock believes that errors made along the way have moulded the space.

“There’s two things they messed up with,” he says.

“The first one is when you enter a food delivery app, customers go section by section, so you can’t just easily skip to where you want to. It’s not visually appealing so people aren’t seeing the items and therefore aren’t buying the items. It doesn’t work.

“The second thing is so underrated, but when you look at most local corner shops or partners, a lot of them have hardly any stock control, so they can’t tell platforms like Uber Eats how many items they have in their shop right now.

“The problem you’ve got there is most shops only have about 50% accuracy regarding the number of items that people order, versus number of items that people actually get delivered.”

Paving the way for industry consolidation

There’s been subtle signs of consolidation in the sector, with Getir reportedly in talks with rapid delivery rival Gorillas over a takeover deal.

Getir also acquired q-commerce firm Weezy back in 2021, in a move that the Turkish-based firm said “solidified Getir’s long-term commitment to the UK market.”

“I think you’ll find eventually you’ll find a lot of these companies merging or acquiring q-commerce companies,”Combstock says.

But he doesn’t think it will be happening anytime soon, pointing out that the “evaluations on a lot of these companies are so dramatically inflated, that it makes no economical sense” right now.

On consolidation, Combstock says that it makes sense for companies such as Deliveroo to snap up smaller firms such as Zapp.

“Why would anyone invest in them? The unit economics aren’t anything better than all the other companies so they can’t raise money. Why would you invest in Zapp for example, if you’ve got Getir and Gopuff? It’s too risky.

“So they’re going to go under eventually or be acquired because otherwise they just can’t survive.”

While q-commerce saw its popularity boom over the course of the pandemic and various lockdowns, as it continues to mature. And with firms either going under or being acquired by the larger players, rapid delivery looks set to occupy a very different space in the future.

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