Getir, a European leader in the rapid delivery space, acquired Berlin-based on-demand grocery delivery company Gorillas. There has been a consolidation in the US.
The story was first published in August.
Before launching his ultrafast delivery business in New York City last year, Kaan Smer, the CEO ofGorillas, promised to break US shoppers' habit of buying bulk.
"Gorillas can give you bulk purchases, but you won't need them, because we're giving you things when you need them," he said in May 2021.
Some habits are difficult to change.
Ultrafast- delivery businesses are collapsing at a rapid pace. Fridge No More, Buyk, Jokr, and 1520 have all left the US. In late July, gorilla's scrambled for $250 million in funding.
The model of rapid- delivery businesses built abroad by many of their founders were tried in the US. Gary Hawkins, a retail analyst who leads the Center for Advancing Retail & Technology, said that the companies didn't understand the differences between US and European consumers.
The so-called ultrafasts wouldn't stick in the US according to Phil Lempert. Lempert said that it was impossible to reach for success.
Insider interviewed people about the industry They said something went wrong.
In New York, Chicago, Boston, and San Francisco, there were express-delivery companies like Gorillas, Jokr, Fridge No More, Buyk, and Getir. Delivery of groceries in 15 minutes or less was their goal.
According to PitchBook, $10.9 billion in venture capital has been invested in last-mile- delivery companies.
Ultrafast players learned the business in other countries. Buyk's founders ran an ultrafast delivery service called Samokat in Russia, while the model of the gorilla's model was on the streets of Berlin.
This may have led to blind spots for the American consumer.
Europeans tend to buy fresh groceries a few times a week. In the US, people with larger homes buy larger quantities of items that can last a week or more. Bulk buying has become more attractive due to persistent inflation.
As the economy has tightened up, bulk buying is hard to change.
Ultrafasts burned money to get customers.
Insider reported in May that Getir was burning $60 million a month. The burn rate for the month was between $50 million and $75 million, according to an Insider.
Ultrafasts' discounts of $20 to $25 for first-time customers were unsustainable according to a research note written by an analyst.
Customers were ordering less than they needed to. The average order was $21 to $32 in May. It was less than the average basket in April.
Sales of groceries ordered online in the US decreased by 18% from March to May, according to a survey. The Labor Department shows that grocery prices have gone up over the past year.
Ultra fasts were squeezed. The business model was doomed from the beginning.
The company that was best positioned to succeed in the US was Getir. It had $2 billion in funding and operations in Europe.
In an interview with Insider in February, its CEO stated that Getir had tested the model. He said that they knew what they were doing.
Getir had a lot of acquisitions in Europe. A delivery service in Spain and Italy was acquired by the company. Weezy was bought in the UK in November.
When Getir arrived in the US in November, it chose to build from the ground up, something it hadn't done outside of Turkey.
It hired hundreds of employees and planned to open thousands of stores in the US, but in May it laid off more than 4,000 people. The company was unprofitable when it was laid off, according to former employees.
Its operations in the US have been difficult. Employees said that snow in Chicago made scooters impossible to ride, and that some scooter riders got into accidents on city streets. The company didn't report their income to tax authorities. The New York State Department of Labor is looking into the matter.
The US was the ninth country that Getir opened. There was plenty of time and resources to put together a design frame that supported what they were doing.
According to analysts, one ultrafast delivery service, Gopuff, seems to have a better understanding of the American market than its competitors.
A group of consumers already accustomed to getting food deliveries quickly and at odd hours started buying snacks and smoking supplies from Gopuff.
It sells a wide range of groceries, snacks, booze, and prepared foods in about 1000 US locations.
Gopuff would emerge as the leader of quick delivery in the US, according to a prediction by Mollins. The company has cut 10% of its workforce since then.
The future is not good for ultrafasts according to alogistics expert.
He suggested that speed isn't everything.
Consumers don't necessarily want 15-minute delivery from grocery retailers and delivery companies. Consumers want to be able to receive groceries when they want."
He said there wasn't a market for rapid grocery delivery.
Do you have insight to share with others? Someone has a tip. Nancy Luna can be reached via email at nluna@insider.com, or by email at abitter@insider.com.
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