Jun 7, 2021

Who will win the fast grocery delivery startup race?

Startups
grocerydelivery
gorillas
VCinvestment
Kate Birch
3 min
With VC investment in European fast grocery delivery startups on course to triple in 2021, we chart the main players and road to global expansion

The race to bigger billion-dollar valuations for speedy grocery delivery startups hots up as Gorillas, Flink and Getir draw ever-bigger investments and valuations in a move to scale and expand internationally.

Investment in speedy grocery delivery startups hots up

It seems venture capitalists can’t get enough of fast grocery delivery startups, whose apps promise delivery of on-demand groceries in just 10 minutes (or 15, in the case of Weezy), with Mubadala Capital, Coatue, Tencent, BOND, Sequoia Capital, Tiger Global, Silver Lake, SoftBank and Creandum among the well-known funds getting in on the fast grocery delivery action.

In fact, venture-backed grocery delivery firms have raised around US$1.56bn in Europe this year to date, more than doubling the investment into these startups throughout the whole of 2020.

Pioneering the sector, Getir, which launched in 2015 in Istanbul, has just raised US$550m in funding giving it a whopping US$7.5bn, tripling its previous valuation of US$2.6bn, bringing its total raised just since the start of the year to US$1bn.

Berlin-based Flink (which means ‘quick’ in German) has just secured US$240m from investors, though hasn’t yet hit unicorn status; and Berlin-based speedy delivery startup Gorillas, which achieved unicorn status (US$1bn) following investment in March, just 10 months after launching, making it Europe’s fastest unicorn, is seeking a further investment round to bring its valuation to US$6bn, according to Bloomberg.

A pandemic phenomenon

Driven in no small part by the pandemic, the now highly competitive speedy grocery delivery phenomenon grew in line with the huge demand for online shopping during lockdown.

In fact, many of them launched during the pandemic, tapping into the fact that people couldn’t leave home, including Berlin-based speedy grocery delivery apps Gorillas (March 2020), Flink (December 2020), Weezy (summer 2020) and Dija (March 2021).

These services, namely apps, which promise groceries shipped to customers’ doors, from cart to doorstep, in just 10-15 minutes, have transformed how people buy groceries, edging out the supermarkets and transforming the food supply chain, with customers paying the same price as going to the store themselves.

The goal is simple, according to the CEO and founder of Gorillas, Kagan Sumer, “to change the game in the grocery retail market, which has been slow to implement new and speedier technological solutions”.  

Getir and Gorillas to enter the US

All European-based startups, Getir, Gorillas, Dija and Flink have all expanded beyond their home countries, but only within Europe to date, with four of the five now in London, for example, and with recent investments being used by all to fund further expansion into European cities.

Flink, which is currently active in 24 cities across Germany, France and the Netherlands, is planning to use its latest investment to expand into more cities, and more countries; while London-based Dija recently expanded to France and Spain (Montmartre, Le Marais, Madrid).

However, both Getir and Gorillas have plans to utilise recent funding to enter the US. Getir – which currently serves 25 cities in Turkey and recently launched in Amsterdam and London – is planning to not just expand across the UK and in Paris and Berlin, but to begin operations in several US cities by the end of the year. While Gorillas, which now has operations in 25+ cities across Germany, the Netherlands, France and the UK, has announced its entry to New York.

Such global expansion would create greater competition for the more mature players, the food delivery behemoths (who don’t necessarily claim to be ‘fast’) such as Instacart, Glovo, Kolonial, Everli, Rohlik, as well as Uber and DoorDash, both of which have recently expanded into grocery deliveries.

How do these startups operate?

Known as ‘dark store startups’, the services are built around self-operated dark stores, which carry a select assortment of items, operating fulfilment centres which carry out online orders rather than serve customers in person and so have significantly smaller operating costs than high-street supermarkets and require fewer people to run them.

 

 

 

 

 

 

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Jun 27, 2021

Billionaire Kumar Birla Champions Regional Supply Chains

AdityaBirlaGroup
Alibaba
globalisation
Regionalisation
Elise Leise
3 min
As multinationals try to recover from the pandemic, Kumar Birla has a solution—narrow your scope and invest in reliable, regional suppliers

As the head of the Aditya Birla Group, a US$46bn firm that operates in 36 countries, Kumar Mangalam Birla is no stranger to splashy strategic moves. Yet his recent announcement that he no longer wants to acquire globally distributed supply chains stood out. While many companies have struggled to cope with shipping backlogs, his firm has chosen to pivot and focus on regional networks. Said Birla: ‘We wouldn’t look at a company or a business where you source in one corner of the world and sell in another’. 

 

He cited protectionism, the pandemic, and the limited movement of products and people around the world as ABG’s primary causes of lost profits. And they aren’t alone. Over the past year, 900 of the U.S. and Europe’s biggest IT, defence, and financial services firms have lost an average of US$184mn apiece

An Era of Global Disruption

Over the past few decades, low shipping rates and rapid delivery times have lulled multinational firms into a false sense of security. In the early 2000s, companies chose to take on significant global supply chain risks in exchange for increased profits. First, it made sense to manufacture higher-value goods, such as electronics, in low-cost regions throughout Southeast Asia, India, and Africa. Second, first-tier suppliers started to outsource the manufacturing of specific components to second-, third-, and even fourth-tiers—leaving supply chains with extremely limited visibility. 

 

So when COVID-19 disruptions struck certain regions, companies were caught unprepared. Usually, these events come few and far between. But over the past ten years, we’ve seen a number of ‘black swan’ events that have thrown the supply chain industry into chaos. Here’s a quick history of the most significant events in recent years, thanks to the MIT Sloan Management Review

 

  • 2010. China creates export quotas for rare earth elements. 
  • 2011. The Tōhoku Earthquake hits East Japan; flooding sweeps throughout Thailand. 
  • 2016-present. Trade wars between the U.S. and China hurt suppliers. 
  • 2020-present. COVID-19 pandemic shuts down international shipping ports.

 

Now, Kumar Birla is one of many who want to re-evaluate how we run our supply chains. Though his company has acquired 40+ companies in the last quarter decade, Birla intends to build up local hubs rather than expand operations. 

 

Why Pursue Regionalisation? 

Combine Chinese economic dominance, global supply chain vulnerabilities, and major government policy shifts around the world, and you have a storm brewing on the horizon for big multinational firms. As Brookings noted, ‘the biggest risk for trading opportunities in the developing world is growing protectionism in more advanced economies, often dressed up as national security protection’. 

 

Altogether, from the U.S. to the European Union, governments are trying to protect their domestic supply chains, secure adequate stockpiles of materials, and build world-class local networks. Consider Biden’s recent executive order, which seeks to bring semiconductor manufacturing back to home soil, or Japan’s bid to open more memory chip fabrication factories near Tokyo. The Aditya Birla Group intends to react in kind. Said Birla: ‘We’re looking at regionalism as a very big theme’. 

Will Others Follow Suit? 

In the post-pandemic economy, global businesses must decide whether to expand or contract. On one hand, the Alibaba Group’s Cainiao Smart Logistics Network recently launched a direct flight between Hong Kong, China, and Lagos, Nigeria. On the other, the Japanese government is desperate to make its chip manufacturing domestic. Indeed, as two supply chain strategies diverge in a post-pandemic world, the one businesses take may make all the difference. 

 

Yet Birla is confident that regionalisation is the right call. According to his words at the Qatar Economic Forum, even necessary cross-border transactions should be smaller in scope. And as the Bloomberg Billionaires Index now lists his net wealth at US$10.4bn, up 52% from 2020, he may have the cash to test his theories out. ‘Regional hubs, regional presence, regional employment, catering to regional demand’, he stated. ‘We’re a global company rooted in local economics’. 

 

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