A courier from the German express delivery company Gorillas in July 2021 in Berlin (AFP/Tobias Schwarz)
The rise in costs weighs on all economic players, but all the more on those who are not profitable: the delivery of express shopping, or “quick commerce”, following a dazzling start, sees a few clouds gathering above from his head.
These companies that promise the delivery of everyday consumer goods in regarding ten minutes, especially in urban areas, were until then used to announcing fundraising and record valuation levels.
But at the end of May, the German Gorillas announced the elimination of 300 administrative posts, the Turkish Getir some 14% of its workforce, or just under 4,500 people. And the American GoPuff has also reduced the sails, according to several media.
The decision was not “taken lightly”, assures the general manager in France of Gorillas, Pierre Guionin, to AFP. “But it was a necessary step” for the company to be stronger and more profitable in the long term”.
– Launch of own brands –
The target audience for this new commercial offer, inhabitants of major international cities, is a priori less sensitive to purchasing power issues than the average consumer, and “the market is still growing”, with ever more attracted customers, according to Pierre Guionin.
Evolution of three of the main companies in the express grocery delivery sector ( AFP / )
However, customers are “more attentive” to prices than before and “the + discount + category, for example, is in high demand”, he observes however. And Gorillas has just launched in France, Germany, the Netherlands and the United Kingdom its own distributor brands on around fifty products, generally identified as more accessible than the big brands (Danone, Coca-Cola for example ).
But the reason for the staff reductions is above all to be found in the financing of this “quick trade” activity, which is very costly in terms of time, logistics and personnel, while the public is used to the low delivery costs charged by e-tailers like Amazon.
Investors “no longer want to support companies that want to grow at all costs,” Clément Genelot, distribution sector specialist at Bryan, Garnier & Co, told AFP.
Quick traders are downsizing or pulling out of certain countries “because they know it’s going to be harder to raise money,” he says.
Paul Lé, who co-founded the online food trade site La Belle Vie, says he has experienced such “difficulties in the past”. “Investors tend to target markets that have better prospects for profitability,” he said.
“The activity needs a fairly high average basket” to generate a larger margin, he says. His company, La Belle vie, which offers “same day” delivery, relies on an average basket of 80 euros compared to around twenty for quick-traders.
– “Dark store” with windows –
Another possibility to gain in profitability, “to lean on other more profitable activities, for example a delivery the next day or the day following with a large shopping basket”. The quick-commerce option would then become an additional service, allowing for example to order products “forgotten in the order in 48 hours”, he observes.
A store of the American “quick-commerce” company GoPuff, on June 10, 2022 in New York (AFP / Thomas URBAIN)
The fact remains that quick-commerce is facing increasingly marked opposition from certain large cities, even from a section of the political class, which denounces pell-mell, the arrival of “warehouse towns”, the nuisances for local residents, even the “lazy economy”.
“In New York, there are discussions regarding banning dark stores from residential neighborhoods to avoid blind windows facing the street,” explains Blake Droesch, analyst in the United States for Insider Intelligence.
GoPuff, a dominant player in the American economic capital, is considering opening its dark stores to the public, but then “what would be the difference with a convenience store that does delivery”, wonders the specialist.
For his part, Clément Genelot says he is “fairly optimistic regarding the development of dark stores”. “They will develop a little slower than expected, but the demand is still there.”
