Quick-Commerce: GoPuff and Gorillas Clones Conquer the World

In early summer 2020 I was in Berlin for the first time Gorillas tried. Kağan Sümer's startup, which started in Prenzlauer Berg in June, delivers groceries and some drugstore products at more or less supermarket prices. Ordering can only be done via an app and delivery takes place within a 10-minute window, which was often exceeded, especially in the early days.

Orders are processed in hyperlocal warehouses, either dark stores or dark warehouses, and delivered using electric bicycles.

From a user perspective, this is an incredibly cool experience: for a small delivery fee, I can order products online, which are often delivered faster than if I went to the supermarket myself (even if the supermarket is just around the corner, like my Berlin apartment).

The Corona pandemic has shown that classic grocery eCommerce providers are reaching their limits. The delivery slots are often fully booked for days, the delivery costs and the minimum order quantity are high.

Startups that rethink the last mile of grocery shopping and offer a high level of convenience have the potential to sustainably change the market. Instead of expensive shops at prime locations, inexpensive storage rooms can be used, like here at Samokat in Russia:

https://samokat.ru/darkstore_video.3b07972b.mp4

Margins in the food trade are low and high sales must be generated in order to operate profitably. Quick commerce startups must quickly capture significant market shares and achieve high average baskets in order to build up bargaining power with producers and to protect themselves against imitators.

In addition, the salary costs should be comparatively low and the population density high for the unit economics to work, since a driver can only deliver around three orders per hour.

Gorillas is a clone of the Turkish startup Getir, which started in 2015 and is now also active in London. Getir has raised over USD 170 million, including from Michael Moritz, partner at Sequoia. The US-based GoPuff, which focuses more on alcohol and whose prices are slightly higher, is now joining in USD 3.9 billion evaluated.

It's no wonder that copycats are emerging all over the world.

Gorillas, which recently received EUR 40 million, is already set to receive another EUR 100 million round have closed. The German challenger Flink currently has one USD 52 million financing round completed. Yandex has been experimenting in Russia for a long time Lavka, and also Samokat (“Scooter”) focuses on the Russian market. Delivery Hero relies on MENA, Weezy and Zap are active in London, Fridge no more in NYC.

In Switzerland, various players are trying out Quick Commerce: Avecnow from Valora and Heymigrolino Migros delivers in the Zurich area within 60 minutes free of charge for baskets worth CHF 20 or more, and charges significantly higher convenience store prices. The two shops do not use dark stores, but rather pick from an existing branch. The delivery is carried out by startups that are also quite hyped in Switzerland Annanov and Luckabox.

Much closer to the original Stash, an experiment by Swiss Start Up Factory. The shop that does not yet offer its own app and relies on Woocommerce (see WordPress: The perfect tool for MVPs), currently only delivers in Zurich districts 4 and 5.

While in densely populated Berlin, with a minimum wage of around EUR 10 per hour, a gorilla can achieve acceptable to good unit economics depending on the average basket, this seems difficult to me in Switzerland. Notime, which was bought by the Swiss Post some time ago, pays at least CHF 23.55 per hour according to the GAV. Even if the shopping carts in Switzerland are probably a lot larger than in other countries, it will probably be a very big challenge to make a Getir clone successful in Switzerland.

That's why Stash, the SSUF's MVP, is sure to be watched closely from all sides. It's all the more exciting that the team around Mike Baur and Simon Koch dared to test the model. What needs to be proven is that the average basket is significantly higher than expected. Otherwise, with a delivery fee of CHF 3.90 and delivery salary costs of over CHF 20 per hour, no positive unit economics can be generated. Three deliveries per hour at CHF 3.90 each result in just under CHF 12, so at least CHF 8 delivery costs must be subsidized. A quick price comparison of a random selection of products showed that the prices are no higher than those at Coop and Migros. I assume that Stash does not currently have any contracts with suppliers, but rather buys the products from either supermarkets or wholesalers; Gorillas took the same approach at its launch in Berlin. Stash needs to grow quickly to get good terms from suppliers in order to achieve an attractive margin.

This can work if Stash manages to conquer the suburbs and rural areas. Either way, consumers will embrace Stash enthusiastically. Good luck!

Image: Copyright GoPuff