The cut-throat competition among fast delivery services is in full swing. Now the end of Getir and Gorillas in Germany seems to have been decided. Of the former high-flyers, only Flink remains. But that is not a guarantee of lasting success.
Lightning delivery services are no longer the stock market darlings they once were. The days when investors invested huge amounts of money in Gorillas, Flink and Co, even though none of the companies were profitable, are over. With central banks raising interest rates, fresh money is no longer available cheaply, the economy is weakening and there is fierce competition in the industry. None of the companies have so far been in the black.
The much-heralded wave of consolidation is rolling – at least since Getir and Gorillas began speculating about a withdrawal from Germany. The Turkish company Getir bought its Berlin competitor Gorillas at the end of 2022. According to a report in “Wirtschaftswoche”, 1,800 employees were said to have been laid off at the beginning of this week. The provider from Istanbul has so far been able to raise a total of $1.8 billion in venture capital from investors. According to reports, the startup burns between 50 and 100 million euros per month.
Of the major providers, only Flink is now left in Germany. The company dominates the market with an estimated 80 percent market share. Last year, Flink is said to have made a total of 560 million euros in sales in Europe – without ever having made any money.
However, the withdrawal of Getir and Gorillas does not mean that Flink will emerge as the winner from the cut-throat competition, according to Otto Rumpf, food marketing expert and board member of AFC Consulting Group AG. Since fast delivery services do not follow a business model of the so-called platform economy, they cannot be expanded to cover any number of customers and transactions without great effort. For each new location, warehouses have to be rented, food has to be stocked and couriers have to be employed. “Therefore, it doesn’t apply here: The winner takes it all! There won’t be a happy ending for Flink when it comes to quick commerce either. On the contrary, it means: The last person turns off the light,” says Stricher.
Promise that cannot be kept
“Germany is the toughest food market in the world”. In this country, discounters are particularly important because of suppliers like Aldi and Lidl – unlike in Turkey. Therefore, the margins for food in Germany are lower than in other countries. “There is less money available to subsidize deliveries from the product margin, the costs of which cannot be covered by the delivery fee. If you then buy even worse than one of the retail giants and still want to sell at supermarket prices, things will be tight,” says Stricher .
According to information from “Wirtschaftswoche”, the deadline for Getir should be May 15th. The Turkish delivery service, founded in 2015, has received funding in the existing double-digit million range from investors. The condition: The money should be used for the withdrawal and settlement of the three markets Germany, Great Britain and the Netherlands. In the home market of Türkiye, however, the food delivery business is to be further expanded. According to Eva Stüber from IFH Cologne, Getir currently makes 90 percent of its sales in Turkey, so it is a logical consequence to concentrate on this market. The low-wage sector also looks different there, which means that it can be operated more cost-effectively.
With the withdrawal from Germany, Getir’s idea of buying Flink is likely to be off the table. Flink’s investors recently committed to pumping another $100 million into the startup so that it can continue to grow. The funding round was led by Flink’s existing backers, including German grocer Rewe and venture capitalists Bond, Northzone and Cherry Ventures, according to Bloomberg.
The structural problem that it is not possible to deliver profitably within a few minutes with small delivery fees at supermarket prices is not changed by the current financial injection, says Stretcher. “The only solution is to separate ourselves from these untenable promises and the associated business model.” Flink has no future in its current form as a quick commerce provider. According to Stretcher, the company doesn’t have much time to make the urgently needed change. “The next six months will decide the future of Flink”.
Flink “above all needs fresh ideas”
The lightning delivery service could survive as a pure service company for delivering Rewe products without any profit claim, with the aim of learning more about food customers and connecting the different worlds of online and offline. “So far, Rewe’s share has been rather small. Too small to integrate Flink cost-effectively,” says Rumpf. This would only be possible if it became clear to the other investors that the value of their holdings was approaching zero.
According to Stretcher, it could be worth taking a look at Picnic in order to develop a viable business model. The company does not rely on lightning deliveries, but rather offers potential time slots specified in the app. According to Stretcher, deliveries based on the “Eiermann model” on fixed routes are much easier to plan and therefore more profitable. “Flink has to quickly find its own way and for this it not only needs fresh capital, but above all fresh ideas,” says Stricher.
Stüber from IFH is a little more optimistic and still sees a lot of potential in online grocery retail. In order to make Flink profitable, the expert recommends taking a very mundane approach to costs. On the one hand, money could be saved through automation in the warehouse and route planning and, above all, when bundling deliveries. On the other hand, on the sales side, the utilization of the individual warehouses could be increased in order to increase the average shopping baskets. “Other revenue lines also offer potential: for example, a higher delivery fee may be charged for the convenience offered, or the service could even be offered as a subscription.”