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21 Mar 2022

Rapid grocery delivery and the big difference between valuation and worth

Rapid grocery delivery and the big difference between valuation and worth
Ever feel like you’re living in Superman’s Bizarro World, the DC Comics created planet where everything is weirdly inverted or opposite to expectations? I certainly did last week when Turkish venture Getir hit a valuation of $12 billion after raising $768 million.

“We are defining the ultrafast delivery sector and this latest round of funding is a testament to our position as an industry pioneer,” commented Getir founder Nazim Salur.

“In such an exciting and competitive market we cannot afford to stand still. This investment will enable us to further develop our proposition and technology, as well as invest in our employees to continue to attract the best talent.”

Cue huge applause from various industry observers and pundits.

This is the way of the future. The traditional online grocery delivery model is broken, they argue.

Startups like Jokr and Gorillas have dispersed their distribution networks to within an actual mile, via the use of dark stores. In doing so, they’ve created the last last mile. It’s the stuff of retail revolutions. And so on.

All I see, however, is silly amounts of money being thrown at loss making ventures as they chase unrealistic delivery times that at best only a small minority of people want.

As former Amazon executive and supply chain consultant, Brittain Ladd, commented last year: “The valuations being assigned to Gorillas and Flink, defy the laws of finance, mathematics, and logic. In my opinion, there is an ‘invisible hand of collusion’ artificially inflating their valuations.”

Although there are many rapid grocery delivery companies, only a few will survive, Ladd argued. Several have already been acquired and there will be more acquisitions in the future. 

“I believe that rapid grocery delivery is a viable business model, but only a few companies will succeed. I anticipate that there will be many changes,” he said.

In conclusion

Expect more grand rapid grocery delivery statements and press releases in 2022, yet more ambitious delivery times (we deliver before you’ve even ordered, anyone?), and eye watering funding rounds.

But also expect more companies like Buyk and Fridge No More to fall by the wayside.

Ultimately, it’s hard to see this as a mass market, cross country thing. Rather, it feels niche and city-based.

Also, at a time when green retail messaging is (quite rightly) here, there and everywhere, are Gorillas et al at the extreme end of irresponsible consumerism, and will that cause them problems down the line?

Read the full article here on Retail Innovation Hub: https://retailtechinnovationhub.com/home/2022/3/20/rapid-grocery-delivery-and-the-big-difference-between-valuation-and-worth

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