Home Technology More consolidation in grocery delivery: Getir acquires FreshDirect to beef up in the US

More consolidation in grocery delivery: Getir acquires FreshDirect to beef up in the US

0
More consolidation in grocery delivery: Getir acquires FreshDirect to beef up in the US

[ad_1]

Getir, the Turkish instant grocery delivery startup, has made an acquisition to expand its presence in the U.S. and to further its strategy as a consolidator in its category. The company has scooped up FreshDirect, an online grocery delivery service based out of New York.

Terms of the deal are not being disclosed, but for some context, FreshDirect, when it was in startup mode itself, raised as much as $517 million (per PitchBook) from investors that included JP Morgan, the UK grocery chain Morrison’s, AIG and Maverick Capital, but when it was sold to the mega-grocery giant Ahold Delhaize and Centerbridge in November 2020, it changed hands for $300 million. Founded in 1999, New York-based company is one of the oldest online-only grocery delivery players. We did not get a comment back from Getir when we asked if the acquisition will see Ahold Delhaize (which held 80% of FreshDirect as of the 2020 deal), or Centerbridge, take stakes in Getir.

FreshDirect will keep its branding in the deal, Getir said.

The news comes at a tricky moment for Getir, and for the wider world of grocery delivery.

Getir, backed by the likes of Sequoia, was valued as high as $11.8 billion in March 2022. But more recently (in September of this year) it was reported to be raising $500 million at a valuation of just $2.5 billion, figures we’ve confirmed with sources close to the company.

In between those two fundraising bookends, we’ve reported on how the company has laid off employees and picked up high-profile rivals like Gorillas that were nearing the end of their runway, while much of the rest of the field has played out in a similar fashion of consolidation or simply winding down. Flink and U.S.-based Gopuff are the other two big players in “instant” delivery in Europe, and even Flink has been rumored to be an acquisition target for Getir. That deal, we understand from sources from both companies, is currently off the table.

Over in the U.S., things have also not been very rosy, either, for standalone delivery-only companies. Instacart, the most visible company in the country in delivery, had a small pop when it went public in September this year. But right now it’s trading considerably lower compared to its IPO price, and its market cap of just under $8 billion is very, very down from the $39 billion valuation it commanded as a privately-backed startup. FreshDirect itself had plans to expand beyond the New York area, and it did open to deliveries in Philadelphia and Washington, but in 2022 it retreated back into a NY-region footprint.

The bigger picture for grocery delivery has been one that’s followed the last several years of socio-economic developments.

These companies were all growing at an encouraging pace before 2020. Then, when the Covid-19 pandemic hit, people were required to shelter in place, or simply wanted to enforce social distancing to avoid the spread of the coronavirus. And with that, online grocery boomed. That led to very high demand, huge funding rounds of hundreds of millions of dollars to meet those growth drivers, and even the surge of a whole new category in the space, around “instant” delivery, where people could order on apps or online and get their goods delivered to the doors of their homes within minutes. Many hailed the shift as the “new normal” and that the habits we picked up during the pandemic would set the pace for how we would live our work and leisure lives in the future.

But for the more cynical among us, the unit economics of these companies always looked impossible. And indeed, many companies in the “instant” space, Uber-Lyft style, looked as if they were simply throwing money at the model (in the form of free or discounted groceries, good payouts to riders, deals with suppliers) just to gain market share.

It was not terribly surprising when, at the end of the day, many grocery delivery startups started to struggle as demand right-sized to the new “new normal” of people shopping in person once again, also feeling less flush economically to shell out for overpriced ice cream.

Getir and FreshDirect have made almost no fanfare of the deal, issuing a short press release in the early hours of the European market and in the middle of the night in the U.S. with no quotes or much detail, noting:

“The acquisition will lead to significant synergies between Getir and FreshDirect and emphasizes Getir’s strategic ambitions to grow in the United States. FreshDirect will leverage Getir’s technology and operational footprint to offer faster services to its loyal customer base, which will also benefit from easy access to Getir’s quick convenience service. FreshDirect will enable Getir to further increase the quality and breadth of its product range, especially regarding fresh products, making it even more attractive to its New York customers.”

[ad_2]

LEAVE A REPLY

Please enter your comment!
Please enter your name here