Picture this: I’d been travelling since 5:30 am after visiting family overseas for Christmas. After a car, plane and train journey to get me back to my destination, there’s one thing I really didn’t want to go out and do: grocery shopping. Thankfully, I was able to order my groceries from the comfort of my flat, and unbelievably, the goods were delivered in just 6 minutes. So, how is this possible?
Superfast grocery delivery apps have been popping up across the world since the rise of online commerce during the coronavirus pandemic. The apps, commonly used in places like Germany, the UK and the United States promise to have the contents of your virtual shopping cart delivered in just 20 minutes or less.
Key Players in the industry
Gopuff- the Philadelphia founded company began in 2013 and has now reached a valuation of $15 billion and has recently received funding of $1 billion.
Getir – a Turkish start-up company that was established in 2015. It is currently valued at $7.55 billion. As of June 2021, Getir had funding of $1 billion.
Flink – a German grocery delivery startup headquartered in Berlin which is valued at $2.1 billion and received $750 million in funding, led by DoorDash.
Gorillas – another Berlin-headquartered startup founded in 2020, which has achieved a valuation of over $1 billion and has secured over $290 in funding.
As well as these names, others to note include Zapp, Jiffy, Dija, Weezy and Fancy.
How do the apps work?
The basic business model of these apps is fairly simple- they offer an anytime express courier service through their app or website and the courier takes care of the order. The speed that the products arrive, the produce itself and the competitive prices are what makes these apps revolutionary.
Navigating these apps is easy: you enter your address, an estimated delivery time is provided, you select your goods from the different categories, make the payment and the goods will be with you in no time at all.
Getting the goods to the customer
The super-quick delivery companies operate multiple ‘dark stores’ across the cities that they serve, allowing for quick access to consumers. You may be wondering what a dark store is: They are large retail sites which resemble a traditional store, but they are not open to the public and instead they are used to fulfil online orders. Some of the apps may not own these stores. For example, Getir forms partnerships with local warehouse owners through a franchise agreement (which allows them to avoid typical owner costs).
Using Jiffy as an example, when an order is made, an alert sounds on the supervisor’s desk in the dark store, and the order is sent to an app on the picker’s phone, notifying them of the shelf location of the items. The picker dashes around with a trolley to collect each product and then they are bagged up and handed to the delivery riders.
In terms of the actual goods, the company may decide to link up with a supermarket brand to source their products. For example, Flink formed a strategic partnership with German supermarket giant REWE which makes them the preferred supplier to fulfil customer orders.
The couriers that deliver the goods to the consumer are employed by the company itself, which is in contrast to food delivery providers such as UberEATS, where the drivers are hired as independent contractors and work on a per-order basis. The riders travel on bicycles, which is obviously more environmentally friendly than using cars or trucks to deliver goods.
Trends in online grocery shopping since the pandemic began
People working from home, lockdowns and long quarantine periods meant that online grocery shopping became more popular, sparking a trend of online commerce, which is continuing into 2022. Kantar, a research company conducted a study in the UK and found that in February 2020, only £7.40 of every £100 spent on groceries in the UK was bought online and in February 2021 it had shot up to £15.40., more than doubling.
The founder of Getir says that the company is “democratizing the right to laziness”, which is perhaps another trend appearing from the ongoing pandemic. Now that people are aware of these apps, they may be less likely to go back to shopping in the ‘traditional’ way.
Finally, the founder of Weezy, Van Beveren, has said that “now there is a second move from online to on-demand. It’s a wave that we are riding.” The ease and flexibility are what makes these apps in-demand.
The future of on-demand grocery apps
Physical grocery stores will remain a necessity, as they offer a wider range of products at potentially cheaper prices. However, it is likely that these big names will start to introduce their own on-demand grocery services, which may have an impact on the industry due to customer loyalty. In the UK, supermarket giant Tesco is trialing their version, named Tesco Whoosh, which comes with a delivery charge of £5 on orders over £15, £7 on smaller orders and a promise of delivering within the hour, which is significantly more than the £1.99 cost set by Getir.
The on-demand grocery apps are likely to continue their growth, whether that means operating in more places, establishing more hubs or offering a wide range of products. The manager of Jiffy, Vladimir Kholyaznikov, has said that its range “will soon expand to 1,500 items”, which is about the same as a small supermarket.
Shopkeepers of local businesses are likely to be concerned by the development of these apps, as customers could be drawn away. The convenience of popping into your local shop and being greeted by the shopkeeper could fizzle out in the future. To prevent this, owners could have the mentality of ‘if you can’t beat them, join them’ and offer to partner with the apps to fulfil customer orders as a way of creating business for themselves.
Closing thoughts
Whether you’re for or against these on-demand grocery apps, there’s no denying that they are really starting to take off and will continue to make a difference to the way we shop for years to come. The way they work is truly remarkable. Many of these apps are only getting started, and with the boost from the pandemic, it is certainly an industry to keep your eyes on.
