Concerns about an imminent recession have forced rapid grocery delivery companies to put a brake on growth.
This week, two of the largest instant grocery apps, Getir and Gorillas, announced a decision to dismiss hundreds of employees. Another company, Zap, said the UK team is proposing redundancy.
Getir told staff on Wednesday that it plans to reduce global workforce by 14%. According to LinkedIn, Turkish companies employ more than 6,000 people worldwide.
“We wholeheartedly shared with our team today the sad and difficult decision to scale down our global organization,” the company said in an email statement.
“We also reduce spending on marketing investments, promotions, and expansions.”
Gorilla said on Tuesday that it had made a “very difficult decision” to let go of about 300 employees because of the need to achieve long-term profitability.
The Berlin-based company has withdrawn from Italy, Spain, Denmark and Belgium, among other “strategic options”, as it is shifting its focus to more profitable markets such as the United States, United Kingdom and Germany. We are evaluating the possibility of.
“These are the necessary moves to help gorillas become a stronger and more profitable business focused on their customers and their brands,” said Gorilla. statement..
according to Sifted report, Gorillas is struggling to raise additional funding. When contacted by CNBC, the company wasn’t able to get immediate comments.
Getir and Gorillas have raised $ 1.8 billion and $ 1.3 billion, respectively. Getir received a $ 12 billion valuation in March, while Gorillas finally received a $ 3 billion valuation.Both companies have run out of significant amounts of cash Expanded in the United States
London-based grocery startup Zapp confirmed Wednesday Report Considering temporary dismissal of up to 10% of staff. A final decision has not yet been made as discussions are underway with the company’s UK employees.
A spokeswoman for the company said, “The current macroeconomic situation is very difficult with little prospect of when things will improve. This uncertainty has made investors significantly more risk-hungry. Reduce and prioritize profitability over growth. “
“As a scale-up of venture support that will need to be re-financed in the future, we need to adjust our business plans to reduce costs and accelerate the path to profitability.”
Zapp Raised $ 200 Million January Financing Round.. The investment was supported by F1 driver Lewis Hamilton.
Companies like Getir and Gorillas have experienced seismic growth during a coronavirus pandemic. Operated in a small warehouse called a “dark store,” such a service promises to deliver goods to shoppers’ doors in just 10 minutes.
The recent surge in layoffs in the industry highlights a widespread shift in investor sentiment towards tech companies that have recently taken steps to reduce costs against the backdrop of the plunge in the global stock market.Earlier this week, Klarna, a company that buys now and pays later Dismiss about 10% of staff According to the following report, the company was looking for a new funding round to reduce its valuation by a third.
Convenience grocery delivery services have long been skeptical about the feasibility of business models that tend to sell their necessities at a premium to supermarkets, while relying on offering generous discounts to attract new users. rice field. The future of this space is uncertain as Covid’s restrictions are significantly lifted and prices are rising around the world today.
In March, Gopuff announced that it would reduce the world’s workforce by about 3% as part of its restructuring program.
Meanwhile, New York startups Fridge No More and Buyk both raised money from Russian investors, but closed down after facing funding problems after Russia’s invasion of Ukraine. bottom.
“A fast grocery delivery company lives and dies based on the amount of capital it raises,” e-commerce consultant Brittain Ladd told CNBC.
“The problem with players like Getir and Gorillas is that they are gimmick companies,” he added, referring to the platform’s 10-minute delivery time promise.
CEO Getir previously stated that his company “democratized the right to laziness.”
The on-demand food and grocery delivery platform has already undergone considerable integration over the past year, Getir has acquired UK startup Weezy, and German delivery heroes are the majority of Spanish food delivery company Glovo. Acquired shares. DoorDash Acquired Finland’s Wolt.
Earlier this month, London-based grocery service Jiffy said it would stop delivery and instead focus on direct grocery collection to convince investors that they could achieve profitability. The company then announced plans to resume delivery through a contract with Zapp.