Groceries delivered to your door? Thatll be 10 minutes

Zipping around central London, among the bikes and scooters of Uber Eats, Just Eat and Deliveroo, is a new entrant promising almost instantaneous satisfaction for your craving for a bar of chocolate or pint of ice cream: Getir, a Turkish company that says it will deliver your groceries in 10 minutes.

The speed of Getir’s deliveries, from a network of neighbourhood warehouses, matches the astonishing pace of the company’s recent expansion. After 5 years pioneering the model in Turkey, it suddenly opened in six European countries this year, bought a rival and, by the end of 2021, expects to be in at least three American cities, including New York. In just six months, Getir raised nearly US$1 billion ($1.43b) to fuel this outburst.

“We accelerated our plans to go to more countries because if we don’t, others do,” said Nazim Salur, a founder of Getir (the word is Turkish for “bring”). “It’s a race against time.”

Salur is right to look over his shoulder. In London alone, five new rapid grocery delivery companies have taken to the streets in the past year or so. Glovo, a 6-year-old Spanish company that delivers restaurant meals as well as groceries, raised more than half a billion dollars in April, just a month after Gopuff, based in Philadelphia, raised US$1.5b from investors, including SoftBank’s Vision Fund.

Shut at home for months on end during the pandemic, millions of people started using online grocery delivery. Delivery subscriptions for many things, including wine, coffee, flowers and pasta, surged. Investors have seized this moment and are backing companies that will bring you whatever you desire, not just soon, but within minutes, whether it be baby diapers, frozen pizza or a chilled bottle of champagne.

Rapid grocery delivery is the next step in the wave of venture capital-subsidised luxury serving a generation used to ordering taxi services in minutes, vacationing in cheap villas through Airbnb and having ever more entertainment available on demand.

“This is not just for the rich, the affluent, who have money to waste,” Salur said. “It’s an affordable premium,” he added. “It’s a very cheap way of treating yourself.”

The road to profitability has been elusive in the food delivery industry. But that hasn’t stopped venture capitalists from investing about US$14b in online delivery grocery businesses since the start of 2020, according to data from PitchBook. This year alone, Getir has completed three funding rounds.

Is Getir profitable? “Yes and no,” Salur said. After a year or two, a neighbourhood can be profitable, he said, which is not to say the company as a whole has been profitable yet.

Alex Frederick, an analyst at PitchBook who studies the food technology sector, said this industry looked like it was going through a period of “blitzscaling”, a term coined by Reid Hoffman, who helped build PayPal and found LinkedIn, to describe a company racing to serve a global customer base before any of its competitors.

And right now, there is a lot of competition without much variation among the companies, Frederick added.

“It’s a race to get market share at the expense of profitability,” he said.

Entrepreneurship is a late career move for Salur, 59, after years of selling shuttered industrial plants. Since then, his focus has been speed and urban logistics. He founded Getir in Istanbul in 2015 with two other investors, three years after creating a taxi-hailing app that got cars to people within three minutes.

In March, when Getir raised US$300 million, which valued the company at US$2.6b, it became Turkey’s second unicorn, the term for a company valued at more than US$1b. Today, the company is valued at US$7.5b.

In its early days, Getir tried two ways to meet its 10-minute goal. Way 1: It stocked the company’s 300 to 400 offerings into vans that were always on the move. But customers demanded more products than the vans could fit (the company now figures the optimal number is about 1500 items). Van deliveries were abandoned.

The company settled on Way 2: delivering via electric bicycles or mopeds from a series of so-called dark stores — a hybrid of warehouse and small supermarket without customers — with narrow aisles lined by shelves stocked with grocery items.

In London, Getir has more than 30 dark stores, and it has begun deliveries in Manchester and Birmingham. It has been opening about 10 stores a month in Britain and expects to have 100 by the end of the year. More customers mean more, not larger, stores, Salur said.

The challenge is finding the properties — they must be close to people’s homes — and then dealing with different local authorities. For example, London is divided into 33 such councils, each issuing licenses and planning decisions.

In Battersea, in southwest London, Vito Parrinello, a manager of several dark stores who until recently managed Italian restaurants, is determined that the delivery riders not disturb their new neighbours. The dark store is under a railway arch, tucked behind a new development of apartments. On either side of the waiting electric scooters are signs that read “No Smoking, No Shouting, No Loud Music.”

Inside, you hear the intermittent sound of a bell, notifying the staff of an incoming order. A picker selects a basket, collects items and packs them in bags for the rider. A wall is lined with refrigerators, with one stocked solely with champagne. At any one time, two or three pickers are weaving through the aisles, and in Battersea, the atmosphere is calm and quiet, belying the fact that their movements are being measured down to the second. On a recent day, the average time it took to pack an order was 103 seconds.

Shaving seconds off a delivery requires efficiency in the stores — it shouldn’t rely on riders racing to the customer, Parrinello said. “I don’t want them to even feel the pressure to run in the streets,” he added.

Remarkably, most of Getir’s workers companywide are full-time employees with holiday pay and pensions, as the company has shunned the gig economy model that has attracted lawsuits for the likes of Uber and Deliveroo. But it offers contracts for people who want flexibility or are looking only for short-term work.

“There’s this idea that if this work is not contract, it can’t work,” Salur said. “I beg to differ, it will work.” He added: “When you look at the supermarket chains, all these other companies, they employ people and they don’t go bankrupt.”

Hiring employees rather than contractors generates loyalty, but it comes at a cost. Getir buys its products from wholesalers and then charges 5 per cent to 8 per cent more than the prices in a large supermarket. Crucially, the prices aren’t much more expensive than those at small local convenience stores.

In Turkey, 95 per cent of the dark stores are independently owned franchises, Salur said, adding that he thinks this system produces better managers. It’s a model that Getir might bring to its new markets once they are more established.

But it has been a busy year. Until 2021, Getir had operated only in Turkey. This year, in addition to the cities in England, Getir has expanded to Amsterdam, Paris and Berlin. At the start of July, Getir made its first acquisition: Blok, another grocery delivery company, which operated in Spain and Italy. It was founded only five months earlier.

“It’s growth, growth, growth,” Salur said. “That’s what we breathe at the moment.”

Written by: Eshe Nelson

Photographs by: Suzie Howell, Tamer Yilmaz

© 2019 THE NEW YORK TIMES

Source: Read Full Article