It doesn’t take too much time browsing the comments on Amazon’s help page under the search phrase, “Why is my order taking so long to ship?” to get a handle on how important speed is in today’s e-marketplace. Fed up with a marked decline in shipping speed from the company that originally set the standard for one-day and two-day delivery, customers talk about shifting their loyalty from the retail giant to other outlets such as Walmart, which is apparently beating Amazon in delivery times.
Known as q-commerce (the “q” stands for quick), the process of getting goods into customers’ hands as quickly as possible has become a big focus of venture capital investments. On Thursday (April 1), PYMNTS reported that Spanish courier Glovo grabbed $530 million in Series F funding, marking the largest fundraising figure in history for a startup in the country. The big score comes just after Deliveroo, another food delivery darling, raised over $2 billion before appearing on the London Stock Exchange earlier in the week.
Glovo isn’t the only q-commerce startup to break a record. Earlier in the month, the Berlin-based startup Gorillas raised €245 million ($288 million) in a Series B funding round, driving the grocery delivery service to a valuation of $1 billion and turning it into a unicorn a mere nine months after it launched. It’s a record for any German company to achieve unicorn status that fast, according to Sifted. The service promises to deliver groceries in 10 minutes or less to people living in its service areas, which currently span 12 cities across Europe, including Munich and Berlin in Germany as well as Amsterdam and London.
Providers like Gorillas and Glovo have their work cut out for them, though. Because the pandemic has changed customer expectations for delivery speeds, companies everywhere are getting in on the action, which means competition is set to be fierce.
This January, in a Series A funding round led by New York-based venture capital firm Left Lane Capital, on-demand supermarket Weezy raised $20 million. Using that infusion, the company plans to expand its services to 40 different sites around the U.K., so it will come right up against Gorillas’ London business. Competing in the same city will also be Zapp, which has gotten its hands on $100 million in funding and, like Weezy, delivers from its own stores.
Elsewhere in Europe, Italy’s Everli, an operation that picks up groceries from major supermarkets and delivers them to consumers, raised $100 million in series C funding last week, and Rohlik in the Czech Republic nabbed €190 million ($230 million), which it plans to use to expand its delivery service that sources from wholesale distributors or existing merchants.
Keys to Success
With so many players raising cash to expand operations, it remains to be seen how many will truly thrive. With a giant like Amazon starting to slip in its delivery times, the demand for fast service from other channels will no doubt remain high. By remaining nimble and hyper-focused on local markets, speedy delivery startups could be perfectly poised to step in.
Those startups, however, will also need support from local regulators. A wobbly start to Delieroo’s IPO was largely due to uncertainty about how the U.K. will continue to regulate workers in the gig economy. And even though San Francisco-based food delivery service DoorDash saw its share price spike 80 percent higher than its starting price on its first day of trading, state regulators are looking to cap the fees the company can slap on top of food prices. The District of Columbia, for example, wants to limit commissions to 15 percent versus the 30 percent the company would like to charge, according to the Washington City Paper.
Still, q-commerce is no doubt here to stay. Ever since Amazon launched Prime membership promising two-day delivery in 2005, the expectation of getting items from the computer screen to the home has only increased. Interestingly, a report from ShipStation showed that the pandemic’s disruption to the supply chain bumped out customer expectations for delivery times to eight days from five. But as the world returns to normal (and assuming that no more ships get wedged in the Suez canal), that expectation will no doubt begin to contract — and the companies that can handle the pressure will be the ones to turn into diamonds.