Battle for London Rages on as Q-Commerce Eyes Path to Profit

In the United Kingdom’s on-demand delivery sector — also known as quick-commerce or Q-Commerce — the story so far has been one of intense competition and consolidation as foreign companies like Germany’s Gorillas, Turkey’s Getir or U.S.-based Gopuff vie for space in the crowded market and battle with U.K. natives like Jiffy, Weezy and Zapp to be London’s top delivery service.

Other aggregators like Deliveroo and UberEats also offer ultra-fast grocery services through partnerships with supermarkets and convenience stores, further intensifying competition in the space.

Read more: European Giants Consolidate in Competitive Ultrafast Delivery Space

But while business seemed to be booming for a while, some London residents have found their dark store delivery options cut in half in a few short months.

Related: Ultrafast Grocers Begin Layoffs; Ocado Sees Major Setbacks

No Space for Small Fry

It all started last year when Getir acquired Weezy as part of an aggressive expansion in the U.K. By snapping up its smaller rival, Getir added Weezy’s London sites to its portfolio of over 1,000 dark stores globally. Additionally, Getir used the Weezy takeover to grow its brand reach in the U.K., where it now operates in 15 cities.

More on this: Delivery Startup Getir to Buy UK’s Weezy Amid Major Consolidation Moves in Ultrafast Grocery Market

In a bid to buy the loyalty of the city’s grocery shoppers, the Turkish company was offering new customers £15 off a £16 order at one point. For the last year, Londoners haven’t been able to walk 10 meters without passing some kind of Q-Commerce advertisement.

Related: Ultrafast Grocery Delivery Services Compete Globally for On-Demand Loyalty

The financial capacity these Q-Commerce giants have to battle it out by enticing customers with too-good-to-be-true deals is not surprising. To date, Gorillas, Getir and Gopuff have raised an impressive $6.5 billion in investment without an initial public offering (IPO).

With these foreign firms backed by enough venture capital to keep them throwing money at London’s signage businesses until the end of the year, it was only a matter of time before the little guys started tapping out.

That’s exactly what Jiffy did in May. Just a year after launching its delivery service, the startup announced it was closing down its Q-Commerce operations to focus on Software-as-a-Service (Saas).

This brings us to Zapp. As the last of the U.K.’s homegrown Q-Commerce startups still standing, the question is, can Zapp survive in the face of its competitors’ seemingly bottomless bank accounts?

Recent events suggest otherwise.

Last month it was revealed that the firm was in talks to lay off 10% of its U.K. workforce, which will see the company wind down its business in Manchester after already ceasing operations in Cambridge and Bristol this year.

Learn more: Retail Recession Woes Spread as UK Business Organization Reports Ongoing Downward Trend

The Path to Profitability

Like all major cities, London is in the grips of a global economic slowdown and layoffs and setbacks must be considered in the context of some of the worst inflation the U.K. has seen in decades.

The effects are sobering for startups that thought good times would last forever.

Even as recent announcements have shown, even the inflated wallets of Getir, GoPuff and Gorillas can’t sustain long term a model that emphasizes growth at the cost of profit. All three companies have announced their own staff layoffs, with Gorillas recently pulling out of Belgium and reviewing operations in Denmark, Italy and Spain.

Related news: Gorillas Leaves Belgium, Hands Off Some Business to Efarmz

This indicates that the wave of Q-Commerce startups that experienced a boom during the pandemic is at risk of repeating the mistakes of some of its forebearers in the aggregator space.

More than a year after going public, Deliveroo stock is down nearly 60% in 2022 and the company has yet to turn a profit. It’s a similar picture at Berlin-based food delivery giant Delivery Hero, which is reportedly on the verge of losing its place on the Dax, — Germany’s leading stock market index – less than two years after joining the coveted club.

Read more: Delivery Hero Eyes Profits by Next Year

Ultimately then, while layoffs and closures aren’t exactly a cause for celebration, investors may be relieved that the push for profitability is coming now rather than later. As Gorillas’ CEO Kagan Sumer told Reuters last month, “risk has become irritating for investors and nobody wants uncertainty right now. That makes it pretty hard to raise money … When we go public, we want to do it as a profitable company.”

Related: German Delivery Service Gorillas Cuts 300 Jobs

For Londoners, all this means that the days of unlimited deals will soon be over and the army of vibrantly-dressed delivery workers whizzing across the city may soon be wearing one less color.

 See also: PYMNTS’ Aggregator Ranking


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