Getir. Jiffy. Zapp. Gorillas. It’s the battle of the instant grocers (and of the wittiest and shortest syllabled one-worder). The question is, in a race where the runners are only getting faster, who will win?

Add to Basket – Physically or Digitally?

Historically, groceries were only something you could purchase physically in a large supermarket or even a corner shop would do for anything that didn’t warrant for a full-fledged trip to the big Tesco.

The grocery world was then shaken up with the introduction of online ordering and home delivery services. Instead of browsing those long, and often freezing, grocery store aisles, you could now digitally browse and search for whatever your heart desired, add it to your basket, and then pick a convenient delivery slot for the grocer to deliver it to you in a day or two – sometimes, costing you nothing, and at other times, anywhere up to £6.00. All surely worth it to avoid those trips to and from the car boot, right?

And this system was convenient, and still is for many. Matters have even been upgraded to reflect same-day delivery services. These services were also a godsend during the pandemic. Most people didn’t dare to venture outside their homes, let alone to a populated supermarket for their necessities. They turned to online shopping for convenience, and the pandemic heavily influenced the grocery retail market in Europe.

Times have changed though. Your minimum order straight from a grocer now needs to be at least £40.00 (thank you toilet-paper-panic-ordering Covid times), and more often than not, you’ll need to wait at least a couple of days for a convenient slot to pop up (unless you’re willing to wake up at 7am and wait for the delivery man to show up at any point between 7am and 10am). Most people, like me, also want to touch and see a product before buying it (whilst ensuring I can grab the item with the farthest expiry date on it too!).

People’s shopping habits changed quickly. One of the pandemic’s effects was to alter consumer behaviours and expectations over time through the rapid migration to online channels and convenience. They don’t want it now, they wanted it yesterday. Even same-day delivery is now deemed too slow. They don’t need a full-fledged weekly shop, they need a packet of cherry tomatoes and a block of parmesan for the pasta they decided to whip up last minute. They don’t need a 12-pack of toilet paper and stacks of kitchen roll to hoard, they just need a quick 4-pack for right now. This of course also feeds into the urban city lifestyle where excessive storage space is considered a luxury and is in fact not available to all, therefore people cannot, or do not, want to store items. They need items for now and for the foreseeable future only, especially if it’s a household of one to two individuals at the maximum, so bitesize orders make complete sense. Scheduled delivery is now taking a backseat to instant delivery. Cue the online grocers and quick commerce through instant-delivery players.

The Era of the E-Grocer

If you still haven’t been bombarded with the promise of getting your groceries delivered to you in minutes, you’re in for a treat. Instant delivery e-grocery has emerged through start-ups having a number of “dark stores” (stores with no front of house option to purchase items by walking in) and specialised warehouses filled with an assortment of products in various areas, and depending on where you are, those items will get delivered to you in a jiffy (no pun intended – if you know, you know) by a driver on a bike, scooter or car. The players differentiate themselves through different offerings, such as focusing more on local/organic produce, having larger assortments, or offering primarily lower prices and offers.

Due to the different offerings, consumers have begun to split their online purchases, where the frequent online shoppers order from at least three different e-grocers. More often than not, these purchases aren’t just satisfying random snack cravings, but also necessary items that consumers need where it’s faster, and considerably less effort, for them to get it delivered than to go into a store. According to McKinsey, the top 15 players in Europe had opened more than 800 dark stores by the end of 2021. I don’t know what’s more impressive – the 800 dark stores, or the fact that there’s enough instant delivery players to account for a top 15 list.

Meal delivery platform leaders like Deliveroo have even responded to the e-grocer frenzy by adding grocery stores on their platforms – and launching bespoke dark stores through the Hop business. The implication for traditional retailers is that they could be at risk of losing market share if they don’t participate in the online game directly, or through a partnership like this. In the United Kingdom alone, online instant grocery is forecasted to be the largest channel in the country by 2030, overtaking traditional supermarkets. Therefore, retailers must establish whether they want to penetrate the instant delivery market and ascertain market share through various e-commerce propositions.

Evolution of the Business Model

E-grocers are often financially backed by venture capital, private equity firms and large technology investors, with circa $5.8 billion being invested globally in dark stores by the third quarter of 2021. The instant-delivery industry is also merging faster than the meal delivery industry initially did. On a global level, on demand delivery giant DoorDash acquired European food delivery start-up Wolt for $8.1bn, and Gopuff acquired Dija and Fancy, in an attempt to expand into Europe and internationalise their footprint. Getir acquired one of the UK’s first ultrafast grocery delivery company’s, Weezy, as well as Spanish online grocery startup BLOK, to cement its position in the European market. Gorillas also acquired French rival Frichti, suggesting that with Frichti, Gorillas would have the second-largest share of same-day grocery deliveries in Paris, with a combined 17.1%. This further contributes to the instant delivery market’s takeover of traditional grocery shopping.

Large market players like Gorillas have conducted long campaigns to increase market-share in core cities, where in the long-term they will likely develop their own unique assortment and brands, either through private-label products or by partnering with retailers or brands . The aim is likely to then leverage their consumption data and expand on it with other data sources to provide the consumer with the ultimate personalised experience and offers. They want to create a society that ultimately needs nothing as they will no longer have to worry about their daily shopping needs.

While many of the players do have the optimisation of market share and growth on their radars, profitability remains the core target (in particular given the current collapse in available VC funding and the impact of the cost of living crisis), and in reality, is now the core issue for most. A few ways in which online grocers can achieve profitability while continuing to grow revolves around expanding on customer retention; enhancing the user experience during shopping; monetising on media and advertisements; automation of order preparation; and creating partnerships.

These businesses have a platform (again, the puns flow freely) to expand from a tech-enabled retailer into a full-fledged tech company that develops its own solutions and creates value through that. That would put such players into a league of their own, although they will require a lot of capital (which is proving more tricky to obtain); but – they have the brand equity, the distribution channel, and the scale to accelerate brands and shape demand. A peak example of this is oat milk – it was an incredible go-to-market strategy that erupted into a new category of its own.

Something Old, Something New, Preferably not Borrowed nor Blue

E-grocery is very much still in its infancy. It accounts for less than 1% of the total market in Europe, reaching between €3 billion and €6 billion in 2021. It lacks transparency and is unprofitable in most cases. It also doesn’t deliver to some areas (both rural and urban), making it impossible to penetrate certain markets when it’s simply unavailable to those who want to try it. New regulations could also shape the market’s development, such as the current freeze on new dark stores in Amsterdam, for example, which is less likely to instigate investment. However, it does seem to show three-digit percent growth annually.

Inflation and current world events will also naturally take its toll on grocery retailers. With the rise of food prices and the decrease of disposable income, this forces consumers to look for cheaper products as well as actively look for promotions. One way e-grocers entice new customers is by offering a number of promotions on their first handful of orders – some being too good to say no to.

Ultimately, trends are shifting, and convenience and speed is at the forefront of most consumer’s minds, especially following the pandemic. Of course, there will remain traditional consumers who wouldn’t want to forego a trip to the supermarket, and that will convert over time, but projections are aggressive, and it does indicate where the state of the grocers is heading to. So, what kind of shopper are you?

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