Rapid grocery delivery boom comes to a grinding halt as Getir, Gorillas slash jobs

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  • Turkish grocery delivery firm Getir told employees on Wednesday that it plans to reduce its global headcount by 14%.
  • Berlin-based grocery start-up Gorilla said it would lay off about 300 of its employees, citing a need to reach profitability.
  • The layoffs highlight a wide shift in investor sentiment toward high-growth tech companies.

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Fears of an impending slowdown are increasingly forcing grocery delivery companies to put the brakes on growth.

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This week, the two biggest instant grocery apps, Getir and Gorillas, announced decisions to lay off hundreds of employees. Another firm, Zap, said it was proposing redundancies in its UK team.

Getir reportedly told employees on Wednesday that it plans to cut 14% of its global workforce. According to LinkedIn, the Turkish company employs more than 6,000 people worldwide.

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“With a heavy heart, we share with our team today the sad and difficult decision to reduce the size of our global organization,” the firm said in an internal memo obtained. techcrunch,

“We will also reduce spending on marketing investments, promotions and expansions.”

Getir was not immediately available for comment when contacted by CNBC.

Gorilla said on Tuesday it was making an “extremely difficult decision” to let go of about 300 of its employees, citing the need to reach profitability in the long run.

The Berlin-based company is also evaluating possible exits from Italy, Spain, Denmark and Belgium, among other “strategic options”, as it focuses on more profitable markets such as the US, UK and Germany.

“These are essential steps that will help Gorilla grow into a stronger and more profitable business with a greater focus on its customers and its brand,” Gorilla said in a statement. Statement,

according to a sifted report, Gorilla is struggling to raise additional funding. The company was not immediately available for comment when contacted by CNBC.

Getir and Gorilla have raised $1.8 billion and $1.3 billion, respectively, to date. Getir had a valuation of $12 billion in March, while Gorilla’s final value was $3 billion. Both firms have burned significant amounts of cash to expand into the US.

London-based grocery start-up Zapp confirmed on Wednesday reports That it is considering laying off up to 10% of employees. A final decision has yet to be taken as consultations are underway with the firm’s UK staff.

A spokesperson for the company said, “The current macroeconomic environment has become incredibly challenging, with very little visibility into when things will improve. taking sides.”

“As a venture-backed scale-up that will require fundraising again in the future, we need to adjust our business plan to reduce costs and accelerate our path to profitability.”

Zapp raised $200 million in its January funding round. The investment was supported by Formula One driver Lewis Hamilton.

Companies such as Getir and Gorilla experienced seismic growth during the coronavirus pandemic. Operating from small warehouses known as “dark stores”, such services promise to deliver goods to buyers’ doorsteps in as little as 10 minutes.

Recent layoffs in the industry have highlighted a wide shift in investor sentiment toward high-growth tech companies, many of which have recently sought to cut costs against the backdrop of a sharp drop in global stock markets. steps have been taken. Earlier this week, buy now, pay later firm Klarna said it would lay off about 10% of its workforce, following reports the company was seeking a new round of funding that would reduce its valuation by a third.

In March, Gopuff said it would cut about 3% of its global workforce as part of a restructuring plan.

Meanwhile, New York start-ups Fridge No More and Byq — both raised funds from Russian investors — shuttered their operations after facing fundraising issues following Russia’s invasion of Ukraine.

“Rapid grocery delivery companies live and die depending on the amount of capital they raise,” e-commerce consultant Brittain Ladd told CNBC.

“The problem with players like Getir and Gorilla is that they are gimmick companies,” he said, referring to the platform’s promise of 10-minute delivery times.

Getir’s CEO has previously said that his company “democratized the right to idleness.”

The on-demand food and grocery delivery platform has already gone through a lot of consolidation over the past year, with Getir buying UK start-up Weezy, Germany-based delivery hero acquiring a majority stake in Spanish food delivery firm Glovo and DoorDash has acquired Finland’s Volt.

Earlier this month, London-based grocery service Jiffy said it would stop making deliveries and instead focus its attention on in-person grocery collection, to give investors confidence that it could achieve profitability. The company has since announced plans to resume deliveries through a deal with Zapp.

Credit: www.cnbc.com /

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