grocery delivery
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On-demand grocery startup Food Rocket launches in the Bay Area, goes up against delivery giants
On-demand grocery startups like Gorillas are invading Europe right now, but although on-demand-everything is kinda old-hat in the Bay Area, a new startup thinks it might just be able to do something new.
Food Rocket says it has raised a $2 million investment round from AltaIR Capital, Baring Vostok fund and the Angelsdeck group of business angels, including Philipp Bashyan, of Russia’s Yonder, who has joined as an investor and advisor.
Yes, admittedly, this tiny startup is competing with DoorDash, GoPuff, InstaCart and Amazon Fresh. Maybe let’s not get into that…
Using the company’s mobile app, users can order fresh groceries, ready-to-eat meals and household goods that will be delivered within 10-15 minutes, says the startup, which will be servicing SoMa, South Park, Mission Bay, Japantown, Hayes Valley and other areas. The company hopes to open 150 “dark stores” on the West Coast as part of its infrastructure.
Vitaly Aleksandrov, CEO, and co-founder of Food Rocket, said: “The level of competition in this market in the U.S. is still manageable, which is why we have the opportunity to become leaders in the sphere of fast delivery of basic products and household goods. We aim to replace brick-and-mortar supermarkets and to change consumers’ current habits in regards to grocery shopping.”
What can we say? Good luck?
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Gorillas, the on-demand grocery delivery startup, raises $290M and ‘surpasses’ $1B valuation
Gorillas, the Berlin-HQ’d startup that promises to let you order groceries and other “every day” items for delivery in as little as 10 minutes, has raised $290 million in Series B funding, at a valuation that surpasses $1 billion.
The round — which was first reported by BI — is led by Coatue Management, DST Global and Tencent, with participation from Green Oaks, Fifth Wall and Dragoneer. Previous backer Atlantic Food Labs also followed on.
Noteworthy, Gorillas CEO and co-founder Kağan Sümer tells TechCrunch the round is “100% equity” (i.e. without a debt component). Asked if it includes any secondary funding — seeing existing shareholders liquidate a portion of their shares — Gorillas declined to comment.
Having become one of the fastest European startups to have achieved so-called “unicorn” status — a valuation of $1 billion or more — Gorillas says it will reward its rider crew and warehouse staff with $1 million in bonuses. However, the company isn’t disclosing how this one-off bonus breaks down per worker, and it isn’t clear if the bonus is cash or stock or a mixture of both. The move comes at a time when Gorillas riders in Germany are reportedly organising to unionise.
“In contrast to established gig economy models, we employ more than a thousand riders directly,” says Sümer. “Therefore, we invest in a strong career development program, rider security and a healthy working environment. Beyond that, all riders will receive a once-off payment”.
Founded last May by Kağan Sümer and Jörg Kattner in Berlin, Gorillas has already expanded to more than 12 cities, including Amsterdam, London and Munich. The company lets you order groceries and other household items on-demand with an average delivery time of 10 minutes.
To do this, it operates a vertical or “dark store” model, seeing it set up its own micro fulfillment centers, which currently total 40, spread across Germany, the U.K. and the Netherlands. Customers are charged just over $2 per delivery and can order from “more than 2,000 essential items at retail prices”.
“We believe that the weekly grocery run is outdated because people’s lives are increasingly spontaneous and shopping habits change accordingly,” says Sümer, noting that while access to supermarkets has increased, the space we have to store goods has decreased as people in cities are living in smaller spaces.
“Additionally, this pandemic has accelerated the need for grocery deliveries. If we can order clothes and trinkets and have them delivered to our door, the same should be said for our essential needs. Gorillas helps customers get what they need when they need it, whether this is their weekly grocery list or the tomatoes they forgot for tonight’s pasta recipe”.
Sümer says the service initially attracted typical early adopters because it was a radically new experience and the app was only available in English. He claims that Gorillas has since gained a “very broad” base of users that are “extremely loyal”. “With geographical expansion and the rapid increase of word-of-mouth, we now cater to pretty much anyone you’d meet in a supermarket,” he says.
Asked to share what a typical basket looks like, and therefore what kind of existing grocery habits Gorillas is displacing, Sümer says that users increase their basket size over time as they gain trust in the service and its products. “Simultaneously, customers are integrating an increasing share of their typical supermarket purchases within their Gorillas orders. This includes fresh goods like fruit and vegetables, as well as products of local suppliers”.
Meanwhile, dark store competition in cities like London — where Gorillas recently expanded and counts as a key market — continues to ramp up. This is seeing operators issue vouchers and offer sizeable discounts in a bid to acquire customers fast, while VCs are pumping huge amounts of early-stage cash into a space where unit economics aren’t yet definitively proven.
Earlier this month, Berlin-based Flink announced that it had raised $52 million in seed financing in a mixture of equity and debt. The company didn’t break out the equity-debt split, though one source told me the equity component was roughly half and half.
Others in the space include London’s Jiffy, Dija and Weezy, and France’s Cajoo. There’s also London-based Zapp, which remains in stealth, and heavily backed Getir, which started in Turkey but recently also came to London.
Meanwhile, U.S.-founded goPuff — which this week raised another $1.15 billion in funding at a whopping $8.9 billion valuation (compared to $3.9 billion in October) — is also looking to expand into Europe and has held talks to acquire or invest in the U.K.’s Fancy.
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SoftBank makes mountains of cash off of human laziness
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
Natasha and Danny and Alex and Grace were all here to chat through the week’s biggest tech happenings. It was yet another crazy week, but we did our best to get through as much of it as we could. Here’s the rundown, in case you are reading along with us!
- Square is buying Tidal in a deal that some are skeptical of, but one about which we found quite a lot to like.
- How capital-as-a-service can get you your first check in 2021, and a nod to Indie.VC, a pioneer in alternative financing for startups that announced it is shutting down net new investments this year.
- Oscar Health priced its IPO above its raised range, which was good for it in terms of fundraising. However, since its debut the company has lost pricing altitude. Its declines mimic those of other public neo-insurance providers in what could be a new trend.
- And sticking to the insurtech beat, Hippo is going public via a SPAC. Because everyone else is?
- Compass filed its S-1, which triggered a debate on how it’s different than Opendoor.
- Coupang’s IPO is also coming, replete with huge growth, an improving profitability picture and a massive valuation. This is one to watch.
- There was also a whole global news circuit around grocery delivery startups, with Instacart raising at a $39 billion valuation.
- And we wrapped with the Surreal seed round that we found to be more than a little spicy. As it turns out, commercialized deepfakes are not merely on the way; they are here.
And with that we are back on Monday. Have a rocking weekend!
Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts!
Early Stage is the premier “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company building: Fundraising, recruiting, sales, product-market fit, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included for audience questions and discussion.
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Backed by Blossom, Creandum and Index, grocery delivery and dark store startup Dija launches in London
Dija, the London-based grocery delivery startup, is officially launching today and confirming that it raised £20 million in seed funding in December — a round that we first reported was partially closed the previous month.
Backing the company is Blossom Capital, Creandum and Index Ventures, with Dija seemingly able to raise pre-launch. In fact, there are already rumours swirling around London’s venture capital community that the upstart may be out raising again already — a figure up to £100 million was mooted by one source — as the race to become the early European leader in the burgeoning “dark” grocery store space heats up.
Image Credits: Dija
Over the last few months, a host of European startups have launched with the promise of delivering grocery and other convenience store items within 10-15 minutes of ordering. They do this by building out their own hyper-local, delivery-only fulfilment centres — so-called “dark stores” — and recruiting their own delivery personnel. This full-stack or vertical approach and the visibility it provides is then supposed to produce enough supply chain and logistics efficiency to make the unit economics work, although that part is far from proven.
Earlier this week, Berlin-based Flink announced that it had raised $52 million in seed financing in a mixture of equity and debt. The company didn’t break out the equity-debt split, though one source told me the equity component was roughly half and half.
Others in the space include Berlin’s Gorillas, London’s Jiffy and Weezy, and France’s Cajoo, all of which also claim to focus on fresh food and groceries. There’s also the likes of Zapp, which is still in stealth and more focused on a potentially higher-margin convenience store offering similar to U.S. unicorn goPuff. Related: goPuff itself is also looking to expand into Europe and is currently in talks to acquire or invest in the U.K.’s Fancy, which some have dubbed a mini goPuff.
However, let’s get back to Dija. Founded by Alberto Menolascina and Yusuf Saban, who both spent a number of years at Deliveroo in senior positions, the company has opened up shop in central London and promises to let you order groceries and other convenience products within 10 minutes. It has hubs in South Kensington, Fulham and Hackney, and says it plans to open 20 further hubs, covering central London and Zone 2, by the summer. Each hub carries around 2,000 products, claiming to be sold at “recommended retail prices”. A flat delivery fee of £1.99 is charged per order.
“The only competitors that we are focused on are the large supermarket chains who dominate a global $12 trillion industry,” Dija’s Menolascina tells me when I ask about competitors. “What really sets us apart from them, besides our speed and technology, is our team, who all have a background in growing and disrupting this industry, including myself and Yusuf, who built and scaled Deliveroo from the ground up”.
Menolascina was previously director of Corporate Strategy and Development at the takeout delivery behemoth and held several positions before that. He also co-founded Everli (formerly Supermercato24), the Instacart-styled grocery delivery company in Italy, and also worked at Just Eat. Saban is the former chief of staff to CEO at Deliveroo and also worked at investment bank Morgan Stanley.
During Dija’s soft-launch, Menolascina says that typical customers have been doing their weekly food shop using the app, and also fulfilling other needs, such as last-minute emergencies or late night cravings. “The pain points Dija is helping to solve are universal and we built Dija to be accessible to everyone,” he says. “It’s why we offer products at retail prices, available in 10 minutes — combining value and convenience. Already, Dija is becoming a key service for parents who are pressed for time working from home and homeschooling, as one example”.
Despite the millions of dollars being pumped into the space, a number of VCs I’ve spoken to privately are skeptical that fresh groceries with near instant delivery can be made to work. The thinking is that fresh food perishes, margins are lower and basket sizes won’t be large enough to cover the costs of delivery.
“This might be the case for other companies, but almost everyone at Dija comes from this industry and knows exactly what they are doing, from buying and merchandising to data and marketing,” Menolascina says, pushing back. “It’s also worth pointing out that we are a full-stack model, so we’re not sharing our margin with other parties. In terms of the average basket size, it varies depending on the customer’s need. On one hand, we have customers who do their entire grocery shop through Dija, while on the other hand, our customers depend on us for emergency purchases e.g. nappies, batteries etc.”
On pricing, he says that, like any retail business, Dija buys products at wholesale prices and sells them at recommended retail prices. “Going forward, we have a clear roadmap on how we generate additional revenue, including strategic partnerships, supply chain optimisation and technology enhancements,” adds Menolascina.
Image Credits: TechCrunch
Meanwhile, TechCrunch has learned that prior to launching its own app, Dija ran a number of experiments on takeout marketplace Deliveroo, including selling various convenience store items, such as potato chips and over-the-counter pharmaceuticals. If you’ve ever ordered toiletry products from “Baby & Me Pharmacy” or purchased chocolate sweets from “Valentine’s Vows,” you have likely and unknowingly shopped at Dija. Those brands, and a number of others, all delivered from the same address in South Kensington.
“Going direct to consumer without properly testing pick & pack is a big risk,” Menolascina told me in a WhatsApp message a few weeks ago, confirming the Deliveroo tests. “We created disposable virtual brands purely to learn what to sell and how to replenish, pick & pack, and deliver”.
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UK on-demand supermarket Weezy raises $20M Series A led by NYC’s Left Lane Capital
Weezy — an on-demand supermarket that delivers groceries in as fast as 15 minutes — has raised $20 million in a Series A funding led by New York-based venture capital fund Left Lane Capital. Also participating were U.K.-based fund DN Capital, earlier investors Heartcore Capital and angel investors, notably Chris Muhr, the Groupon founder.
Although the company hasn’t made mention of a later U.S. launch, the presence of U.S. investors would tend to suggest that. Weezy is reminiscent of Kozmo, the on-demand groceries business from the dot-com boom of the late ’90s. However, it differs from Postmates in that it doesn’t do pickups.
The cash injection will be used to expand its grocery delivery service across London and the broader UK, and open two fulfillment centers across London. Some 40 more U.K. sites are planned by the end of 2021 and it plans to add 50 new employees in the next four months.
Launched in July 2020, Weezy uses its own delivery people on pedal cycles or electric mopeds to deliver goods in less than 15 minutes on average. As well as working with wholesalers, it also sources groceries from independent bakers, butchers and markets.
It has pushed at an open door during the pandemic. In Q2 2020, half a million new shoppers joined the grocery delivery sector, which is now worth £14.3 billion in the U.K., according to research.
Kristof Van Beveren, co-founder and CEO of Weezy, said in a statement: “People are no longer happy to wait around for deliveries, and there is strong demand for a more efficient service.”
Weezy’s co-founders are Kristof Van Beveren and Alec Dent. Van Beveren is formerly from the consumer goods world at Procter & Gamble and McKinsey & Company, while Dent headed up operations at U.K. startup Drover and business development at BlaBlaCar.
Harley Miller, managing partner, Left Lane Capital, commented: “Weezy’s founding team have the right balance of drive, experience and temperament to lead in e-commerce innovation and convenience within the UK grocery market and beyond.”
Nenad Marovac, founder and managing partner, DN Capital, said: “Even before the pandemic, interest in online grocery shopping was on the rise. The first time I ordered from Weezy, my delivery arrived in seven minutes and I was hooked.”
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Remote-controlled delivery carts are now working for the local Los Angeles grocer
Robots are no longer the high-tech tools reserved for university labs, e-commerce giants and buzzy Silicon Valley startups. The local grocer now has access too.
Tortoise, the one-year-old Silicon Valley startup known for its remote repositioning electric scooters, has taken its tech and adapted it to delivery carts. The company recently partnered with online grocery platform Self Point to provide neighborhood stores and specialty brand shops with electric carts that — with help from remote teleoperators — deliver goods to local consumers.
The companies have launched the product offering in Los Angeles with three customers. Each customer, which includes Kosher Express, has two to three carts that can be used to make deliveries up to a three-mile radius from the store. Unlike the network models used by some autonomous sidewalk delivery companies, grocery stores lease the delivery carts and are responsible for storage, charging and packing it up with goods that their customers have ordered.
The initial Self Point/Tortoise launch is small. But it has the makings of expanding far beyond Los Angeles. More importantly for Tortoise, it’s a validation of the company’s larger vision to make remote repositioning a horizontal business with numerous applications.
Tortoise started by equipping electric scooters with cameras, electronics and firmware that allow teleoperators in distant locales to drive the micromobility devices to a rider or deliver it back to its proper parking spot. Now, it has taken that same hardware and software and used it to build its own delivery cart.
Tortoise co-founder and president Dmitry Shevelenko has said the company’s remote repositioning kit can be used for security and cleaning bots as well as electric wheelchairs and other accessibility devices. He’s even fielded inquiries from farmers interested in using remote repositioning scooters to monitor crops.
“From a practical point of view we’re not trying to not be everywhere overnight, but there’s really no technological constraint for us,” Shevelenko said in a recent interview.
The emergence of COVID-19 and its effects on consumer behavior prompted Tortoise to home in on delivery carts as its second act.
“We kind of quickly realized that we’re living in a once-in-a-generation change in consumer behavior where now everything is online and people are expecting it to be delivered same day,” Shevelenko said. Tortoise was able to go from the first renderings in May to a delivery cart launch by the fourth quarter because of its ability to repurpose its hardware, software and workforce.
The company still remains bullish on its initial application in micromobility. Earlier this year, Tortoise, GoX and and tech incubator Curiosity Labs launched a six-month pilot in Peachtree Corners, Georgia that allows riders to use an app to hail a scooter. The scooters are outfitted with Tortoise’s tech. Once riders hail the scooter, a Tortoise employee hundreds of miles away remote controls the scooter to the user. After riders complete trips, the scooters drive themselves back to a safe parking spot. From there, GoX employees charge and sanitize the scooters and then mark them with a sticker that indicates they have been properly cleaned.
While partnership with Self Point is Tortoise’s next big project, Shevelenko was quick to note that the company is only focused on one slice of the on-demand delivery pie.
“Low speeds and hot foods don’t work too well,” he said. Startups such as Kiwibot and Starship have smaller robots that focus on that market, Shevelenko added. Tortoise’s delivery carts were designed specifically to hold large amounts of groceries, alcohol and other goods.
“We saw kind of a big opening in grocery,” he said, adding that relying on remote operators and its kit is a low-cost combination that can be used today while automated technology continues to develop. “We’re doing for last-mile delivery what globalized call centers did for customer support.”
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GrubMarket raises $60M as food delivery stays center stage
Companies that have leveraged technology to make the procurement and delivery of food more accessible to more people have been seeing a big surge of business this year, as millions of consumers are encouraged (or outright mandated, due to COVID-19) to socially distance or want to avoid the crowds of physical shopping and eating excursions.
Today, one of the companies that is supplying produce and other items both to consumers and other services that are in turn selling food and groceries to them, is announcing a new round of funding as it gears up to take its next step, an IPO.
GrubMarket, which provides a B2C platform for consumers to order produce and other food and home items for delivery, and a B2B service where it supplies grocery stores, meal-kit companies and other food tech startups with products that they resell, is today announcing that it has raised $60 million in a Series D round of funding.
Sources close to the company confirmed to TechCrunch that GrubMarket — which is profitable, and originally hadn’t planned to raise more than $20 million — has now doubled its valuation compared to its last round — sources tell us it is now between $400 million and $500 million.
The funding is coming from funds and accounts managed by BlackRock, Reimagined Ventures, Trinity Capital Investment, Celtic House Venture Partners, Marubeni Ventures, Sixty Degree Capital and Mojo Partners, alongside previous investors GGV Capital, WI Harper Group, Digital Garage, CentreGold Capital, Scrum Ventures and other unnamed participants. Past investors also included Y Combinator, where GrubMarket was part of the Winter 2015 cohort. For some context, GrubMarket last raised money in April 2019 — $28 million at a $228 million valuation, a source says.
Mike Xu, the founder and CEO, said that the plan remains for the company to go public (he’s talked about it before), but given that it’s not having trouble raising from private markets and is currently growing at 100% over last year, and the IPO market is less certain at the moment, he declined to put an exact timeline on when this might actually happen, although he was clear that this is where his focus is in the near future.
“The only success criteria of my startup career is whether GrubMarket can eventually make $100 billion of annual sales,” he said to me over both email and in a phone conversation. “To achieve this goal, I am willing to stay heads-down and hardworking every day until it is done, and it does not matter whether it will take me 15 years or 50 years.”
I don’t doubt that he means it. I’ll note that we had this call in the middle of the night his time in California, even after I asked multiple times if there wasn’t a more reasonable hour in the daytime for him to talk. (He insisted that he got his best work done at 4:30 a.m., a result of how a lot of the grocery business works.) Xu on the one hand is very gentle with a calm demeanor, but don’t let his quiet manner fool you. He also is focused and relentless in his work ethic.
When people talk today about buying food, alongside traditional grocery stores and other physical food markets, they increasingly talk about grocery delivery companies, restaurant delivery platforms, meal kit services and more that make or provide food to people by way of apps. GrubMarket has built itself as a profitable but quiet giant that underpins the fuel that helps companies in all of these categories by becoming one of the critical companies building bridges between food producers and those that interact with customers.
Its opportunity comes in the form of disruption and a gap in the market. Food production is not unlike shipping and other older, non-tech industries, with a lot of transactions couched in legacy processes: GrubMarket has built software that connects the different segments of the food supply chain in a faster and more efficient way, and then provides the logistics to help it run.
To be sure, it’s an area that would have evolved regardless of the world health situation, but the rise and growth of the coronavirus has definitely “helped” GrubMarket not just by creating more demand for delivered food, but by providing a way for those in the food supply chain to interact with less contact and more tech-fueled efficiency.
Sales of WholesaleWare, as the platform is called, Xu said, have seen more than 800% growth over the last year, now managing “several hundreds of millions of dollars of food wholesale activities” annually.
Underpinning its tech is the sheer size of the operation: economies of scale in action. The company is active in the San Francisco Bay Area, Los Angeles, San Diego, Seattle, Texas, Michigan, Boston and New York (and many places in between) and says that it currently operates some 21 warehouses nationwide. Xu describes GrubMarket as a “major food provider” in the Bay Area and the rest of California, with (as one example) more than 5 million pounds of frozen meat in its east San Francisco Bay warehouse.
Its customers include more than 500 grocery stores, 8,000 restaurants and 2,000 corporate offices, with familiar names like Whole Foods, Kroger, Albertson, Safeway, Sprouts Farmers Market, Raley’s Market, 99 Ranch Market, Blue Apron, Hello Fresh, Fresh Direct, Imperfect Foods, Misfit Market, Sun Basket and GoodEggs all on the list, with GrubMarket supplying them items that they resell directly, or use in creating their own products (like meal kits).
While much of GrubMarket’s growth has been — like a lot of its produce — organic, its profitability has helped it also grow inorganically. It has made some 15 acquisitions in the last two years, including Boston Organics and EJ Food Distributor this year.
It’s not to say that GrubMarket has not had growing pains. The company, Xu said, was like many others in the food delivery business — “overwhelmed” at the start of the pandemic in March and April of this year. “We had to limit our daily delivery volume in some regions, and put new customers on waiting lists.” Even so, the B2C business grew between 300% and 500% depending on the market. Xu said things calmed down by May and even as some B2B customers never came back after cities were locked down, as a category, B2B has largely recovered, he said.
Interestingly, the startup itself has taken a very proactive approach in order to limit its own workers’ and customers’ exposure to COVID-19, doing as much testing as it could — tests have been, as we all know, in very short supply — as well as a lot of social distancing and cleaning operations.
“There have been no mandates about masks, but we supplied them extensively,” he said.
So far it seems to have worked. Xu said the company has only found “a couple of employees” that were positive this year. In one case in April, a case was found not through a test (which it didn’t have, this happened in Michigan) but through a routine check and finding an employee showing symptoms, and its response was swift: the facilities were locked down for two weeks and sanitized, despite this happening in one of the busiest months in the history of the company (and the food supply sector overall).
That’s notable leadership at a time when it feels like a lot of leaders have failed us, which only helps to bolster the company’s strong growth.
“Having a proven track record of sustained hypergrowth and net income profitability, GrubMarket stands out as an extraordinarily rare Silicon Valley startup in the food technology and ecommerce segment,” said Jay Chen, managing partner of Celtic House Venture Partner. “Scaling over 15x in 4 years, GrubMarket’s creativity and capital efficiency is unmatched by anyone else in this space. Mike’s team has done an incredible job growing the company thoughtfully and sustainably. We are proud to be a partner in the company’s rapid nationwide expansion and excited by the strong momentum of WholesaleWare, their SaaS suite, which is the best we have seen in space.”
Updated with more detail on the valuation.
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Delivery Hero picks up InstaShop in $360M deal to expand in groceries in the Middle East
Grocery delivery has emerged as one of the hottest categories in e-commerce in the last six months, partly due to the coronavirus pandemic, where stay-at-home orders plus a general reluctance to avoid crowded places have led many more consumers to shopping online. Today, one of the big players in on-demand restaurant delivery is picking up a grocery delivery business both to meet that demand and continue diversifying its business.
Delivery Hero, the Berlin-based restaurant delivery company that operates mainly in emerging markets, has acquired InstaShop, a Dubai-based grocery delivery platform with around 500,000 users in five markets, where people can order food and other home supplies, pharmacy items, flowers and other items.
Delivery Hero said the acquisition values the company at $360 million, $270 million upfront plus an additional $90 million based on InstaShop meeting certain growth targets. It currently operates in five markets: United Arab Emirates, Lebanon, Egypt, Bahrain and Greece, the home country of the founders, Ioanna Angelidaki and John Tsioris. It’s a great return for investors: the five year-old startup had raised just $7 million before being acquired.
Both Delivery Hero and InstaShop are already profitable. The bigger of the two today posted half-year results that noted revenues were up 93.7% on a year-on-year basis to €1,126.8 million ($1.3 billion) in the period, although gross profit declined slightly given the impact of lockdowns and curfews, it said, posting gross profit of €167.2 million versus €168.3 million a year ago.
The plan is for InstaShop to stay as an independent brand under its current leadership team, both to expand in MENA, but also to look at how to apply its model to other markets.
This puts it (and now Delivery Hero) a significant step ahead of U.S. companies like Instacart, which was one of the pioneers and most popular purveyors of the grocery-on-demand model in the U.S. but hasn’t really exported its service outside of North America.
InstaShop’s basic business model is very similar to Instacart’s: its focus is on providing a two-sided marketplace not just to consumers but to retailers, which might not have their own delivery services, or want to use InstaShop to expand the number of deliveries they can make, or to reach a different audience.
DeliveryHero — which is now traded publicly in Germany with a market cap of nearly €19 billion ($22 billion) — is already running grocery delivery services across most of its operations in Europe, Latin America, Asia and Middle East/Africa, its founder and CEO Niklas Ostberg told TechCrunch.
“The largest part is Latin America and MENA but Asia catching up quickly. Today we cover 22,000 vendors in our quick commerce area,” he said. “InstaShop is unique in their customer experience. We looked into 100+ grocery players last year and InstaShop is a magnitude better than anything we have seen. This is one reason why they can grow incredibly fast while still being profitable. Together with Delivery Hero they can further improve their customer experience by offering faster delivery and more shops.”
If you count that they are from Greece, this is one of the largest exits for a Greek-founded company.
“The partnership with Delivery Hero is a great opportunity for us to continue to grow our business and put the group’s expertise to use,” said Tsioris, the CEO. “I really enjoyed working with Delivery Hero on this deal and am thrilled to continue to further expand the reach and quality of our service at InstaShop. Delivery Hero is a network driven by ambitious founders and entrepreneurs just like ourselves, and we are proud to become part of this family.”
The transaction is said to set a record value for a Greek startup and is one of the largest recent exits in the MENA region more generally. The previous largest Greek deal was Microsoft’s acquisition of Softomotive for around $150 million. Prior to this, other notable Greek exits include Samsung’s purchase of Innoetics and Daimler buying TaxiBeat — both for less than $50 million each.
InstaShop was initially backed in 2015 by VentureFriends, a European early-stage investor from Greece, and Jabbar, an investor in the MENA region. Notably, VentureFriends’ founding partner Apostolos Apostolakis co-founded e-food, a food delivery marketplace also acquired by Delivery Hero, in 2015.
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DoorDash expands with on-demand grocery delivery
DoorDash is announcing that customers can now order groceries through the DoorDash app from partners including Smart & Final, Meijer and Fresh Thyme. Additional stores like Hy-Vee and Gristedes/D’Agnostino are supposed to be added in the next few weeks.
Through these partnerships, DoorDash says it has a delivery footprint covering 75 million Americans in markets like the San Francisco Bay Area, Los Angeles, Orange County, Sacramento, San Diego, Chicago, Cincinnati, Milwaukee, Detroit and Indianapolis.
DoorDash began delivering from a wide range of convenience stores earlier this year. Fuad Hannon, the company’s head of new verticals, also noted that a number of grocery stores are already part of the DoorDash Drive program, a white-label service where DoorDash handles last-mile delivery.
So Hannon said introducing grocery delivery into the DoorDash app itself is a “natural extension” of those efforts. And in contrast to many other grocery services, the company promises to deliver within an hour of your order.
“There’s no scheduling, no delivery slots, no day-long waits,” he said.
To achieve this, Hannon said DoorDash has created “deep partnerships and commercial relationships” with the grocery stores, coordinating on things like inventory management. “Embedded shoppers” hired from a staffing agency handle the shopping in each store, and the groceries are then delivered by DoorDash’s Dashers.
Image Credits: DoorDash
Hannon said these deliveries will be handled by “the same pool of Dashers” as restaurant delivery. Individual Dashers will decide for themselves when and if they want to take on groceries as well, but he argued that this provides a new opportunity for them, particularly between mealtimes when there’s not much demand for restaurant delivery.
Asked whether there’s any tension with grocery stores in the Drive program that may prefer bringing in customers through their own websites and apps, Hannon argued that customers in the DoorDash app represent “largely different users,” and he said the company is “philosophically agnostic” about whether customers are making purchases through the grocery store’s website/app or through DoorDash.
“DoorDash provides another convenient way for customers to get the value, selection and quality that Smart & Final offers, especially at a time when some are looking to limit trips outside their homes,” said Navin Cotton, Smart & Final’s director of digital commerce, in a statement. “DoorDash’s on-demand grocery service is a nice addition to our online shopping options and with delivery in under an hour, we know Smart & Final customers are going to appreciate it.”
Grocery prices are set by the merchant and should be the same as what you’d find in-store, Hannon said, though perhaps without buy-one-get-one-free offers and others in-store deals. These deliveries are also included in the company’s DashPass subscription, which offers free delivery and reduced service fees.
DoorDash is also offering prepared meals from a longer list of grocery partners, including Wegmans, Hy-Vee, Gelson’s, Kowalski’s, Big Y World Class Markets, Food City, Village Supermarkets, Save Mart, Lucky, Lucky California and Coborn’s.
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What grocery startup Weee! learned from China’s tech giants
When Larry Liu moved to the U.S. in 2003, one of the first challenges he experienced was the lack of Chinese ingredients available in local groceries. A native of Hubei, a Chinese province famous for its freshwater fish and lotus-inspired dishes, Liu got by with a limited supply found at local Asian groceries in the Bay Area.
His yearning for home food eventually prompted him to quit a stable financial management role at microcontroller company Atmel and go on to launch Weee!, an online market selling Asian produce, snacks and skincare products.
Like other players in grocery e-commerce, the five-year-old startup has seen exponential growth since the coronavirus outbreak as millions are confined to cooking and eating at home. Nearly a quarter of Americans purchased groceries online to avoid offline shopping during the pandemic, according to Statista data. Online grocery giants Instacart and Walmart Grocery boomed, both hitting record downloads.
In a Zoom call with TechCrunch, Liu, who’s now chief executive of Weee!, said that COVID-19 played a “very important role” in his company’s recent growth, and paved its way to profitability.
“It happened a lot faster than we expected, but we were growing rapidly with even more ambitious plans for expansion prior to COVID-19,” he said. “People are buying more because restaurants are closed. Many are first-time users of grocery delivery.”
The startup’s revenue is up 700% year-over-year and is estimated to generate an annual revenue in the lower hundreds of millions of dollars.
Online grocery, the WeChat way
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