Layoffs, closures, takeovers… After a thunderous start, the start of express delivery marks time. Between the impossible quest for profitability and administrative constraints, the future of fast trading in France is now in check.
Will the quick trade be a shooting star? After a meteoric rise in 2021, 10-minute errand delivery services appear to be stalling. While start-ups multiplied last year in this new market born during the Covid epidemic, in recent months the buds seem to have quickly withered.
Zapp, KOL or even Yango Deli have ceased their activity in France. BAM Courses, La Belle Vie’s rapid trading service, has abandoned its promise of 15-minute delivery for a one-hour service. And while spectacular fundraising characterized the news in the sector, it is now layoffs that the major players are announcing. From gorillas to Flink via Getir or Gopuff, more than 7,000 jobs have been lost by the big players in fast commerce worldwide.
Add to that a concentration of the expected sector, but which is happening very quickly for an activity that is barely two years old. The giant Gopuff has offered the British Dija to tackle the European market. And the more fragile French are easy prey. At the beginning of the year, Frichti was taken over by Gorillas and Cajoo was absorbed by the German Flink last May.
From 11 to 4 actors in one year
“Of the 11 players mentioned above, there are now only four left on the French market: GoPuff (leader in the US with a valuation of more than 40 billion euros), Flink (valuation of 5 billion after the acquisition of Cajoo ), Gorillas (3 billion) and Getir (12 billion)”, notes the consulting company Vertone in a note.
They may soon be just three. Despite very rapid expansion and a leading position in France with a market share of 61% according to Iri, Gorillas may fall into the hands of Turkish Getir. According to Bloomberg, discussions between the two groups are already well advanced. The German had been looking for months to get closer to a competitor to reach critical size and accelerate in its quest for profitability.
Will express delivery have only been a fleeting mode favored by the Covid-era lockdowns and other curfews? In any case, the data from panelist Iri does not suggest a slowdown in demand. In the first half of 2022, fast trading accounted for 174.5 million euros in revenue, according to Iri, against 122 million for the entire past year. The “lazy business” to use the qualification of Dominique Schelcher, the head of System U, therefore currently seems to still be seducing consumers, although the panelist notes a “slowdown over the last three months with a growth of “only “64%”.
Rather, the problem must be found on the side of the economic model and the financial markets. As a reminder, these services charge on average between 2 euros for delivery. But to make the cost of a delivery person profitable (around 18 euros per hour), the latter must make no less than 9 deliveries within the hour. Most of the platforms have chosen to deliver on fixed contracts rather than freelancers.
10 minute delivery interrupted
But to fund this service at a loss, the platforms had no choice but to raise funds. Between the end of 2020 and the beginning of 2022, that is, in just under 18 months, almost 7 billion euros were raised by these platforms worldwide.
“But the financial markets suddenly turned at the beginning of the year, and now it will be very difficult for them to raise funds, notes Frank Rosenthal, a consultant specializing in trade. Investment funds wonder if they are not investing without results. Where there was enthusiasm, there is now suspicion.”
In an inflationary context with rising interest rates, investors no longer sign blank cheques. In order to reassure their creditors, quick trading starts must therefore show that their activity is not a bottomless pit. Hence the drop in expenses in recent months with the many layoffs.
But also the deterioration of service. Today, there are no platforms that promise delivery in less than 10 minutes, as was the case when they were launched. The services are also trying to boost their activity by offering more products for purchase (such as small electronics for example) or working on new business models such as Amazon Prime-type subscriptions to offer free delivery with recurring income.
Still, the platforms’ voluntariness, mergers and acquisitions may not be enough to save the sector. The restrictions in connection with urban planning should greatly inhibit their spread. In September, the government decided to qualify the “dark shops” as warehouses, giving the mayor the power to determine their location with the local town plan.
“The mayors have won, and since there are many of them, the platforms will have to adapt on a case-by-case basis, city by city,” Frank Rosenthal believes. a platform has a billion euros to invest in, it is certain that it will not place it in France.