The acquisition of Gorillas makes Getir the largest quick commerce company in Europe
Getir, the Turkish food delivery company’s acquisition of German rival Gorillas moves the strengthening of Europe’s food delivery sector to a point further where the companies are struggling to come out of post- Covid stricken market. The lockdowns had been the growth stimulator for food delivery industries globally and with the world resuming its normal pace after the Covid slump with eased restrictions, the delivery market began to get affected owing to decreased demands and rising interest rates.
The food delivery companies began to cut costs and even exit in areas where the demand was growing increasingly weak. Experts suggest that the pressure dawned upon the delivery market is expected to continue but the current mergers and acquisition deals happening in the industry are increasing at a much faster pace than expected.
Getir and Gorillas
Getir bought Gorillas in a 1.2 billion deal on Friday, seeing the merging of the two continuing grocery-delivering companies making the combined companies stronger. The combined entity will compete with German as well as US companies. According to reports, various Gorillas’ investors will be paid a combined $40 million in cash, along with receiving equity in Getir.
The acquisition of Gorillas makes Getir the largest quick commerce company in Europe. Getir was valued at around $8 billion in Friday’s deal, which is more than Gorillas due to its strong foothold in Turkey. Getir and Gorillas were among the many quick commerce companies based on venture capital that planned to open ‘dark stores’, which are delivery hubs in city centers that transport the required goods to their customers.
2021 and 2022 saw the acquisition, merging, and winding up of many commercial companies, and the remaining companies, with fewer competitors, began to reduce costs, promotions, and vouchers. Acquisitions are not a new phenomenon in the meal delivery market, but the companies in the current scenario are taking big risks as the quick commerce sector hasn’t yet proved its profitability. Even if there is a long distance for firms to reach the profitable target, Europe’s listed meal delivery companies have all set their goals for earnings before interest, taxes, depreciation, and amortization (EBITDA).
Getir recently struck a deal with Just Eat Takeaway to list the firms’ groceries on the Takeaway app. Just Eat Takeaway and Delivery Hero are some of the established firms that are now venturing into the grocery delivery space. The firm has also announced that it is EBITDA profitable while Delivery Hero stated that it will reach that position by the year 2023, followed by Britain’s Deliveroo by the first half of 2024. DoorDash and Uber, are EBITDA positive on the potency of their U.S. procedures and mention that their European subsidiaries are growing.
Getir’s deal with Just Eat Takeaway will be beneficial to both firms as Just Eat Takeaway will receive additional high-margin orders and Getir will receive more sales and deliveries.
Although the market saw two years of exceptional growth, 2022 sees a reduction in that growth owing to unreliable macroeconomic conditions and consumers looking to save money. Shares in the European delivery companies are down around 60% compared to the previous year but have traded favorably since June. According to reports, the Online Food delivery market is expected to reach $95.69 billion in 2022 and the revenue of the same is expected to show an annual growth rate of 12.99% which results in a market volume of $176.20 billion by the year 2027. Despite the slowdown, Europe’s food delivery market is expected to show a revenue growth of 19.6 in 2023.