E-Commerce Unicorns 2022: Getir Struggles As Valuations And Growth Rates Slow Down

Photo Credit: Rudy and Peter Skitterians from Pixabay

According to a recently released McKinsey study, in the first nine months of 2021, nearly $5.8 billion was invested globally in the development of micro-hubs or dark convenience stores for instant grocers.

Getir’s Offerings

Founded in 2015 by Nazim Salur, Serkan Borancili, and Tuncay Tutek, Istanbul-based Getir is an online grocery delivery platform that ships products to its buyers within 10 minutes. Getir follows a micro fulfillment model where it has signed up with local warehouse operators who deliver the products. The company has tied up with other wholesalers as well who are able to supply the inventory at a lower cost. Getir marks up the cost of the product with a margin to earn revenues on sales.

Known for its speedy grocery deliveries, the company operates multiple grocery warehouses in each of the cities it is present in through a franchise agreement with the warehouses. Getir is responsible for product selection, pricing, and shipping items to the distribution warehouses, while the store owner handles the shipment to the customer. Besides groceries, customers are also able to order restaurant food and several other times including tech items, pet goods, or child care products. Getir has also expanded its capabilities to allow customers to hire couriers to have letters and packages delivered on their behalf.

Getir’s competitors include players like Deliveroo. But unlike Deliveroo, which contracts its couriers on a per-order basis, Getir has employed the couriers itself. Getir currently operates in Turkey, the UK, the Netherlands, France, Germany, Spain, Italy, and some cities in the US. It has become Europe’s largest grocery delivery network. Today, Getir has more than 32,000 people, primarily delivery personnel, on its payroll. It manages more than 1,100 dark stores. And, its apps have been downloaded more than 40 million times.

Getir’s Financials

Getir does not disclose its financial details. The company earns revenues through margins on product sold, a delivery fee, a payment processing fee, and a small order fee to ensure it makes money even on small value orders. The pandemic accelerated Getir’s growth dramatically, and Getir claimed that its revenues grew five times during the year. Its profitability and revenue figures are not known, but some believe that the company has always focused on being profitable since early days.

The company has raised $1.8 billion in seven rounds of funding led by Abu Dhabi Growth Fund, Mubadala, Tiger Global Management, Alpha Wave Global, Sequoia Capital, Revo Capital, Silver Lake, and Base Partners. Its most recent round was held in March 2022 where it raised $768 million at a valuation of $12 billion.

The instant grocery market opportunity is no longer as rosy as it was during the pandemic. With restrictions easing, customers are open to going back to shopping in offline stores. The competition is also growing significantly. Grocery stores and food delivery service providers like DoorDash and Uber Eats are now offering similar services through tie-ups with each other. The industry is also seeing significant consolidation. DoorDash acquired Wolt and Gopuff bought Dija to grow their footprint.

Add to that, the recent market conditions. Troubled by these, Getir recently announced plans to lay off 14% of its staff globally. It is also looking at halting some of its capital-intensive expansion including hiring, marketing investments, and promotions. As VCs have finally become more cautious about the value of their investments, startups are beginning to face the pressure. Unicorn valuations are no longer justifiable unless supported by strong business and financial models.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research ...

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