Getir, the Turkish instant grocery delivery startup, has made an acquisition to expand its presence in the US and further its strategy as a consolidator in its category. The company has acquired FreshDirect, an online grocery delivery service based in New York.
Terms of the deal aren’t disclosed, but in some context, FreshDirect, while still in startup mode itself, raised a whopping $517 million (per PitchBook) from investors including JP Morgan, British supermarket chain Morrison’s, AIG and Maverick. Capital, but when it was sold to mega-supermarket giant Ahold Delhaize and Centerbridge in November 2020, it changed hands for $300 million. Founded in 1999, the New York-based company is one of the oldest players in online-only grocery delivery.
FreshDirect will retain its brand name in the deal, Getir said.
The news comes at a difficult time for Getir and for the broader world of grocery delivery.
Getir, backed by companies like Sequoia, was valued at a whopping $11.8 billion in March 2022. But more recently (in September this year) it was reported that it raised $500 million at a valuation of just $2.5 billion, figures we confirmed from sources close to the company.
In between these two fundraising bookends, we reported on how the company laid off employees and picked up high-profile rivals, like gorillas nearing the end of their runway, while much of the rest of the field played out in a similar fashion. consolidate or simply phase out. Flink and US-based Gopuff are the other two major players in “instant” delivery in Europe, and even Flink is said to be a takeover target for Getir. That deal, we understand from sources at both companies, is currently off the table.
Things were not very rosy in the US either. Instacart, the nation’s most visible company in the delivery space, had a bit of a boom when it went public in September of this year. But right now it’s trading significantly lower compared to its IPO price, and its market cap of just under $8 billion is a far cry from the $39 billion valuation it commanded as a privately backed startup.
The bigger picture for grocery delivery is one that has been following recent years of socio-economic developments.
These companies were all growing at an encouraging pace before 2020. When the Covid-19 pandemic hit, people were forced to shelter in place or simply wanted to enforce social distancing to prevent the spread of the coronavirus. And with that, the online grocery market grew. That led to very high demand, massive funding rounds of hundreds of millions of dollars to meet these growth drivers, and even the emergence of a whole new category in the space, around “instant” delivery, where people could order via apps or online. get their goods delivered to your home within minutes. Many called the shift the “new normal,” saying the habits we adopted during the pandemic would set the pace for how we live our work and leisure lives in the future.
But to the more cynical among us, the unitary economics of these companies always seemed impossible. And indeed, many companies in the Uber-Lyft-style “instant” space looked like they were simply throwing money at the model (in the form of free or discounted groceries, good payouts to passengers, deals with suppliers) just to make a profit. market share.
It wasn’t too surprising when many grocery delivery startups eventually ran into trouble because demand was well matched to consumer needs. new “the new normal” of people shopping in person again, and also feeling less economically good about having to pay for overpriced ice cream.
Getir and FreshDirect have made virtually no fuss about the deal, issuing a brief press release in the early hours of the European market and the middle of the night in the US, without quotes or with much detail, noting:
“The acquisition will create significant synergies between Getir and FreshDirect and highlights Getir’s strategic ambitions to grow in the United States. FreshDirect will leverage Getir’s technology and operational footprint to offer faster services to its loyal customer base, who will also benefit from easy access to Getir’s fast convenience service. FreshDirect will enable Getir to further increase the quality and breadth of its product range, especially in fresh produce, making it even more attractive to its customers in New York.”