Jul 8, 2023 2 min read

Grocery Delivery: From Hyped-up Promises to Reality Check

Investors poured a whopping $12 billion into instant delivery companies in a lucrative race for a slice of the pie. But here's the burning question: is there any pie left to be devoured?
Grocery Delivery: From Hyped-up Promises to Reality Check

Remember the buzz that swept through inboxes and plastered the streets of NYC? It was all about Jokr, the grocery delivery business that went from rags to riches in just eight months, only to stumble and fall in half that time. Their flashy claim of "GROCERY DELIVERY WITHIN 15 MINUTES - FOR FREE!" had everyone intrigued. Fast forward to today, and the company has packed up its bags in Europe, setting up shop exclusively in Latin America.

During the pandemic, the desire for convenience skyrocketed, and grocery delivery services became the go-to solution. Investors poured a whopping $12 billion into companies promising lightning-fast grocery deliveries in under 30 minutes. Take GoPuff, for instance. In 2021, they raised a staggering $1.5 billion, skyrocketing their valuation to a jaw-dropping $40 billion (keep in mind, they were worth a mere $4 billion in 2019) and even enlisted Goldman Sachs to help prepare for an IPO. While their bid to go public is now dead in the water, today they're valued at $10 billion.

While pandemic-era giants like Gorillas and Gopuff thrived in the grocery delivery industry, third-party companies couldn't resist joining the lucrative race for a slice of the pie. But here's the burning question: is there any pie left to be devoured?

Enter Uber Eats and Doordash, the dynamic duo that ventured into the world of grocery delivery. However, both companies are yet to taste the sweet flavor of profit in this domain. In 2022, Uber Eats raked in a hefty $10.9 billion in revenue from their grocery business but experienced a staggering loss of $1.8 billion. Doordash, on the other hand, generated $1.6 billion in revenue but suffered a loss of $1.2 billion. The harsh reality is that the high customer acquisition costs, low margins, and soaring operational expenses are making it difficult for these businesses to turn a profit.

Just this week, news broke that Doordash had decided to shut down Dashmart after a mere four months of operation in NYC. Customers in Sydney, Melbourne, and Brisbane still have a month to enjoy DashMart before bidding farewell on the grand finale, Friday, May 5. As the macroeconomic climate worsens in 2023, it remains uncertain how long the consumer demand for quick commerce services that defined the preceding years will endure.

However,  there is light at the end of all this turbulence. The giants in the market have a golden opportunity to expand into new territories and introduce exciting product offerings. With such a vast market size, the stage is set for them to thrive once again and navigate their way through this ever-evolving landscape. Who knows what thrilling adventures lie ahead for the world of grocery delivery? Only time will tell!

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