Growth of mobile home grocery delivery applications
The market for super-fast door-to-door grocery delivery is booming.
Since April, many startups have launched in the fast home grocery delivery industry. These young ventures hope to enter the market before the distribution networks.
If you’ve been on the Paris metro recently, you will have noticed the new German brand Flink, which promises to deliver your groceries in 10 minutes tops. Flink is not the only company to have sensed the opportunity of this emerging market – it’s closely followed by Yango Deli of the Russian internet giant Yandex, which prides itself on delivering your groceries in only 15 minutes. The service has already existed in Russia since 2019. Launching operations in France has been a successful bet for 2021.
These startups have managed to flourish on the French market in a very short time: in fact, in less than 6 months. Until then, this market was mainly dominated by the giants of mass distribution. Today there are about twenty companies that are entering this “Quick Commerce” niche. These companies carry out their deliveries from micro-warehouses that are now located throughout the city, enabling them to deliver to urban areas in record time.
Since the pandemic, nascent consumption habits have strengthened considerably. Ordering meals on the internet and online shopping has become commonplace – and can be achieved in two clicks from a well-optimized mobile app!
These companies – which come from places as diverse as Turkey, the United Kingdom, Germany or Russia – have sensed the shifting tide well and understood that consumption habits established during successive lockdowns are now well-anchored among urban populations. And they intend to take advantage of it.
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Operators in Paris have fine-tuned their strategies, and some of them are even accessible from the Too Good to Go application (which helps reduce food waste). Other keys to success have been added to their offering, such as the now-common delivery times of 7am until midnight every day of the week including weekends – all with low delivery charges.
The market is clearly ripe for distance shopping for food products.
Nielsen says that in 2021 the online food sales industry has overtaken that of convenience stores, with online shopping sales at 9% against 8.4% for convenience stores. Quick commerce is now part of the consumption habits of the French. These companies have therefore positioned themselves well to successfully enter the market with new technologies.
Fundraising that accelerates the pace
Press releases indicate that some of these companies are already consuming increasingly large pieces of the cake with:
- 100,000 users for Cajoo,
- 10,000 downloads for Flink per week.
Cajoo is a young French startup. They decided to team up with Carrefour and raised more than $40 million last September. This strategic partnership with the supermarket giant should enable them to put pressure on their competitors and above all to double the number of their micro-warehouses (called dark stores).
Other startups are still in the fundraising race, with $100 million raised for Everli and $244 million for Gorillas.
It remains to be seen what will happens to all these startups. Some are inevitably intended to be resold in order to meet investor objectives. Others will surely become profitable, eventually.
Well-established delivery logistics
Mobile home grocery delivery applications are built on the model of delivering groceries from existing supermarkets or from dark stores (micro-warehouses).
Their strategy is broadly the same: they all set up their own network of supply stores. The order collectors and delivery people have the right to access the micro-warehouses. The Managing Director of Flink says he has around 150,000 potential customers within a 10-minute radius of each store. If the startup manages to convert 5% to 10% of these prospects into customers, then the micro-warehouse becomes profitable. The company also says they serve around 500 home deliveries per day per store. It is easy to understand why in large cities such as Paris or Lyon this type of business model works well.
Conversely, the Italian Everli, for example, will deliver the groceries to a customer directly from a supermarket.
On average, an order is prepared in between 1 and 2 minutes. Indeed, dark stores are optimized for efficiency in packing and preparation. There are no customers in the aisles, so the it’s easier to prepapre each order very quickly. Obviously, a dark store doesn’t have as many product references as a normal supermarket. A supermarket may offer a choice of 15 different shampoos, but in a micro-warehouse there will only be 5 brands of shampoo: the 5 brands that sell the best.
Another notable development and improvement is how these well-prepared startups have learned from the unstable status of delivery drivers in today’s delivery companies. They have put an end to the precarious employment status of delivery people and ensure that they are hired under open-ended contracts. Rest rooms have also been created for delivery people to use between two deliveries. This prevents them from being forced to wait outside on the street. Other positions that provide a prospect of career development have also been considered, such as team managers, dark store managers, etc.
These startups also target several populations, and not necessarily the wealthiest ones. They are also trying to reach:
- Mothers who want to avoid carrying their shopping,
- Employees who want to have an after-work drink at the office…
The General Manager of Gorillas has claimed that baby products as well as fresh products represent the strongest sales. According to their statement, their customers tend to order more than three times a month.
It’s also nevertheless a paradox that many people are increasingly looking for a chance ‘to slow down’. While there is an increasing trend towards embracing the concept of a “slow life,” with quick commerce we are witnessing a real acceleration.
As these rapid delivery mobile apps evolve, each type of need is treated in a personalized way.
If you have a home delivery concept that touches a niche market and you’re looking for a reasonably priced team of developers to make it happen, let’s get in touch and discuss your project. At Bocasay, we’ve been specializing in the development of offshore mobile projects for 8 years now. Discover our locations in Paris, Brussels, Vietnam, Madagascar and Mauritius.
Source: https: //www.lemonde
Copyright images: deli.yango.com, goflink.com
