Most grocery startups will ‘fail’, admits Beelivery boss

Most rapid grocery firms will fail and the market will remain a “niche” one, a Beelivery executive has warned.

Paul Gott, the grocery startup’s chief operating officer, said competitors were hampered by their “asset-heavy models”.

Companies like Gorillas and Getir employ their own couriers and rely on a network of “dark stores” for supply.

By contrast, Gott compared Beelivery’s “asset-light” model – which relies on supermarket infrastructure – to the budget airline Ryanair.

READ MORE: Beelivery secures £4.5m to expand customer base

He told The New Statesman: “We connect people who need groceries, delivering a network of people who will go and do that shopping for them.

“It’s much cheaper to run. We were the only grocery delivery business that actually made a profit last year.”

However, the momentum in the sector seems to be moving away from Beelivery’s model.

Deliveroo used to rely on supermarket products but recently opened its first grocery dark store in London to supply Hop, a new venture.

Gott believes that “most” of these dark store-reliant firms “are going to fail”.

While the sector has not yet seen any high-profile collapses, Dija and Fancy have been snapped up by the US delivery titan Gopuff.

Nevertheless, the surge in the number of quick commerce firms during the pandemic could put a dent in the wider grocery market.

“In the next few years we might see a lot of supermarkets being smaller in the future than they are at the moment,” Gott suggested.

Delivery apps could also “contribute to a reduction in the number of smaller convenience stores”.

In April, a Credit Suisse report predicted that Tesco Express and Sainsbury’s Local would see their sales hit by rapid competitors.

Beelivery brought in £4.5 million in its latest funding round in April, with investors that included the broadcaster UKTV.

As part of the deal, the startup launched a 12-month advertising campaign across its channels.

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