As Covid restrictions see life return to ‘normal’, what now for Deliveroo, Gorillas and Zapp?

Lockdown restrictions and consumer uncertainty over the safety of doing the weekly shop paved the way for a plethora of rapid grocery delivery companies such as Deliveroo, Gorillas and Zapp to launch over the past two years.

With customers either unable or too scared to visit stores, these hungry start-ups saw an opportunity to save the day, launching speedy services that can deliver essentials to your doorstep faster than you can reach the corner shop.

If you live in a major city, you’ll have noticed the number of rapid grocery delivery drivers on the road. If you live in London, it’s almost impossible to miss the ads for Gorillas and Zapp on almost every single bus. Even Tottenham Hotspur walk out onto the pitch sporting a Getir sponsorship.

However, with restrictions easing in the UK, it looks like our ‘old’ lives are set to return. Discount supermarket Aldi recently ended its partnership with Deliveroo, as the discount grocer said that a return to normal shopping habits had seen the demand for the service melt away.

Deliveroo took the breakup in its stride, but Aldi’s decision begs the question – have shoppers had enough of rapid grocery delivery? And if so, what does the future hold for the super-speedy delivery companies that built their initial successes on customers being grounded at home?

The new evolution of grocery shopping

Grocery delivery company Zapp – which launched in 2020 and is backed by Lewis Hamilton – remains convinced customers will continue to order from rapid grocers.

“We aren’t focused on replacing the planned weekly or fortnightly grocery shop, where we feel there are already great online and offline options,” Zapp’s VP of strategy Steve O’Hear told Grocery Gazette. “Instead, Zapp is for when life can’t wait and serves the ‘want it now’ use case best.”

“We actually saw a sales spike immediately after the end of the first national lockdown, and that trend has continued,” O’Hear added.

“This is because as people’s lives get busier and they socialise more, they have less time to plan ahead and Zapp’s on-demand convenience offering really comes into its own.”

The team at Gorillas also remains confident in its post-pandemic offering, pointing out that “people are living increasingly spontaneous lives” and as such, their “shopping habits change accordingly”.

“The pandemic brought how we shop into sharp focus,” a spokesperson told Grocery Gazette.

“At Gorillas, we’re on a mission to change the way our users experience grocery shopping. It’s no longer an obligation to do a ‘weekly shop’, but a way of picking up what you need throughout the week.”

They added: “It’s hard to predict exactly what the market is going to look like in a few years, or even a few months from now, but the leaders in the industry will begin consolidating the market because they will be the ones making a profit.”

Gorillas is also an advocate of reducing food waste, pointing out that the weekly shop model often results in missed ‘best before’ dates or fresh produce wilting at the back of the fridge.

“That’s why rapid delivery services like Gorillas are the new evolution of grocery shopping; it allows people to buy smaller baskets throughout the week and avoid producing as much food waste by only buying what you need,” it added.

Food waste movement Too Good To Go revealed that the average shopper throws away £303 worth of perfectly edible food a year due to an expired ‘best before’ date, so Gorillas might really be onto something here.

Winners and losers: profit v loss

With so many different platforms fighting for the same audience in the same cities, there will naturally be both winners and losers over the coming months.

In the last six months, the market has seen Getir snap up Weezy, while Gopuff has acquired both Dija and Fancy before officially launching in the UK. Gorillas also announced its partnership with Tesco, allowing customers to shop from one of the UK’s most trusted supermarkets before having their items delivered by the German rapid grocery service. And of course, we’ve seen the Aldi split from Deliveroo.

“It feels very reminiscent of that period of madness when Uber first arrived in the UK,” The Fight Against Platform Capitalism author Dr Jamie Woodcock told The Guardian. “They spent vast amounts of money fighting to get new customers on board.”

The start-ups are mostly financed by venture capitalists but these conditions won’t last forever.

Marketing analyst at Insider Intelligence Blake Droesch agrees, pointing out that eventually, the companies will “need to turn a profit and won’t be able to afford the pricey real estate in cities”.

“They are going to have to be more economical when choosing where and how many micro-fulfilment centres to set up, which will likely impede their ability to keep their delivery as fast and cheap as it is right now,” he adds.

Although Gorillas has already achieved a £1.6 billion ($2.1 billion) valuation, the company has burned through hundreds of millions in investment and is yet to turn over a profit. Following this, it looks unlikely that the ‘cheap’ prices and ubiquitous discount codes will be able to remain long-term.

Big ambitions and customer service

Many of the start-ups companies have big ambitions and even bigger pockets, but long-term success is far from guaranteed. They face fierce competition, high costs and ethical concerns from community activists, while supply chain issues and record-breaking inflation rates will certainly impact their businesses.

There’s still a lot of room for innovation, from offering even more ambitious delivery times to targeting niche markets. But as costs continue to rise and the pressure to turn a profit increases, the target audience of young city-dwelling professionals with disposable income is unlikely to change in the foreseeable future.

With all that said, Zapp’s Steve O’Hear remains convinced that a strong offering, fair pricing and a focus on the consumer will be enough to see the company thrive in the post-pandemic market place.

“Ultimately, what will win in the online convenience retail market is good old-fashioned customer experience,” he said.

Predicting the long-term future for rapid grocers may prove to be difficult, but as the sponsorship deals, discount codes and millions of pounds spent on advertising proves, they’re determined to stay around.

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