The Race for On-Demand Groceries

As we reported in our Q1 2021 report, the daily essentials delivery service, Gopuff, was the New Year's top growth company. Consumer demand due to the pandemic undoubtedly influenced the company’s impressive $1.2BN Round G in March. But while the world reopens and we are ostensibly able to return to the supermarket or bodega, consumer behavior (and investor enthusiasm) has continued to favor rapid delivery.

The opportunity to meet new consumer behavior has many new startups clamoring to get into the game. The founder of one European company, Getir, says that “people have a right to laziness.” His investors believe he’s right, giving the company $550MM at a $7.5BN valuation in June. Speculators suggest that consolidation amongst startups is the only path forward. The UK company Dija is said to be considering a sale to its rival, Gopuff, which has already made acquisitions of the companies Liquor Barn, RiseOS, Fancy Delivery, and BevMo.

Chicago-based Foxtrot Market has 9 retail locations for grocery, booze & gift deliveries in minutes. They also specialize in software to power these transactions. Similarly, the now-public company out of the UK, Ocado, began as an online grocery retailer but pivoted to software for other grocers to conduct online sales and rapid deliveries, such as massive U.S. grocer, Kroger’s.

Ocado is among a growing sea of voices saying the VC capital flooding the industry is incongruous to the size of the opportunity. Rather than replacing the supermarket treks totaling hundreds of consumer dollars, these startups are competing with convenience stores for a much lower shopping cart total. For consumers choosing between convenience and a 30-40% markup, only time will tell how often we choose to exercise our right to laziness.