As ultrafast grocers’ challenges continue, leading players around the world are beginning rounds of major layoffs.
Turkey-based ultrafast grocer Getir, for one, is planning to lay off 14% of the staff at its global headquarters, according to a company memo published by TechCrunch on Wednesday (May 25).
“Rising inflation and the deteriorating macroeconomic outlook around the world pushes all companies, especially in the tech industry and including Getir, to adjust to the new climate,” the memo read. The document later added, “There is no change in Getir’s plans to serve in the nine countries it operates.”
Also Wednesday, it was reported that United Kingdom-based ultrafast grocer Zapp is cutting 10% of its staff, according to an internal email viewed by European startup news outlet Sifted. The company attributed the move to inflation, supply chain challenges and issues resulting from the invasion of Ukraine. The publication estimates that the layoffs will affect 200-300 workers.
“The current macroeconomic climate has become incredibly challenging, with very little visibility of when things will improve,” a company spokesperson told the outlet. “This uncertainty is seeing investors reduce their risk appetite considerably, favoring profitability over growth.”
The news comes just a day after ultrafast grocer Gorillas announced Tuesday (May 24) that it will lay off 300 workers, cutting its administrative staff in half.
“Risk has become irritating for investors, and nobody wants uncertainty right now. That makes it pretty hard to raise money right now,” Gorillas CEO Kagan Sumer told Reuters in an interview. “When we go public, we want to do it as a profitable company.”
Additional details: German Delivery Service Gorillas Cuts 300 Jobs
With the high costs of delivery and the typically small baskets associated with last-minute needs purchases, it can be difficult to make the economics of the model work. A January report found that these ultrafast services’ losses can amount to as much as $20 per order on average, including ad spending.
Related news: Ultrafast Grocers’ Losses Mount in the Face of an Uncertain Future
“Everyone is talking about … the rise and potential fall of this ultra-quick, small-basket, 15-minute delivery phenomenon,” Chieh Huang, CEO of membership-free wholesale eTailer Boxed, said in an interview with PYMNTS last month. “So where does that go, and how does that reshape the online grocery world, and is it just a fad or is it here to stay? … That industry consumes so much money, because if you’re sending $20-$25 baskets out, there’s just not enough gross profit dollars to play with after delivery, after personnel, after marketing.”
Read more: Boxed CEO: Inventory Management Is Key to Winning Over eGrocery Customers
Already, some shakeout is occurring. When Russian-backed ultrafast grocer Buyk was about to secure enough funding after being impacted by sanctions related to the invasion of Ukraine, the service shut down. Jokr is also struggling. A report earlier this year stated that the company was looking to sell its New York business.
See also: Instant Grocery Delivery Service Buyk Closes, Files Bankruptcy Over Russian Sanctions
Jokr’s Intention to Sell NYC Biz Reveal US Consumers May Not Be Ready for Ultrafast Grocery
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