In a significant shift, the once high-flying fast-track grocery delivery service, Getir, has seen its valuation plummet to a quarter of its worth just 18 months ago.
Originally valued at $11.8 billion in March 2022, the Istanbul-based company is now raising $500 million in funding, putting its current valuation at $2.5 billion. The funding round is expected to conclude later this month, as reported by The Financial Times, citing individuals familiar with the matter.
Getir’s positive decline
This decline in value is reportedly driven by a drop in consumer demand.
Interestingly, even with the stark reduction in valuation, Getir’s latest funding round stands out as one of this year’s most substantial deals in the industry.
Key contributors to this funding round include established shareholders like the Abu Dhabi wealth fund Mubadala Investment Company, the venture capital firm G Squared, and seasoned investor Michael Moritz.
The recent market dynamics have prompted Getir to make some tough decisions. In the face of dwindling demand within the delivery sector, the company announced last month that it would be slashing 2,500 jobs across five countries. This translates to more than 10% of its 23,000-strong employee base and impacts couriers, pickers, and office personnel across the United Kingdom, the United States, Germany, the Netherlands, and its home turf, Turkey.
It has also scaled back its operations, exiting from Spain, Italy, and Portugal. This strategic move reflects that the ongoing cost of living crisis has curtailed demand for rapid grocery deliveries within a 20-minute window, while operational costs have surged.
The good ol’ days
The initial surge in demand for grocery delivery services during the peak of the Covid-19 pandemic was significantly impacted by the reopening of bars, restaurants, shops, and offices as lockdowns were lifted. Consequently, the market landscape shifted dramatically.
Established in 2015, Getir rapidly ascended to become one of the largest players among the numerous delivery app companies. However, the majority of its competitors either folded or were acquired. Among those that endured, many underwent streamlining efforts, laying off delivery personnel and divesting warehouse assets.
Getir’s acquisition of its German counterpart, Gorillas, in a $1.2 billion deal in December of the previous year followed its acquisition of the UK-based Weezy just a year earlier.
Meanwhile, smaller London-based competitor Jiffy ceased its delivery operations in the preceding year, and in 2021, the US-based operator Gopuff acquired Fancy and Dija, both UK-based firms.
In addition to competition from rivals like Gopuff and the UK’s Zapp, Getir now faces increased competition from more giant delivery corporations like Uber Eats, JustEat, and Deliveroo, which have diversified their offerings to include grocery deliveries alongside takeout food.
Notably, major retailers in the UK such as Tesco, Sainsbury’s, and Ocado have also entered the rapid delivery space with services like Whoosh, Chop, and Zoom.
The allure of investing in the sector has waned considerably, with investors funneling more than $14 billion globally into the market during 2020 and 2021, according to The Guardian.
However, in the past year, the global value of venture capital investments in on-demand delivery services plummeted by over 60% to £3.8 billion, signaling a continuing decline in the current year.