Glovo bags two grocery picking and delivery startups

More startup swapping in the food delivery space: Spain’s Glovo, an on-demand delivery platform which operates a network of dark stores focused on urban convenience shopping, is pushing deeper into planned grocery shopping — announcing the acquisition of two regional ‘Instacart-style’ grocery picking and delivery startups, Madrid-based Lola Market and Portugal’s Mercadão.

Terms of the acquisitions are not being disclosed.

2015-founded Lola Market had raised around €3M, per Crunchbase. It’s not clear how much Portugal’s Mercadão — which was founded in 2018 — had raised over its shorter run.

Glovo, meanwhile, raised a meaty $528M Series F back in April — but quickly splurged $208M to pick up three food delivery brands from rival Delivery Hero in Central and Eastern Europe.

The Spanish on-demand delivery platform is facing challenges to its model on home turf where the government has applied a labor reform aimed at delivery workers in the gig economy.

The reform, agreed earlier this year, came into application last month — recognizing delivery platform riders as employees, or at least on paper.

Glovo responded by imposing a new self-employment model on the vast majority of riders on its platform, hiring only around a fifth. So the scene looks set for legal challenges in its home market.

At the European Union level, lawmakers are also eyeing how to improve conditions for platform workers — and could come with pan-EU legislation that has wider implications for the business models of regional players like Glovo.

Ongoing regulatory challenges over employment classification and algorithmic management of workers in the gig economy may offer some context for Glovo’s expanding interest in grocery purchasing in Europe, where it has been building out a network of dark stores to power what it calls ‘Q-commerce’ (aka, quick urban convenience shopping).

As well as for its recently announced international expansion in Africa, where it has said it will be doubling down investment over the next 12 months.

But also the challenge of hitting profitability for pure on-demand food delivery looks like a sizeable piece of the puzzle here driving consolidation.

By adding players in the supermarket and retail outlet picking delivery space, Glovo expands its coverage of shoppers’ needs — and can nudge users to spend more by being able to cross-sell them on planned purchases (such as the weekly grocery shop), as well as what it bills as “emergency essentials” and “fast action convenience” powered by the more limited inventory it can offer in its city center dark stores.

Both Lola Market and Mercadão’s brand identities will be retained, per Glovo, which also says they will operate independently — led by Gonçalo Soares da Costa, CEO of Mercadão.

It touts the acquisitions as strengthening its competitive position in Europe in “key markets” — going on to suggest it will add grocery picking and delivery across its entire market footprint, with an initial expansion planned for Poland and Italy.

Also today it said its Q-Commerce division is “on track” to reach an annual Gross Transaction Value (GTV) of more than €300M this year — adding that it expects that to more than triple by the end of 2022, projecting it will surpass a run rate of €1BN.

Commenting on its latest acquisitions in a statement, Oscar Pierre, CEO and co-founder of Glovo, added: “We see huge potential in the on-demand groceries marketplace and both companies are strong local players in their respective markets, and further strengthen our Q-Commerce offering.

“With Lola Market and Mercadão on board, we can build stronger partnerships with retailers, offer our users big-basket purchases and provide a more complete service. These acquisitions represent a significant step forward for us, as we’re now able to cover all of the main purchasing considerations for groceries customers, making Glovo a one-stop-shop for e-groceries.”

#apps, #delivery-hero, #delivery-startups, #e-groceries, #europe, #food, #food-delivery, #glovo, #grocery-store, #instacart, #madrid, #online-food-ordering, #oscar-pierre, #portugal, #spain

GrubMarket gobbles up $120M at a $1B+ pre-money valuation to take on the grocery supply chain

When people talk about “online food delivery” services, chances are that they’ll think of the Uber Eats, Instacarts and Getirs of this world. But today a startup that’s tackling a different aspect of the market — addressing the supply chain that subsequently turns the wheels of the bigger food distribution machine — is announcing a big round of funding as it continues to grow.

GrubMarket, which provides software and services that help link up and manage relationships between food suppliers and their customers — which can include wholesalers and other distributors, markets and supermarkets, delivery startups, restaurants, and consumers — has picked up $120 million in a Series E round of funding.

The funding is coming from a wide mix of investors. Liberty Street Funds, Walleye Capital, Japan Post Capital, Joseph Stone Capital, Pegasus Tech Ventures, Tech Pioneers Fund are among the new backers, who are being joined by existing investors Celtic House Asia Partners, INP Capital, Reimagined Ventures, Moringa Capital Management, and others, along with other unnamed participants

Mike Xu, GrubMarket’s founder and CEO (pictured, above), tells me that the company is currently profitable in a big way. It’s now at a $1 billion annualized run-rate, having grown revenues 300% over last year, with some markets like New York growing even more (it went from less than $10 million ARR to $100 million+).

With operations currently in Arizona, California, Connecticut, Georgia, Michigan, New York, New Jersey, Missouri, Massachusetts, Oregon, Pennsylvania, Texas, and Washington, and some 40 warehouses nationwide. GrubMarket had a pre-money valuation of over $1 billion, and now it will be looking to grow even more, both in terms of territory and in terms of tech, moving ahead in a market that is largely absent from competitors.

“We are still the first mover in this space,” Xu said when I asked him in an interview about rivals. “No one else is doing consolidation on the supply chain side as we are. We are trying to consolidate the American food supply chain through software technologies, while also trying to find the best solutions in this space.”

(And for some context, the $1 billion+ valuation is more than double GrubMarket’s valuation in October 2020, when it raised $60 million at a $500 million post-money valuation.)

Longer term, the plan will be to look at an IPO provisionally filing the paperwork by summer 2022, Xu added.

GrubMarket got its start several years ago as one of many companies looking to provide a more efficient farm-to-table service. Tapping into a growing consumer interest in higher quality, and more traceable food, it saw an opportunity to build a platform to link up producers to the consumers, restaurants and grocery stores that were buying their products. (Grocery stores, incidentally, might be independent operations, or something much bigger: one of GrubMarket’s biggest customers is Whole Foods, which uses GrubMarket for produce supply in certain regions of the U.S. It is currently is the company’s biggest customer.)

As we wrote last year, GrubMarket — like many other grocery delivery services — found that the pandemic initially provided a big fillip, and a big rush of demand, from that consumer side of the business, as more people turned to internet-based ordering and delivery services to offset the fact that many stores were closed, or they simply wanted to curtail the amount of shopping they were doing in-person to slow the spread of Covid-19.

But fast forward to today, while the startup still serves consumers, this is currently not the primary part of its business. Instead, it’s B2B2C, serving companies that in turn serve consumers. Xu says that overall, demand from consumers has dropped off considerably compared to a year ago.

“We think that restaurant re-openings have meant more people are dining out again and spending less time at home,” Xu said, ” and also they can go back to physical grocery stores, so they are not as interested as they were before in buying raw ingredients online. I don’t want to offend other food tech companies, but I think many of them will be seeing the same. I think B2C is really going to slow down going forward.”

The opening for GrubMarket has been not just positioning itself as a middleman between producers and buyers, but to do so by way of technology and consolidating what has been a very regionalized and fragmented market up to now.

GrubMarket has snapped up no less than 40 companies in the last three years. While some of these have been to help it expand geographically (it made 10 acquisitions in the Los Angeles area alone), many have also been made to double down on technology.

These have included the likes of Farmigo, once a Disrupt Battlefield contender that pivoted into becoming a software provider to CSAs (an area that GrubMarket sees a lot of opportunity), as well as software to help farms manage their business staffing, insurance and more: Pacific Farm Management is an example of the latter.

GrubMarket’s own in-house software, WholesaleWare, a cloud-based service for farmers and other food producers, saw its sales grow 3,500% over the last year, and it is now managing more than $4 billion in wholesale and retail activity across the U.S. and Canada.

There will be obvious ways to extend what GrubHub does deeper into the needs of its customers on the purchasing end, but this is in many ways also a very crowded market. (And not just crowded, but crowded with big companies. Just today, Toast, the company that builds software for restaurants, filed for a $717 million IPO at potentially a $16.5 billion valuation.) So instead, GrubHub will continue to focus on what has been a more overlooked aspect, that of the suppliers.

“I am focused on the food supply chain,” Xu said. “Operators in the food supply chain business most of the time don’t have any access to software and e-commerce technology. But we are not just a lightweight online ordering system. We do a lot of heavyweight lifting around inventory management, pricing and customer relations, and even HR management for wholesales and distributors.” That will also mean, longer term, that GrubMarket will likely also start to explore connected hardware to help those customers, too: robotics for picking and moving items are on that agenda, Xu said.

“GrubMarket has built a profitable, high-growth business underpinned by its best-in-class technology platform that’s reinventing how businesses access healthy, fresh foods,” said Jack Litowitz, director of strategic investments at Reimagined Ventures, in a statement. “We’re proud to support GrubMarket as it continues to expand into new regions and grow its WholesaleWare 2.0 software platform. At Reimagined Ventures, we always seek to invest in businesses that are disrupting inefficient industries in innovative ways. Mike Xu and the GrubMarket team have built one of these businesses. We’re excited to back their vision and work in making the food supply chain more efficient.”

“GrubMarket is transforming the trillion-dollar food distribution industry with unprecedented speed by implementing advanced digital solutions and operational discipline. The company’s scale, growth, and profitability are extraordinarily impressive. Pegasus is delighted and honored to be part of GrubMarket’s exciting journey ahead,” added Bill Reichert, partner at Pegasus Tech Ventures.

#arizona, #california, #canada, #ceo, #connecticut, #digital-solutions, #farmigo, #food, #food-delivery, #food-supply-chain, #funding, #georgia, #grocery-store, #grubhub, #grubmarket, #instacart, #japan-post-capital, #los-angeles, #massachusetts, #michigan, #mike-xu, #missouri, #new-jersey, #new-york, #olo, #online-food-delivery, #online-food-ordering, #oregon, #partner, #pegasus-tech-ventures, #pennsylvania, #reimagined-ventures, #retailers, #software, #software-platform, #supply-chain, #texas, #uber-eats, #united-states, #washington, #whole-foods

CookUnity whips up nationwide expansion following $47M round

Chef-prepared, small-batch meal delivery startup CookUnity is undergoing a major expansion after closing a $47 million Series B round.

Insight Partners led the round and was joined by Endeavor Capital and current investors IDCV, Fuel Ventures and Gaingels. The latest funding comes eight months after New York-based CookUnity closed a $15.5 million Series A round led by Fuel Venture Capital. The company has now raised a total of $70 million since its inception in 2018.

Mateo Marietti, founder and CEO of CookUnity, had the idea for the subscription-based company five years ago. Marietti, who is from Argentina, was working in food tech and saw that modern delivery services were only able to offer limited food options and pricing, and was a trade-off between convenience and variety.

He went looking for a similar experience to apps like Spotify, where the music selection was limitless, and created CookUnity to connect creators of food with the people who would be eating it.

CookUnity combines the ready-to-eat meal category with a chef-focused business model that provides restaurant-quality meals at home. The rotating menu features hundreds of dishes, starting at $10.49 per meal, with an option of a subscription plan for four, six, eight, 12 or 16 meals per week. Meals heat up in minutes and also include both fast-cooking instructions, like in a microwave, or how the chef might prepare it at home, like with an additional squeeze of lemon or other toppings.

CookUnity founder Mateo Marietti. Image Credits: CookUnity

Chefs are also given tools and resources to create a digital-first business, and Marietti told TechCrunch that top-selling chefs bring in upwards of $1 million a year.

“We are building the infrastructure, working with farmers, providing the ingredients and the tech layer for both the consumer app and the chef app,” he added. “We don’t employ any talent or cook the food, but we give chefs the tools to start recruiting cooks, gather information on new recipes, organize their team and expand into new markets while also seeing their sales for the day or week.”

The company’s platform is already working with notable chefs like Jean-Georges Vongerichten, Marc Forgione and Esther Choi, and the Series B funding will enable it to add more chefs, including local rising stars and established restaurateurs, enabling them to sell beyond the typical on-demand food delivery zone, Marietti said.

Starting with the flagship kitchen in Brooklyn, CookUnity initially expanded to San Francisco, Dallas-Fort Worth, Boston and Washington, D.C. Following the Series A, the company opened kitchens in Los Angeles, Austin and Chicago. The new funding will now enable the company to accelerate its nationwide expansion with new kitchens in Atlanta and Miami by the end of the year. When all of the new kitchens are online, Marietti estimates that CookUnity will be able to serve 88% of the U.S. population.

In the last 12 months, CookUnity saw over 550% growth and to date has over 50 chefs on its roster, with plans to increase to 150 across all of its kitchens by mid-2022.

As part of the investment, Rebecca Liu-Doyle, principal at Insight Partners, is joining the CookUnity board of directors. Insight’s model is to track companies for a long time before investing; in CookUnity’s case, Liu-Doyle was watching them for more than two years. She said the timing was right for Insight to invest.

In addition to product-market fit, strong chef retention and liking the company’s focus on the food market, which is a “massive total addressable market,” she said, CookUnity was on its way to building a big business with subscription-based revenue as it took on the complexities of the back-end business for chefs.

The value proposition is unique for both of the stakeholders — on the chef side there is a creator economy tailwind, which is taking the friction out of scaling a business while also enabling chefs to build a business with a larger footprint than they just selling food around their restaurants. On the consumer side, Liu-Doyle said CookUnity is providing affordable and convenient food without having to compromise on taste and quality.

“Very few companies can offer that: it is democratization on both fronts,” she added. “In order to execute on the vision, you need a specific team, which Mateo has, and show incremental improvement to the experience. It doesn’t just happen overnight. You have to be patient and deliberate in the way you improve the experience.”

#chef, #chefs, #cookunity, #delivery-services, #ecommerce, #endeavor-capital, #food, #food-and-drink, #food-delivery, #fuel-venture-capital, #funding, #gaingels, #idcv, #insight-partners, #mateo-marietti, #rebecca-liu-doyle, #recent-funding, #restaurants, #saas, #startups, #tc

Glovo to double down African investment in the next 12 months but will it stay put?

Spanish on-demand delivery platform Glovo today announced plans to double its investment in Africa and expand its operations on the continent.

The Barcelona-based company has invested up to €25M ($30M) by bringing its food delivery service to six African countries — Morocco, Uganda, Kenya, Ghana, Côte d’Ivoire, and Nigeria.

Glovo is available in more than 40 cities with more than 300,000 users, 8,000 restaurants and 12,000 couriers in these countries. Earlier this year, it launched operations in Lagos, Nigeria and Accra, Ghana before expanding to Tema, another Ghanaian city last month.

Over the next 12 months, Glovo says it will invest an additional €50M ($60M) to drive expansion into more cities on the continent and move into new markets like Tunisia, where it plans to launch in Tunis next month.

According to a statement released by the company, the expansion will make Glovo’s services available to 6.5 million people. Co-founder Sacha Michaud believes these markets are currently underserved, and Glovo has found the right opportunity to work with local restaurants, bringing them online to reach new customers in a bid to “make everything, within all towns and cities, available to everyone.”

The attention on Africa follows a series of regional moves Glovo has pulled this year. After its mammoth $528 million Series F raise, it acquired several Delivery Hero’s businesses in Central and Eastern Europe for $208 million.

Now present in 23 countries, Africa represents 30% of the company’s geographical footprint. And the Spanish company plans to be live in 30 countries before the end of next year, a decision in part due to an IPO target in three years.

Glovo says it is a market leader in 80% of the countries where it has operations. The company’s grocery service arm has grown the fastest and revenue has been increasing significantly after a steady rise in orders. To meet the growing needs of customers, Glovo has had to invest heavily in dark stores and in July also launched virtual brands for restaurants.

It’s not clear if Glovo will extend these add-on services to Africa where it has its largest market in terms of population size: Nigeria. Yet, the West African nation does not come without its own fair share of troubles like poor logistics infrastructure and an unpredictable regulatory environment.

Despite that, a couple of food delivery platforms like Gokada and Jumia Food, a subsidiary of e-commerce giant Jumia have tried to scale, finding varying degrees of success doing so.

While Glovo will have to compete for market share with these players, the company says it is bullish because of its multi-category strategy. According to the company, grocery sales account for half of its business in some African markets.

That said, Glovo’s performance in emerging markets is questionable. Last year, the company pulled out of all the Latin American countries — Argentina, Ecuador, Peru, Panama, Costa Rica, Honduras, Guatemala, and the Dominican Republic. It sold operations in these markets to Delivery Hero for $272 million.

The company also exited the Middle East and North Africa (Egypt and Turkey) and Uruguay and Puerto Rico in January 2020.

Over the past couple of years, Glovo has said it wanted to achieve profitability in a short amount of time. The delivery space is a thin-margin business and it is thinner in emerging markets. This played a part in why Glovo exited both Middle East and Latin America. The market isn’t any different in Africa, and time will tell if the Spanish delivery will stay put, exit, or close shop.

Whatever the case, Glovo says it is “committed to continuing its policy to hire top local talent” on the continent and plans to double its number of staff and add an extra 200 employees before the end of next year.

“Our expansion in Nigeria, Ghana, and our upcoming launch in Tunisia is something we’ve been looking at for some time now, so it’s great to be able to make it official. There’s been an unprecedented spike in the on-demand delivery business in Africa and the expansion of our services to new countries and cities is both a reflection of that trend and a testament to our commitment to the continent. We’re looking forward to making food, groceries, pharmaceuticals and retail products available to our new users at the touch of a button,” William Benthall, Glovo’s general manager of sub-Saharan Africa, said in a statement.

#africa, #delivery-hero, #e-commerce, #food, #food-delivery, #glovo, #jumia, #tc

Owner.com serves up $10.7M so that independent restaurants can get cooking

Independent restaurants don’t typically have the luxury to create their own online food ordering and delivery capabilities or negotiate for lower rates from legacy ordering platforms like the large restaurant chains do.

Here’s where Owner.com comes in. The Beverly Hills-based company provides a free online ordering, delivery and marketing platform for independent restaurants that puts them on similar playing fields with the big guys. And unlike the legacy food delivery services, Owner.com restaurants own their customer data and can automate marketing campaigns.

Adam Guild is the company’s 21-year-old co-founder and CEO, a high school dropout and a Thiel Fellow, who originally started by assisting his mother’s dog grooming business that was having difficulties attracting customers. After stepping in with some online marketing methods, her business grew, and later expanded into multiple locations. Guild then wanted to work with a bigger group of people and stumbled across restaurants while helping some clients create online landing pages.

With consumer demand shifting to primarily online ordering and delivery over the past 18 months, online ordering revenue is expected to double from $248 billion in 2020 to $449 billion by 2025. Ordering platforms like Doordash, Uber Eats and Grubhub control 80% of orders and typically charge between 20% and 30% per order to restaurants and additional fees to consumers.

In contrast, Owner.com is free for restaurants and charges customers a flat $4 fee when they order from the website. Guild explained that larger restaurant chains have the buying power to negotiate lower rates, while independent restaurants do not. With the inability to keep up, some 110,000 restaurants in the U.S. closed in 2020.

Guild initially bootstrapped his company, working with large restaurant chains, like P.F. Chang’s, drive online orders. Then the global pandemic hit. He ended up losing all of his revenue and had to let all of his employees go but one. To add to his bad luck, he was then rejected from Y Combinator and other accelerator programs.

“For the first three days, I was depressed,” Guild told TechCrunch. “I had spent two years building a company and now it was dead. In the same way we were disrupted, I began to think there was no better position to be in than a scrappy startup. I didn’t know what the next business would look like, so I started cold-calling restaurant owners, asking how I can be helpful and what type of technology they were looking for. Many of them told me that online ordering sucked, but if they didn’t solve it soon, they would go out of business.”

One pivot and a year later with co-founder Dean Bloembergen, Owner.com closed on $10.7 million in seed funding led by SaaStr Fund, with participation from Redpoint Ventures and Day One Ventures, as well as a group of individual investors including Naval Ravikant, CNBC’s The Profit host Marcus Lemonis, The Kitchen Restaurant Group’s Kimbal Musk, DoNotPay founder Joshua Browder, Figma founder Dylan Field, The Chainsmokers and independent restaurant owners and customers of Owner.com.

Jason Lemkin, founder of SaaStr Fund, said restaurant SaaS was a space in which his firm was interested in investing, but thought it was a bit boring — there were already quite a few vendors in the space, like Toast and Grubhub, and most were just technology solutions. However, when he heard that Owner.com was a break-out company from the monotony, he said he had to take a look.

“The ability to own the customer relationship is that ultimate differentiation,” Lemkin said. “Their ultimate goal is to provide a robust technology platform to increase margins, have people order more and come back often.”

Meanwhile, Guild intends to use the new funding to continue product development and add new features like landing pages, the ability to make reservations and native apps for white-label service.

Since the launch last year, the company has reached a seven-figure run-rate and over 105% monthly revenue retention across over 700 restaurant locations, Guild said. To date, Owner.com has transacted over $18 million and helped its restaurant customers avoid paying $3 million to online order platform fees annually.

“It’s all about empowering the 40% of the restaurant industry that is run by people who started off in entry-level positions, and over the years, worked their way up to own the ‘American Dream,’ ” he added.

 

#adam-guild, #advertising-tech, #day-one-ventures, #dean-bloembergen, #ecommerce, #enterprise, #food-delivery, #funding, #jason-lemkin, #online-food-ordering, #owner-com, #recent-funding, #redpoint-ventures, #saastr-fund, #startups, #tc, #the-chainsmokers

Europe’s quick-commerce startups are overhyped: Lessons from China

More than 10 companies currently compete across Europe with an instant grocery delivery business model. Half of them were established in 2020, the year of the pandemic. These companies have raised more than $2 billion to date.

Existing and well-funded online food-delivery service players like Delivery Hero are also joining the race by launching dedicated grocery offerings. However, if lessons from the world’s largest online grocery market, China ($400 billion), matter, then it’s clear that instant delivery is not the magic bullet to crack the dominance of Europe’s incumbent supermarket chains in the overall $2 trillion-plus flat market.

Instead, China’s quick-commerce equivalents (like Dingdong Maicai, Miss Fresh and Meituan Maicai) compete alongside a wealth of other online grocery models (such as Pinduoduo, JD’s Super and Alibaba’s Taoxianda), which have helped bring total market penetration to 20% and beyond.

Quick commerce suffers from narrower profit margins compared to competing models and is addressing lower consumer demand in China than anyone in the West is expecting it to achieve in Europe and the U.S. If the performance of online grocery platforms in China (a market five to seven years ahead of Europe in terms of online retail) is anything to go by, a range of B2C business models would be more likely to displace the traditional grocery retailers.

Third-time luck for quick commerce?

The idea of ordering groceries online and having them delivered to consumers in less than an hour is nothing new. Back in the heyday of the dot-com bubble, a company attempted to do just that: Kozmo.com. Founded in 1998, it raised more than $250 million (around $400 million in today’s dollars) from investors, promising to deliver food, among other items, to consumers within an hour, while charging no delivery fees.

In 1999, it had revenues of $3.5 million and a loss of $1.8 million. However, in 2001, the business was shut down by its board after the company could not make the business model work at scale.

Some 15 years later, another company had a go. Gopuff was established in Philadelphia in 2013 and originally targeted students. What started out as a hookah delivery service soon expanded into a much broader convenience store offering and delivered to customers in approximately 30 minutes.

Gopuff was most recently valued at $15 billion after raising a total of $3.4 billion — 75% of which occurred in the past 12 months. Last year, Gopuff grew revenues from around $100 million to $340 million.

Kozmo.com went out of business after just three years. Meanwhile, Gopuff was turned down by several VCs in its early days, and it wasn’t until the pandemic that it saw a rapid acceleration in fundraising. Little did teams at either company know that they would later become the inspiration for a whole generation of founders in Europe.

Europe’s $2B instant-grocery gamble

Has anything fundamentally changed in the 20 years since Kozmo.com? Indeed, we’ve seen little technological progress that would hugely affect the operations of an instant commerce business. However, there have been much larger shifts in consumer habits.

Firstly, the number of global internet users has skyrocketed (from below 500 million to beyond 4 billion), and mobile internet has taken over. Secondly, demand for online grocery delivery has grown significantly due to the COVID-19 pandemic, as consumers have preferred to make retail purchases from home for safety reasons. Thirdly, consumers are now accustomed to paying fees for delivery services, typically around $2 per order, which Kozmo notoriously did not do.

While many online grocery business models exist, the instant grocery, quick-commerce approach has been the favorite of European entrepreneurs and VCs over the past 18 months. The model itself, also referred to as q-commerce, is not that hard to understand.

Companies maintain a small product offering of around 1,000–2,000 SKUs that consumers would otherwise find in convenience or drug stores. These products are purchased directly from brands or through distributors and are stored in self-operated microwarehouses close to customers’ locations.

Marketing tactics are aggressive, often employing vouchers for first-time users of up to $12 (50% of an average shopping basket), and many startups offer their products at supermarket price or even at a discount of 10%–15%. Delivery usually happens by bicycle, e-bike or scooter, within 10-30 minutes of an order being placed, for a fee of around $2 with no minimum order value.

Companies like Getir from Istanbul (total funding: $1 billion, last valuation: $7.5 billion) and Gorillas from Berlin (total funding: $335 million, last valuation: $1 billion) are leading the way. When Gorillas announced its $290 million Series B in March 2021, it became the fastest European startup to achieve unicorn status (nine months after launch). The company is already rumored to be seeking Series C financing at a $2.5 billion valuation.

There are more than 10 companies across Europe with more or less the same business model. Those include the 2020-established Flink (Germany-based, $300 million raised), Zapp (U.K.-based, $100 million raised), Dija (U.K.-based, $20 million raised and just acquired by Gopuff), Jiffy (U.K.-based, $7 million raised) and Cajoo (France-based, $6 million raised).

There is also JOKR, which was started by the founder of Foodpanda. JOKR was only established in Q1 2021, but right after incorporation raised one of the largest ever initial seed rounds (rumored to be $100 million) and subsequently a $170 million Series A in July to bring the model to Europe, Latin America and the U.S.

Likewise, companies coming from food delivery have pushed further into this space and received additional funding in recent months, notably Delivery Hero through Dmart and Glovo through SuperGlovo, following role models in the U.S., such as DoorDash.

Does instant grocery stand a chance of becoming profitable?

As these companies approach later-stage financing sometime in the future, questions will be asked about the path to profitability in an industry of notoriously thin margins. Indeed, this is an uncomfortable truth that hasn’t changed since the early days of Kozmo.com.

The available figures show that old patterns are repeating. Gopuff recently reported an EBITDA of negative $150 million on $340 million in revenue (EBITDA margin: -45%). Furthermore, an analysis by the German business monthly Manager Magazine concluded that Gorillas was operating at negative unit economics of -6%. Additional costs, such as overhead and technology, might push this number up significantly further.

#alibaba, #amazon, #asia, #carrefour, #china, #column, #covid-19, #delivery-hero, #e-commerce, #ec-china, #ec-ecommerce-and-d2c, #ec-europe, #ecommerce, #europe, #food-delivery, #gopuff, #meituan, #ocado, #online-food-ordering, #online-grocery, #pinduoduo, #tc

Grocery delivery startup Membo is hungry to build a Europe-wide, local food producer network

Estonia-based Membo — which is backed by Y Combinator and will be presenting at the incubator’s Summer 2021 Demo Day next week — is aiming to take a slice of the premium end of grocery shopping in Europe and a bite out of supermarket giants’ continued dominance of the traditional weekly food shop. 

On-demand food delivery in Europe is of course a highly competitive business with rapid-fire market moves and bursts of consolidation among app makers making a kind of sizzling startup stir-fry. Online grocery delivery, by contrast, tends to be a bit more sedate. Although there is some overlap, with developments like dark stores.

Interest in app-based grocery shopping also had an especially big boost during the pandemic — which has fired up consumer interest in doing the weekly shop online so that’s now driving more startup activity and capacity from supermarket giants trying to meet increased demand for online delivery.

Entering this fray is Membo — which, starting in Estonia, has built an app-based marketplace for local food producers to sell directly to consumers, cutting out other middlemen as the startup handles delivery logistics and billing.

Its service is live in the Estonian cities of Tallin and Tartu, currently. So most of us can merely oggle the mouth-watering fare for now.

Food producers display their wares in Membo’s app, which it likens to a virtual farmers’ market — allowing shoppers to browse and buy from multiple high quality, local fresh food producers and have everything delivered to them in one go. Its business model is based on taking a commission on orders made via its platform.

Products ordered via Membo can be delivered to customers in one of (currently) three slots a week. So within a few days or even next day. The startup batches customer orders to send to producers who only have to send one bulk order back to Membo’s centralized warehouse — where its staff take care of the packing and distribution to fulfil all the individual customer orders.

It launched the service last December and has seen 30% month on month growth over the past eight months — with, to date, 4,000+ orders sent out and customer numbers reaching over 1,400.

While local produce — and therefore the environmental benefits of sourcing food locally (lower ‘food miles’) — is a big feature of what Membo is selling it does also offer food from further afield — shipping Spanish oranges to its Estonia-based shoppers, for example — in order that it can provide customers with a full range of groceries and do things like be able to offer certain seasonal produce at different times of the year.

A full inventory is also important for it to be able to compete with traditional supermarkets on the ‘single weekly shop’ convenience front too, of course.

At present there are 800+ items listed on Membo’s platform from some different 65 producers. (And while groceries are its core offering it says it’s keeping an open mind about how that might expand — noting it recently added a locally produced pet food producer to its inventory, for example.)

But the overarching idea is for the food Membo sells to be as locally sourced to the customer as possible — which obviously has positive knock on impact on freshness and therefore overall grocery quality.

“Everything that we’re doing stems from the insight that people ordering their weekly groceries actually care much more about freshness and quality of their food than they actually care about 15 minute deliveries,” says co-founder and CEO Vahur Hansen, who cut his startup teeth working as an early engineer for TransferWise (now Wise).

“Coming from that insight we set out to build a model that can guarantee that when you order from us, every item in your cart always arrives as the freshest version possible. As an example… when you order trout from us the same trout was caught the day before. You get dairy produce that was specifically prepared for your delivery. You get oranges that were picked from the tree 24 hours ago. That’s the sort of reality that we’re focused on.”

“The product, from a fundamental point of view, is built for Europeans — and sort of for the European mentality,” he also tells TechCrunch. “It’s not new for people [here] to have this sort of mission/feel on being able to consume local produce. Europeans all over, in every country, they know that they need to support their local producers but they also know that local producers really make the best products for them. And for us the bigger goal is to build a cross-European, high quality producer network — coupled with very efficient logistics — so that we can, anywhere, deliver high quality local producers across Europe.”

On the last mile delivery side, the team has tried a few different approaches but is currently outsourcing that to delivery partners — with Hansen reiterating it makes sense for it to stay focused on the core logistics piece.

“When we started with this product we realized that we’re more of a logistics company than an actual store. So everything that we do is logistics in trying to figure out how to organize the quickest producer to end customer delivery.”

Given the target segment is premium groceries, Membo shoppers’ baskets are unsurprisingly more valuable than the average food delivery app — which conversely cater to impulse buys and hyper quick convenience. (Toothpaste, chocolate bars, takeaways, that sort of thing.)

So although there can be some overlap in the basic nature of what’s offered for delivery by Membo vs the average on-demand food delivery app there is more than enough clear blue water separating its value proposition vs — for example — the stuff that even a dark store operator like Spain’s Glovo can bike to your door.

It is very hard for hyper speedy delivery focused players to handle fresh produce and get it intact and in date to the customer’s door. Non-perishable, long shelf life products — processed foods, bottled drinks, toiletries etc — or indeed meal deliveries from restaurants which are set up to dish up takeaway are far easier for such platforms to manage and deliver. So grocery freshness is an especially difficult USP for such apps to compete on.

The question then is how large is the market for freshness and quality in the grocery space vs hyper quick, push-button convenience.

Membo’s bet is that delivering quality groceries is ultimately the more sustainable app business to be in. And it looks like a solid one. Certainly in a wealthy region like Northern Europe.

“It’s definitely a different model to dark stores — where they need to have mini warehouses spread across all cities — and also for us, unit economics wise, it’s a very good thing, because you can really save on scale,” says Hansen, discussing how Membo’s model contrasts with on-demand delivery apps doing grocery deliveries out of networks of dark stores.

“The fact that us needing one big warehouse as opposed to like ten smaller ones really effects our unit economics positively.”

“They capture impulse buys — and we capture planned out weekly grocery baskets,” he goes on. “Based on my research, our grocery baskets are at least 50% higher than for the sort of ‘convenience’ grocery apps. Right now it’s around $50 for an average customer. So from a very practical point of view we already see that — people come to our site to really order all of our fresh produce. As opposed to just a few items.”

There is another differentiating factor in play too.

Membo isn’t relying on a retail model that requires predicting customer demand in advance — so its business can be leaner and more efficient. Which also sums to less food being wasted — something else Membo’s target buyers are probably going to appreciate too. (The typical Membo customer is a 27-55 year old suburban mother who likes to cook for their family and prepare weekly meals ahead, per Hansen — someone who “really appreciates high quality, mostly eco ingredients for the food that they make”.)

“We set out to avoid food sitting in our warehouse and all the fresh produce that comes to our warehouse in the morning — it’s based on orders and it gets sent out to end customers the same evening. And also as a side effect of that model for the local food produce that we serve — there’s no food waste,” he says, adding: “Everything that arrives to our warehouse has already been ordered by our customers and our warehouse, essentially, is empty by the end of the day.”

It’s still early days for Membo of course. But it has big expansion plans in the region.

It’s been using its home market as a “playground” for fine-tuning its model and operations ahead of planned scaling into other European markets — with an eye on potential launches in Switzerland, Germany or France.

Markets with a rich network of local food producers who can be persuaded to sell their wares more directly to consumers via its platform will take priority, per Hansen, who says a range of factors will be involved in deciding where it goes next — so clearly the local competitive mix will also be key.

(Europe-based rivals include the UK’s Farmdrop — which targets a similarly discerning grocery shopper, who cares where their food is coming from and has the money to pay a quality premium, offering farmer sourced produce direct to UK consumers via its own online platform.)

“We’ve been using Estonia as a playground to figure out what is the exact operating model under which we can guarantee freshness for every item. So we’re been fine-tuning our product and building it so that we know it’s a sustainable business before going into expansion,” he says, adding: “That’s also one of the things that YC has really taught us.

“Build a working business and don’t go into scaling mode too quickly. But we are getting to the point where we’re already mapping bigger Western European countries and really honing in — trying to figure out what is the best combination of all of these factors to go in.”

Prior to taking in investment from YC, Membo had raised a little pre-seed funding to get going — although Hansen notes that its team remains small and expenses are therefore pretty lean. Its pre-seed backers included the CEO and VP of growth at Estonian ride-hailing startup Bolt, as well as some of Hansen’s ex colleagues at (Transfer)Wise.

#apps, #estonia, #europe, #food, #food-delivery, #food-waste, #fundings-exits, #grocery-delivery, #grocery-store, #local-food, #membo, #on-demand-food-delivery, #transferwise, #y-combinator

Forward Kitchens cooks up $2.5M to transform existing kitchens into digital storefronts

Forward Kitchens was working quietly on its digital storefront for restaurants and is now announcing a $2.5 million seed round.

Raghav Poddar started the company two years ago and was part of the Y Combinator Summer 2019 cohort. Poddar told TechCrunch he has been a foodie his entire life. Lately, he was relying on food delivery and pickup services, and while visiting with some of the restaurant owners, he realized a few things: first, not many had a good online presence, and second, these restaurants had the ability to cook cuisine representative of their communities.

That led to the idea of Forward Kitchens, which provides a turnkey tool for restaurants to set up an online presence, including food delivery, where they can create multiple digital storefronts easily and without having to contact each delivery platform. The company ran pilot programs in a handful of restaurants, and this is the first year coming out of stealth.

“It’s an expansion of what they have on the menu, but is not immediately available in the neighborhood,” Poddar added. “Kitchens can keep the costs and headcount the same, but be able to service the demand and get more orders because it is fulfilling a need for the neighborhood, which is why we can grow so fast.”

Here’s how it works: Forward Kitchens goes into a restaurant and takes into account its capacity for additional cooking and the demographic area, as well as what food is available near it, and helps the restaurant create the storefront.

Each restaurant is able to build multiple storefronts, for example, an Italian restaurant setting up a storefront just to sell its popular mac n’ cheese or other small plates on demand. A couple hundred digital storefronts were already created, Poddar said.

A group of investors, including Y Combinator, Floodgate, Slow Ventures and SV Angel and angel investors Michael Seibel of YC, Ram Shriram and Thumbtack’s Jonathan Swanson, were involved in the round.

The new funding will be used to expand the company’s footprint and reach, and to hire a team in operations, sales and engineering to help support the product.

“Forward Kitchens is empowering independent kitchens to create digital storefronts and receive more online sales,” Seibel said via email. “With Forward Kitchens, a kitchen can create world-class digital storefronts at the click of a button.”

#ecommerce, #enterprise, #floodgate, #food, #food-and-drink, #food-delivery, #forward-kitchens, #funding, #jonathan-swanson, #kitchen, #michael-seibel, #online-food-ordering, #raghav-poddar, #recent-funding, #restaurant, #slow-ventures, #startups, #storefront, #sv-angel, #tc, #y-combinator

Orchata raises $4M, aims to build a ‘Gopuff for Latin America’

Luis Mario Garcia grew up in Mexico making deliveries for the grocery stores in his neighborhood. After honing his startup skills in San Francisco, he returned to Mexico with the idea of building a software company.

That’s when he met his co-founder Javier Gonzalez and the pair started Orchata in 2020, a mobile app enabling consumers to get groceries delivered in 15 minutes, with no substitutes and at supermarket prices. Products delivered include fresh fruit, beverages, bread, medicine and household essentials, Garcia told TechCrunch.

Orchata does this by operating a network of micro fulfillment centers — it is already operating in two cities — with technology for efficient picking and hyperfast delivery.

Online food delivery sales in Latin America are projected to reach $9.8 billion by 2024, with the global pandemic driving demand for faster delivery, according to Statista. Garcia sees three different waves in this market: the first one being traditional supermarkets, where you can spend hours, which led to the second wave of food delivery companies, including some big players in the region — for example Rappi in Colombia, which in July raised $500 million in Series F funding at a $5.25 billion valuation in a round led by T. Rowe Price, and Cornershop in Chile, which was acquired by Uber in 2019.

However, Garcia said many of these services still take more than an hour from order to doorstep and may require phone calls if an item is not available. He wants to be part of a third wave — software that is integrated with inventory and delivery that is super fast, and no substitutions.

“This is similar to what is going on around the world, but there is a huge opportunity to bring convenience, to be the Gopuff for Latin America, and we want to build it first in the region,” Garcia said.

The Monterrey-based company was part of Y Combinator’s summer 2020 cohort and on Friday announced a $4 million seed round from a group of investors, including Y Combinator, JAM Fund, FJ Labs, Venture Friends, Investo and Foundation Capital, and angel investors Ross Lipson, Mike Hennessey, Brian Requarth and Javier Mata.

Jonathan Lewy, co-founder of Grin Scooters and founder of Investo, is also an investor in Rappi. He said Garcia was building a product for the end user, with the key being the building of the infrastructure and inventory. Lewy believes Garcia understands how quick delivery should be done and that it is not just about offering a mobile app, but building the technology behind it.

Meanwhile, Justin Mateen, general partner at JAM Fund, and co-founder of Tinder and an early-stage investor, met Garcia over a year ago and was one of the company’s first investors. He said Garcia’s and Gonzalez’s initial idea for the model of grocery stores was still not solving the problem, but then they pivoted to doing fulfillment and inventory themselves.

“He fits the mold of what I look for in a founder, and he is the type of founder that doesn’t give up,” Mateen said. “Luis finally agreed to let me double down on my investment. The model makes sense now, he is on to something and it is now going to be about execution of capital as he scales.”

Both Mateen and Lewy agree that there will be similar apps coming because food delivery is such a large market, but that Orchata has a clear advantage of owning the customer experience from beginning to end.

Having only launched four months ago, Orchata is already processing thousands of orders and is seeing 100% monthly growth. The new funding will enable Orchata to expand into three new cities in Mexico. Garcia is also eyeing Colombia, Brazil, Peru and Chile for future expansion.

The company is also targeting multiple use cases, including someone noticing a forgotten item while cooking to consumers shopping for the week or teenagers needing food for a party.

“We are going to be super convenient to customers, and we think every use case for food delivery will be this way in the future,” Garcia said. “We will eventually introduce our own brands and foods with the goal of being that app that is there anytime you need it.”

 

#apps, #ecommerce, #fj-labs, #food, #food-delivery, #foundation-capital, #funding, #grocery-store, #investo, #jam-fund, #javier-gonzalez, #jonathan-lewy, #justin-mateen, #latin-america, #luis-mario-garcia, #mexico, #online-food-ordering, #orchata, #rappi, #recent-funding, #startups, #tc, #venture-friends, #y-combinator

YC-backed Tablevibe’s customer surveys help restaurants reduce their reliance on delivery apps

Food delivery apps offer convenience for customers, but a host of headaches for restaurants, like commissions as high as 40% and very few tools to build customer loyalty. Based in Singapore, Tablevibe wants to help restaurants reduce their reliance on third-party delivery apps and help them get more direct orders and returning customers. The startup is part of Y Combinator’s current batch, which will hold its Demo Day at the end of this month.

Tablevibe’s founding team includes two former Googlers: Jeroen Rutten, formerly head of Google Search’s product strategy in APAC and Sneep, who was responsible for its app development go-to-market strategy and led large sales teams. They are joined by Guido Caldara, a lead teacher at coding bootcamp Le Wagon and Tablevibe’s chief technology officer.

The idea for Tablevibe came after Rutten, its chief executive officer, visited a restaurant in Singapore that used paper feedback forms.

“We thought, if they use a paper feedback form, it actually creates a lot of hassle, like entering all the data into an Excel spreadsheet,” he told TechCrunch. “How’s the restaurant owner going to get actionable feedback based on data in an Excel spreadsheet?”

The team began working on the first version of Tablevibe, with simple Google Forms for dine-in customers and Google Data Studio dashboards, and tested it with three restaurants a few months before COVID-19 emerged. They found that using Tablevibe instead of paper forms increased response rates by up to 26x and also had the benefit of creating more repeat customers, since they are given an incentive for filling out surveys.

Then the pandemic hit and restaurants had to suddenly pivot to deliveries. The team kept the same idea behind their feedback forms, but started using QR codes affixed to takeout packaging. The QR codes (usually in the form of stickers so food and beverage businesses don’t need to order new packaging) also offer an incentive if customers scan it and fill out a survey—but the discount or free item can’t be redeemed through third-party delivery apps, only through direct orders with the restaurant.

Restaurants can customize surveys, but about 80% use Tablevibe’s templates, which are quick to fill out, since most questions just ask for a rating from one to five stars (there’s also an optional form for customers to write their opinions). Customers fill out their name, email addresses, and then rank the food and atmosphere (for dine-in). For delivery, customers are also asked what app they used.

Tablevibe is integrated with Google Reviews, so if someone gives the restaurant a high rating, they are asked if they want to make it public. They also have the option to follow its Facebook or Instagram profile.

For dine-in customers, Tablevibe primarily works with F&B businesses that have multiple venues, including Merci Marcel and Lo and Behold Group. For its delivery survey, most users are smaller restaurants that have one location. It also serves cloud kitchens, like CloudEats in the Philippines.

“As a restaurant, you want to own and grow your customer relationships,” said Sneep, Tablevibe’s chief operating officer. “The first part is actually knowing who your customers are, what they experienced and how you can contact them, which is how we can help. The second piece is growing a customer relationship, which we do by giving a reward, but only if a customer reorders directly with a restaurant.”

Customers have generated over 25,000 reviews through Tablevibe so far, which gives the company data to help determine what kind of incentives will convince someone to scan a restaurant’s QR code and take a survey.

Tablevibe’s founders say it can deliver more than 100x return on investment to its clients. For example, Merci Marcel did an evaluation and determined that it got a 103x ROI, based on the number of customers who claimed incentives, average order value, how many people left a five-star Google Review and how much more business those reviews drove to their venues.

The startup plans to expand into other English-speaking markets, focusing first on Northern Europe and then North America later this year. Aside from Singapore, it’s already used by customers in the Philippines, the Netherlands, Belgium, the United Kingdom and Portugal.

Rutten said that Tablevibe plans to build its development team, with the goal of becoming a “Salesforce for restaurants” that can help them build engagement through delivery or dine-ins, capture data and turn them into useful insights.

“Our roadmap has two levers—one is to get more data and the other is to provide more intelligence,” he said. “We’re working on API integrations so Tablevibe can integrate with point-of-sale systems. The second thing is to pull in more publicly available data from sources like Google Reviews. We will also build out more marketing features to leverage customer databases so businesses can send out emails about new restaurant launches, etc.” Eventually, Tablevibe also plans to use AI to help restaurants determine exactly what they need to do to improve customer experience, like change a menu item.

#fb, #food-and-beverage, #food-delivery, #restaurants, #singapore, #southeast-asia, #startups, #tablevibe, #tc, #y-combinator

Airbnb, DoorDash report earnings as COVID threatens to slow the IRL economy (again)

Home-stay giant Airbnb and on-demand delivery concern DoorDash reported their quarterly results today after the bell.

Both companies were heavily impacted by the onset of COVID-19. Airbnb saw its revenues collapse in 2020 during early lockdowns, leading the company to raise expensive capital and batten its hatches. The company recovered as the year continued, leading to its eventual IPO.

DoorDash, in contrast, managed a simply incredible 2020 as folks stayed home and ordered in. Given that we got both reports on the same day, let’s digest ’em and see how COVID has — and may — impact their results.

Airbnb’s Q2

In the second quarter, Airbnb reported revenues of $1.3 billion, which compares favorably with its Q2 2020 result of $335 million and its 2019 Q2 revenue total of $1.21 billion. In percentage terms, Airbnb’s revenue grew 299% from its Q2 2020 level and 10% from what the company managed during the same period of 2019.

Analysts had expected $1.23 billion in revenue for the period.

Airbnb lost $68 million in the quarter when counting all costs. The company’s adjusted EBITDA, a heavily modified profit metric, came to $217 million in the quarter. Cash from operations in Q2 2021 was $791 million. Looking ahead, here’s what Airbnb had to say regarding its revenue outlook:

[We] expect Q3 2021 revenue to be our strongest quarterly revenue on record and to deliver the highest Adjusted EBITDA dollars and margin ever.

How did the market digest Airbnb’s better-than-expected growth, rising adjusted profit, falling net losses, massive cash generation and expectations of record Q3 revenue? By bidding its shares lower. Airbnb is off around 4.5% in after-hours trading.

Confused? Investors may be worried about the following note from the company, also from the guidance section of its earnings letter:

In the near term, we anticipate that the impact of COVID-19 and the introduction and spread of new variants of the virus, including the Delta variant, will continue to affect overall travel behavior, including how often and when guests book and cancel. As a result, year-over-year comparisons for Nights and Experiences Booked and GBV will continue to be more volatile and non-linear.

While Q3 2021 is looking great for Airbnb, it appears that its future growth could be lumpy or delayed thanks to the ongoing pandemic. There are public indicators pointing to travel rates declining, which could impact Airbnb.

The company’s Q2 results and Q3 anticipations are impressive when compared to where Airbnb was a year ago. But that doesn’t mean that it is entirely out of the COVID woods.

DoorDash’s Q2

Despite generally lower COVID friction in its market during Q2 2021, DoorDash managed to set records for orders and the value of those orders. In the three-month period concluding June 30, 2021, the on-demand food delivery company turned $10.46 billion in order value (marketplace GOV) into $1.24 billion in total revenue. The marketplace GOV number was 70% greater than the Q2 2020 result, while DoorDash’s revenues expanded by 83%.

Investors had expected the company to post $1.08 billion in total revenues, so DoorDash handily bested expectations.

How profitable was DoorDash during the quarter? DoorDash was unprofitable overall, with a net loss of $102 million. In adjusted EBITDA terms, DoorDash saw $113 million in profit during Q2 2021. That’s not too bad, given that Uber cannot manage the same feat with its own food delivery business. DoorDash’s net income was worse than what it managed in Q2 2020, while its adjusted EBITDA improved.

Shares of DoorDash are off around 3.5% in after-hours trading.

Why? It’s not entirely clear. DoorDash said that it expects “Q3 Marketplace GOV to be in a range of $9.3 billion to $9.8 billion, with Q3 Adjusted EBITDA in a range of $0 million to $100 million.” Sure, that’s down a smidgen from its Q2 GOV number, but investors were anticipating DoorDash to post less revenue in Q3 than Q2, so you would think that GOV expectations were also more modest.

Is COVID the answer? Mentions of COVID-19 in the company’s earnings document tend to deal with trailing results and historical efforts to provide relief to restaurants that use DoorDash for orders or delivery. So, there’s not a lot of juice to squeeze there. However, the company did say the following toward the end of its report:

We believe the broad secular shift toward omni-channel local commerce remains nascent. However, the scale and fragmentation of local commerce suggests the problems to be solved will get more difficult, coordination between internal and external stakeholders will become more complex, and vectors for competitive threats will increase. At the same time, we expect the pace of consumer behavioral shifts to slow compared to the extraordinary pace of change in recent quarters.

Simplifying that for us: DoorDash expects slower growth in the future, a more complex business climate and rising competition as it enters new markets. That’s not a mix that would make any investor more excited, we don’t think.

#airbnb, #doordash, #earnings, #food-delivery, #on-demand-food-delivery, #travel

Turkey’s first decacorn: Trendyol raises $1.5B at a $16.5B valuation

Trendyol, an e-commerce platform based in Turkey, has raised $1.5 billion in a massive funding round that values the company at $16.5 billion. General Atlantic, SoftBank Vision Fund 2, Princeville Capital and sovereign wealth funds, ADQ (UAE) and Qatar Investment Authority co-led the round. 

The deal marks SoftBank’s first in the country.

The new financing also makes Trendyol Turkey’s first decacorn, and among the highest-valued private tech companies in Europe. It comes just months after strategic — and majority — backer Alibaba invested $350 million in the company at a $9.4 billion valuation.

Founded in 2010, Trendyol ranks as Turkey’s largest e-commerce company, serving more than 30 million shoppers and delivering more than 1 million packages per day. It claims to have evolved from marketplace to “superapp” by combining its marketplace platform (which is powered by Trendyol Express, its own last-mile delivery solution) with instant grocery and food delivery through its own courier network (Trendyol Go), its digital wallet (Trendyol Pay), consumer-to-consumer channel (Dolap) and other services.

Trendyol founder Demet Suzan Mutlu said the new capital will go toward expansion within Turkey and globally. Specifically, the company plans to continue investing in nationwide infrastructure, technology and logistics and toward accelerating digitalization of Turkish SMEs. She said the company was founded to create positive impact and that it intends to continue on that mission.

Evren Ucok, Trendyol’s chairman,  added that part of the company’s goal is to create new export channels for Turkish merchants and manufacturers.

Melis Kahya Akar, managing director and head of consumer for EMEA at General Atlantic, said that Trendyol’s marketplace model — ranging from grocery delivery to mobile wallets — “brings convenience and ease to consumers” in Turkey and internationally.

“Turkey is one of the fastest growing economies in the world and benefits from attractive demographics, with a young population that is very active online,” wrote General Atlantic’s Kahya Akar via e-mail. “We expect its already sizable e-commerce market –$17 billion in 2020 – to continue to grow meaningfully on the back of growing online penetration. We think Trendyol is ideally positioned to meet the needs of consumers in Turkey and around the world as the company expands.”

A 2020 report by JPMorgan found that e-commerce represented only 5.3% of the overall Turkish retail market at the time but that Turkish e-commerce had notched impressive leaps in revenues in recent years: 2018 alone saw the market jump by 42%, followed by 31% in 2019. As of 2020, 67% of the Turkish population were making purchases online.

#alibaba, #apps, #demet-suzan-mutlu, #e-commerce, #ecommerce, #europe, #food-delivery, #funding, #fundings-exits, #general-atlantic, #qatar-investment-authority, #recent-funding, #softbank, #softbank-vision-fund, #startups, #trendyol, #turkey, #venture-capital

This Week in Apps: In-app events hit the App Store, TikTok tries Stories, Apple reveals new child safety plan

Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy.

The app industry continues to grow, with a record 218 billion downloads and $143 billion in global consumer spend in 2020. Consumers last year also spent 3.5 trillion minutes using apps on Android devices alone. And in the U.S., app usage surged ahead of the time spent watching live TV. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours per day on their mobile devices.

Apps aren’t just a way to pass idle hours — they’re also a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus. In 2020, investors poured $73 billion in capital into mobile companies — a figure that’s up 27% year-over-year.

This Week in Apps offers a way to keep up with this fast-moving industry in one place, with the latest from the world of apps, including news, updates, startup fundings, mergers and acquisitions, and suggestions about new apps and games to try, too.

Do you want This Week in Apps in your inbox every Saturday? Sign up here: techcrunch.com/newsletters

Top Stories

Apple to scan for CSAM imagery

Apple announced a major initiative to scan devices for CSAM imagery. The company on Thursday announced a new set of features, arriving later this year, that will detect child sexual abuse material (CSAM) in its cloud and report it to law enforcement. Companies like Dropbox, Google and Microsoft already scan for CSAM in their cloud services, but Apple had allowed users to encrypt their data before it reached iCloud. Now, Apple’s new technology, NeuralHash, will run on users’ devices, tatformso detect when a users upload known CSAM imagery — without having to first decrypt the images. It even can detect the imagery if it’s been cropped or edited in an attempt to avoid detection.

Meanwhile, on iPhone and iPad, the company will roll out protections to Messages app users that will filter images and alert children and parents if sexually explicit photos are sent to or from a child’s account. Children will not be shown the images but will instead see a grayed-out image instead. If they try to view the image anyway through the link, they’ll be shown interruptive screens that explain why the material may be harmful and are warned that their parents will be notified.

Some privacy advocates pushed back at the idea of such a system, believing it could expand to end-to-end encrypted photos, lead to false positives, or set the stage for more on-device government surveillance in the future. But many cryptology experts believe the system Apple developed provides a good balance between privacy and utility, and have offered their endorsement of the technology. In addition, Apple said reports are manually reviewed before being sent to the National Center for Missing and Exploited Children (NCMEC).

The changes may also benefit iOS developers who deal in user photos and uploads, as predators will no longer store CSAM imagery on iOS devices in the first place, given the new risk of detection.

In-App Events appear on the App Store

Image Credits: Apple

Though not yet publicly available to all users, those testing the new iOS 15 mobile operating system got their first glimpse of a new App Store discovery feature this week: “in-app events.” First announced at this year’s WWDC, the feature will allow developers and Apple editors alike to showcase directly on the App Store upcoming events taking place inside apps.

The events can appear on the App Store homepage, on the app’s product pages or can be discovered through personalized recommendations and search. In some cases, editors will curate events to feature on the App Store. But developers will also be provided tools to submit their own in-app events. TikTok’s “Summer Camp” for creators was one of the first in-app events to be featured, where it received a top spot on the iPadOS 15 App Store.

Weekly News

Platforms: Apple

Apple expands support for student IDs on iPhone and Apple Watch ahead of the fall semester. Tens of thousands more U.S. and Canadian colleges will now support mobile student IDs in the Apple Wallet app, including Auburn University, Northern Arizona University, University of Maine, New Mexico State University and others.

Apple was accused of promoting scam apps in the App Store’s featured section. The company’s failure to properly police its store is one thing, but to curate an editorial list that actually includes the scams is quite another. One of the games rounded up under “Slime Relaxations,” an already iffy category to say the least, was a subscription-based slime simulator that locked users into a $13 AUD per week subscription for its slime simulator. One of the apps on the curated list didn’t even function, implying that Apple’s editors hadn’t even tested the apps they recommend.

Tax changes hit the App Store. Apple announced tax and price changes for apps and IAPs in South Africa, the U.K. and all territories using the Euro currency, all of which will see decreases. Increases will occur in Georgia and Tajikistan, due to new tax changes. Proceeds on the App Store in Italy will be increased to reflect a change to the Digital Services Tax effective rate.

Game Center changes, too. Apple said that on August 4, a new certificate for server-based Game Center verification will be available via the publicKeyUrl.

Fintech

Robinhood stock jumped more than 24% to $46.80 on Tuesday after initially falling 8% on its first day of trading last week, after which it had continued to trade below its opening price of $38.

Square’s Cash app nearly doubled its gross profit to $546 million in Q2, but also reported a $45 million impairment loss on its bitcoin holdings.

Coinbase’s app now lets you buy your cryptocurrency using Apple Pay. The company previously made its Coinbase Card compatible with Apple Pay in June.

Social

An anonymous app called Sendit, which relies on Snap Kit to function, is climbing the charts of the U.S. App Store after Snap suspended similar apps, YOLO and LMK. Snap was sued by the parent of child who was bullied through those apps, which led to his suicide. Sendit also allows for anonymity, and reviews compare it to YOLO. But some reviews also complained about bullying. This isn’t the first time Snap has been involved in a lawsuit related to a young person’s death related to its app. The company was also sued for its irresponsible “speed filter” that critics said encouraged unsafe driving. Three young men died using the filter, which captured them doing 123 mph.

TikTok is testing Stories. As Twitter’s own Stories integrations, Fleets, shuts down, TikTok confirmed it’s testing its own Stories product. The TikTok Stories appear in a left-hand sidebar and allow users to post ephemeral images or video that disappear in 24 hours. Users can also comment on Stories, which are public to their mutual friends and the creator. Stories on TikTok may make more sense than they did on Twitter, as TikTok is already known as a creative platform and it gives the app a more familiar place to integrate its effects toolset and, eventually, advertisements.

Facebook has again re-arranged its privacy settings. The company continually moves around where its privacy features are located, ostensibly to make them easier to find. But users then have to re-learn where to go to find the tools they need, after they had finally memorized the location. This time, the settings have been grouped into six top-level categories, but “privacy” settings have been unbundled from one location to be scattered among the other categories.

A VICE report details ban-as-a-service operations that allow anyone to harass or censor online creators on Instagram. Assuming you can find it, one operation charged $60 per ban, the listing says.

TikTok merged personal accounts with creator accounts. The change means now all non-business accounts on TikTok will have access to the creator tools under Settings, including Analytics, Creator Portal, Promote and Q&A. TikTok shared the news directly with subscribers of its TikTok Creators newsletter in August, and all users will get a push notification alerting them to the change, the company told us.

Discord now lets users customize their profile on its apps. The company added new features to its iOS and Android apps that let you add a description, links and emojis and select a profile color. Paid subscribers can also choose an image or GIF as their banner.

Twitter Spaces added a co-hosting option that allows up to two co-hosts to be added to the live audio chat rooms. Now Spaces can have one main host, two co-hosts and up to 10 speakers. Co-hosts have all the moderation abilities as hosts, but can’t add or remove others as co-hosts.

Messaging

Tencent reopened new user sign-ups for its WeChat messaging app, after having suspended registrations last week for unspecified “technical upgrades.” The company, like many other Chinese tech giants, had to address new regulations from Beijing impacting the tech industry. New rules address how companies handle user data collection and storage, antitrust behavior and other checks on capitalist “excess.” The gaming industry is now worried it’s next to be impacted, with regulations that would restrict gaming for minors to fight addiction.

WhatsApp is adding a new feature that will allow users to send photos and videos that disappear after a single viewing. The Snapchat-inspired feature, however, doesn’t alert you if the other person takes a screenshot — as Snap’s app does. So it may not be ideal for sharing your most sensitive content.

Telegram’s update expands group video calls to support up to 1,000 viewers. It also announced video messages can be recorded in higher quality and can be expanded, regular videos can be watched at 0.5 or 2x speed, screen sharing with sound is available for all video calls, including 1-on-1 calls, and more.

Streaming & Entertainment

American Airlines added free access to TikTok aboard its Viasat-equipped aircraft. Passengers will be able to watch the app’s videos for up to 30 minutes for free and can even download the app if it’s not already installed. After the free time, they can opt to pay for Wi-Fi to keep watching. Considering how easy it is to fall into multi-hour TikTok viewing sessions without knowing it, the addition of the addictive app could make long plane rides feel shorter. Or at least less painful.

Chinese TikTok rival Kuaishou saw stocks fall by more than 15% in Hong Kong, the most since its February IPO. The company is another victim of an ongoing market selloff triggered by increasing investor uncertainty related to China’s recent crackdown on tech companies. Beijing’s campaign to rein in tech has also impacted Tencent, Alibaba, Jack Ma’s Ant Group, food delivery company Meituan and ride-hailing company Didi. Also related, Kuaishou shut down its controversial app Zynn, which had been paying users to watch its short-form videos, including those stolen from other apps.

Twitch overtook YouTube in consumer spending per user in April 2021, and now sees $6.20 per download as of June compared with YouTube’s $5.60, Sensor Tower found.

Image Credits: Sensor Tower

Spotify confirmed tests of a new ad-supported tier called Spotify Plus, which is only $0.99 per month and offers unlimited skips (like free users get on the desktop) and the ability to play the songs you want, instead of only being forced to use shuffle mode.

The company also noted in a forum posting that it’s no longer working on AirPlay2 support, due to “audio driver compatibility” issues.

Mark Cuban-backed audio app Fireside asked its users to invest in the company via an email sent to creators which didn’t share deal terms. The app has yet to launch.

YouTube kicks off its $100 million Shorts Fund aimed at taking on TikTok by providing creators with cash incentives for top videos. Creators will get bonuses of $100 to $10,000 based on their videos’ performance.

Dating

Match Group announced during its Q2 earnings it plans to add to several of the company’s brands over the next 12 to 24 months audio and video chat, including group live video, and other livestreaming technologies. The developments will be powered by innovations from Hyperconnect, the social networking company that this year became Match’s biggest acquisition to date when it bought the Korean app maker for a sizable $1.73 billion. Since then, Match was spotted testing group live video on Tinder, but says that particular product is not launching in the near-term. At least two brands will see Hyperconnect-powered integrations in 2021.

Photos

The Photo & Video category on U.S. app stores saw strong growth in the first half of the year, a Sensor Tower report found. Consumer spend among the top 100 apps grew 34% YoY to $457 million in Q2 2021, with the majority of the revenue (83%) taking place on iOS.

Image Credits: Sensor Tower

Gaming

Epic Games revealed the host of its in-app Rift Tour event is Ariana Grande, in the event that runs August 6-8.

Pokémon GO influencers threatened to boycott the game after Niantic removed the COVID safety measures that had allowed people to more easily play while social distancing. Niantic’s move seemed ill-timed, given the Delta variant is causing a new wave of COVID cases globally.

Health & Fitness

Apple kicked out an app called Unjected from the App Store. The new social app billed itself as a community for the unvaccinated, allowing like-minded users to connect for dating and friendships. Apple said the app violated its policies for COVID-19 content.

Google Pay expanded support for vaccine cards. In Australia, Google’s payments app now allows users to add their COVID-19 digital certification to their device for easy access. The option is available through Google’s newly updated Passes API which lets government agencies distribute digital versions of vaccine cards.

COVID Tech Connect, a U.S. nonprofit initially dedicated to collecting devices like phones and tablets for COVID ICU patients, has now launched its own app. The app, TeleHome, is a device-agnostic, HIPAA-compliant way for patients to place a video call for free at a time when the Delta variant is again filling ICU wards, this time with the unvaccinated — a condition that sometimes overlaps with being low-income. Some among the working poor have been hesitant to get the shot because they can’t miss a day of work, and are worried about side effects. Which is why the Biden administration offered a tax credit to SMBs who offered paid time off to staff to get vaccinated and recover.

Popular journaling app Day One, which was recently acquired by WordPress.com owner Automattic, rolled out a new “Concealed Journals” feature that lets users hide content from others’ viewing. By tapping the eye icon, the content can be easily concealed on a journal by journal basis, which can be useful for those who write to their journal in public, like coffee shops or public transportation.

Edtech

Recently IPO’d language learning app Duolingo is developing a math app for kids. The company says it’s still “very early” in the development process, but will announce more details at its annual conference, Duocon, later this month.

Educational publisher Pearson launched an app that offers U.S. students access to its 1,500 titles for a monthly subscription of $14.99. the Pearson+ mobile app (ack, another +), also offers the option of paying $9.99 per month for access to a single textbook for a minimum of four months.

News & Reading

Quora jumps into the subscription economy. Still not profitable from ads alone, Quora announced two new products that allow its expert creators to monetize their content on its service. With Quora+ ($5/mo or $50/yr), subscribers can pay for any content that a creator paywalls. Creators can choose to enable a adaptive paywall that will use an algorithm to determine when to show the paywall. Another product, Spaces, lets creators write paywalled publications on Quora, similar to Substack. But only a 5% cut goes to Quora, instead of 10% on Substack.

Utilities

Google Maps on iOS added a new live location-sharing feature for iMessage users, allowing them to more easily show your ETA with friends and even how much battery life you have left. The feature competes with iMessage’s built-in location-sharing feature, and offers location sharing of 1 hour up to 3 days. The app also gained a dark mode.

Security & Privacy

Controversial crime app Citizen launched a $20 per month “Protect” service that includes live agent support (who can refer calls to 911 if need be). The agents can gather your precise location, alert your designated emergency contacts, help you navigate to a safe location and monitor the situation until you feel safe. The system of live agent support is similar to in-car or in-home security and safety systems, like those from ADT or OnStar, but works with users out in the real world. The controversial part, however, is the company behind the product: Citizen has been making headlines for launching private security fleets outside law enforcement, and recently offered a reward in a manhunt for an innocent person based on unsubstantiated tips.

Funding and M&A

🤝 Square announced its acquisition of the “buy now, pay later” giant AfterPay in a $29 billion deal that values the Australian firm at more than 30% higher than the stock’s last closing price of AUS$96.66. AfterPay has served over 16 million customers and nearly 100,000 merchants globally, to date, and comes at a time when the BNPL space is heating up. Apple has also gotten into the market recently with an Affirm partnership in Canada.

🤝 Gaming giant Zynga acquired Chinese game developer StarLark, the team behind the mobile golf game Golf Rival, from Betta Games for $525 million in both cash and stock. Golf Rival is the second-largest mobile golf game behind Playdemic’s Golf Clash, and EA is in the process of buying that studio for $1.4 billion.

💰  U.K.-based Humanity raised an additional $2.5 million for its app that claims to help slow down aging, bringing the total raise to date to $5 million. Backers include Calm’s co-founders, MyFitness Pal’s co-founder and others in the health space. The app works by benchmarking health advice against real-world data, to help users put better health practices into action.

💰 YELA, a Cameo-like app for the Middle East and South Asia, raised $2 million led by U.S. investors that include Tinder co-founder Justin Mateen and Sean Rad, general partner of RAD Fund. The app is focusing on signing celebrities in the regions it serves, where smartphone penetration is high and over 6% of the population is under 35.

💰 London-based health and wellness app maker Palta raised a $100 million Series B led by VNV Global. The company’s products include Flo.Health, Simple Fasting, Zing Fitness Coach and others, which reach a combined 2.4 million active, paid subscribers. The funds will be used to create more mobile subscription products.

🤝 Emoji database and Wikipedia-like site Emojipedia was acquired by Zedge, the makers of a phone personalization app offering wallpapers, ringtones and more to 35 million MAUs. Deal terms weren’t disclosed. Emojipedia says the deal provides it with more stability and the opportunity for future growth. For Zedge, the deal provides🤨….um, a popular web resource it thinks it can better monetize, we suspect.

💰 Mental health app Revery raised $2 million led by Sequoia Capital India’s Surge program for its app that combines cognitive behavioral therapy for insomnia with mobile gaming concepts. The company will focus on other mental health issues in the future.

💰 London-based Nigerian-operating fintech startup Kuda raised a $55 million Series B, valuing its mobile-first challenger bank at $500 million. The inside round was co-led by Valar Ventures and Target Global.

💰 Vietnamese payments provider VNLife raised $250 million in a round led by U.S.-based General Atlantic and Dragoneer Investment Group. PayPal Ventures and others also participated. The round values the business at over $1 billion.

Downloads

Mastodon for iPhone

Fans of decentralized social media efforts now have a new app. The nonprofit behind the open source decentralized social network Mastodon released an official iPhone app, aimed at making the network more accessible to newcomers. The app allows you to find and follow people and topics; post text, images, GIFs, polls, and videos; and get notified of new replies and reblogs, much like Twitter.

Xingtu

@_666eveITS SO COOL FRFR do u guys want a tutorial? #fypシ #醒图 #醒图app♬ original sound – Ian Asher

TikTok users are teaching each other how to switch over to the Chinese App Store in order to get ahold of the Xingtu app for iOS. (An Android version is also available.) The app offers advanced editing tools that let users edit their face and body, like FaceTune, apply makeup, add filters and more. While image-editing apps can be controversial for how they can impact body acceptance, Xingtu offers a variety of artistic filters which is what’s primarily driving the demand. It’s interesting to see the lengths people will go to just to get a few new filters for their photos — perhaps making a case for Instagram to finally update its Post filters instead of pretending no one cares about their static photos anymore.

Tweets

Facebook still dominating top charts, but not the No. 1 spot:  

Not cool, Apple: 

This user acquisition strategy: 

Maybe Stories don’t work everywhere: 

#adt, #afterpay, #alibaba, #android, #ant-group, #api, #app-maker, #app-store, #apple, #apps, #australia, #automattic, #beijing, #biden-administration, #canada, #china, #cloud-services, #coinbase, #coinbase-card, #computing, #day-one, #dragoneer-investment-group, #driver, #dropbox, #duolingo, #emojipedia, #eta, #facebook, #fintech-startup, #food-delivery, #game-center, #game-developer, #general-atlantic, #general-partner, #georgia, #gif, #google, #hyperconnect, #instagram, #ios, #ios-devices, #ipad, #iphone, #italy, #itunes, #jam-fund, #justin-mateen, #kuaishou, #kuda, #law-enforcement, #london, #ma, #maine, #meituan, #microsoft, #middle-east, #mobile, #mobile-app, #mobile-applications, #mobile-devices, #online-creators, #onstar, #operating-system, #palta, #playdemic, #quora, #sean-rad, #sensor-tower, #sequoia-capital, #smartphone, #snap, #snapchat, #social-network, #social-networking, #software, #south-africa, #south-asia, #spotify, #stories, #target-global, #tc, #this-week-in-apps, #tiktok, #twitch, #united-kingdom, #united-states, #valar-ventures, #viasat, #vnv-global, #wi-fi, #wordpress-com, #zedge, #zynga

Amazon expands same-day Prime delivery to 6 more U.S. cities

Amazon announced this morning it’s expanding its faster, same-day delivery service to half a dozen more U.S. cities. The service, which the retailer has been working to make same-day delivery even faster over the past year, now offers consumers in a number of markets the ability to shop up to 3 million items on Amazon.com, then receive their orders in only a few hours.

To do so, Amazon invested in what it called “mini-fulfillment centers” closer to where customers lived in select U.S. markets, initially in Philadelphia, Phoenix, Orlando, and Dallas. Those customers could then shop across a dozen merchandise categories, including Baby, Beauty & Health, Kitchen & Dining, Electronics, Pet Supplies, and more. As the pandemic continued to impact Amazon’s business, in November 2020, Amazon expanded its faster same-day service to more cities, to include Nashville and Washington, D.C.

With today’s expansion, Amazon is rolling out same-day delivery to Prime members in Baltimore, Chicago, Detroit, Tampa, Charlotte, and Houston, bringing the total markets served to 12. In these markets, shoppers will be able to place orders online throughout the day then have items on their doorstep in as fast as 5 hours, Amazon says. Customers can also place orders by midnight to have their orders arrive the following morning.

The service continues to be free with no additional charges on orders over $35 that qualify for same-day delivery. Orders under $35 have a $2.99 fee for Prime customers, and a $12.99 fee for non-members. Prime membership, meanwhile, is $12.99 per month or $119 per year.

The time frame commitments for same-day delivery are the same as those Amazon promised last year when it first announced its plans to speed up Prime delivery. Orders placed between midnight and 8 AM will arrive today by 1 PM. Orders placed between 8 AM and 1 PM arrive by 6 PM; those placed between 1 PM and 5 PM will arrive by 10 PM; and those placed between 5 PM and midnight will arrive overnight by 8 AM. That means customers can place orders fairly late and receive their items before they head out of the house the next day.

Faster same-day delivery has been one of the most significant services Amazon has used to challenge rivals like Walmart and Target, who both benefit from having a large brick-and-mortar footprint that allows them to more quickly serve their customers through same-day order pickup, curbside pickup, and same-day delivery services. While Walmart partners with third-parties on its same-day service, Express delivery, largely focused on grocery, Target acquired delivery service Shipt in 2017 to bring its fast delivery services in-house.

In response to the growing competition, Amazon has been recently acquiring smaller warehouse space inside major urban metros, including in these six new markets where it’s now announcing same-day delivery, as well as larger markets, like New York, and even suburban neighborhoods. It also acquired Whole Foods for $137.7 billion in 2017, not only to more fully participate in the online grocery business, but also in part because of its large retail footprint.

As Amazon has sped up the pace of what’s available under “Prime” delivery, it has wound down its older “Prime Now” business, which was retired Aug. 30 and will be fully shut down by year-end. The separate app had allowed customers to shop items that were available in one or two hours for an additional fee.

The news follows Amazon’s earning miss last week, when the retailer fell short of Wall St.’s estimates for revenue, and gave a weaker than-expected outlook for the quarter ahead, which Amazon attributed to difficult comparisons with a time frame that included Covid lockdowns during height of the pandemic in 2020. The company reported $113.08 billion in revenue and earnings of $15.12, versus expectations of $115.2 billion and $12.30.

#amazon, #amazon-prime, #amazon-com, #baltimore, #charlotte, #chicago, #dallas, #delivery-services, #detroit, #ecommerce, #food-delivery, #houston, #nashville, #new-york, #online-grocery, #online-shopping, #orlando, #philadelphia, #phoenix, #prime, #prime-now, #retailers, #shipt, #tampa, #target, #united-states, #walmart, #washington-d-c, #whole-foods

Deliveroo could leave Spanish market ahead of on-demand labor reclassification

Deliveroo announced today that it is considering leaving the Spanish market, citing limited market share and a long road of investment with “highly uncertain long-term potential returns” on the horizon.

The company, an on-demand outfit based in the U.K., went public earlier in 2021. Its shares initially sagged, drawing concern about both the value of on-demand companies and tech concerns listing in London more broadly. However, shares of Deliveroo have since recovered, and the company’s second-quarter earnings report saw it raise its expected gross order volume growth expectations “from between 30% to 40% to between 50% to 60%.”

Given its rising growth expectations and improving public-market valuation, you may be surprised that Deliveroo is willing to leave any of the 12 markets in which it currently operates. In the case of Spain, it appears that Deliveroo is concerned that changes to local labor laws will make its operations more expensive in the country, which, given its modest market share, is not palatable.

Recall that Spain adopted a law in May — a law generally agreed to in March — requiring on-demand companies to hire their couriers. This is the sort of arrangement that on-demand companies in food delivery and ride-hailing have long fought; many on-demand companies are unprofitable without hiring couriers, and doing so could raise their costs. The possibility of worsened economics makes such changes to labor laws in any market a worry for startups and public companies alike that lean on freelance delivery workers.

Let’s parse the Deliveroo statement to better understand the company’s perspective. Here’s the introductory paragraph:

Deliveroo today announces that it proposes to consult on ending its operations in Spain. Deliveroo currently operates across 12 markets worldwide, with the vast majority of the Company’s gross transaction value (GTV) coming from markets where Deliveroo holds a #1 or #2 market position.

Translation: We’re probably leaving Spain. Most of our order volume comes from markets where we are in a leading position (the company competes with Uber Eats, Glovo and Just Eat in different markets). We are not in a leading position in Spain.

Spain represents less than 2% of Deliveroo’s GTV in H1 2021. The Company has determined that achieving and sustaining a top-tier market position in Spain would require a disproportionate level of investment with highly uncertain long-term potential returns that could impact the economic viability of the market for the Company. 

Translation: Spain is a very small market for Deliveroo. To gain lots of market share in Spain would be very costly, and the company isn’t sure about the long-term profitability of the country’s business. This is where labor issues like this come into play — investing to gain market share in a country where your business is less profitable is hard to pencil out.

And according to El Pais, the decision by Deliveroo comes as it was up against a deadline regarding worker reclassification. That may have contributed to the timing of the announcement.

From this juncture, Deliveroo spends three paragraphs discussing how it will support workers in case it does leave the Spanish market. It closes with the following:

This proposal does not impact previously communicated full-year guidance on Group annual GTV growth and gross profit margin.

Fair enough.

On-demand companies have made arguments over the years that changes to labor laws that would push more costs onto their plates in the form of hiring couriers — or simply paying them more — would make certain markets uneconomic and drive them away. Here, Deliveroo can follow through with an exit at essentially no cost, given how small its order volume is compared to its other 11 markets.

#deliveroo, #food-delivery, #just-eat, #labor, #london, #online-food-ordering, #spain, #uber-eats, #united-kingdom

Colombia’s Merqueo bags $50M to expand its online grocery delivery service across Latin America

Merqueo, which operates a full-stack, on-demand delivery service in Latin America, has landed $50 million in a Series C round of funding.

IDC Ventures, Digital Bridge and IDB Invest co-led the round, which also included participation from MGM Innova Group, Celtic House Venture Partners, Palm Drive Capital and previous shareholders. The financing brings the Bogota, Colombia-based startup’s total raised to $85 million since its 2017 inception.

Merqueo CEO and co-founder Miguel McAllister knows a thing or two about the delivery space in Latin America, having also co-founded Domicilios.com, a Latin American food delivery company that was bought by Berlin-based Delivery Hero and later merged with Brazil’s iFood.

McAllister describes Merqueo as a “pure-play online supermarket with a fully integrated grocery delivery service” that sources directly from large brands and local suppliers, bypassing intermediaries and “delivering directly from its dark store network.” (Dark stores are traditional retail stores that have been converted to local fulfillment centers.”

Merqueo offers more than 8,000 products, including fresh foods, packaged goods, home essentials, beverages and frozen products. It currently operates in more than 25 cities in Colombia, Mexico and Brazil and has over 600,000 users.

Image Credits: Merqueo

It must be doing something right. The startup is close to $100 million in “run-rate revenue,” according to McAllister, having grown more than 2.5x in 2020. Merqueo also reached positive cash flow in Colombia, its most mature market. Over the last year, large Latin American retail chains and retailers have approached the company about potentially acquiring it, McAllister said.

Part of the company’s success might be attributed to the speed and flexibility it offers. Users can choose how and when to receive their groceries according to their needs, with the startup offering delivery in as little as 10 minutes or three to four hours. Users can also schedule delivery of their groceries in two-hour intervals for the same day or the next day.

Also, owning and controlling the “entire” vertical supply chain gives it the ability to obtain better margins, offer competitive pricing and achieve healthy unit economics, according to McAllister.

Merqueo plans to use its new capital in part to expand geographically. The company is currently in phase one of its expansion to Brazil, entering initially in Sao Paulo later this month. Next year, it expects to launch in other Brazilian cities such as Rio de Janeiro, Fortaleza and Salvador de Bahia.

The market opportunity in Latin America is massive considering that online grocery sales only represent just 1% of the market –– far lower than in the U.S., EU or China, for example. Other players in the increasingly crowded space include GoPuff in the U.S., Getir out of Turkey and Mexico-based Jüsto, which raised $65 million in a Series A led by General Atlantic earlier this year.

“The pandemic accelerated the adoption of online grocery shopping in LatAm,” McAllister told TechCrunch. “The region went from 0.3% share of online groceries to 1%. And after the pandemic, we are seeing a 50% increase in the pace of user adoption.” Overall, the $85 billion e-commerce market in Latin America is growing rapidly, with projections of it reaching $116.2 billion in 2023.

Currently, Merqueo has over 1,300 employees in LatAm, up 60% from last year. It plans to continue hiring with the proceeds from the Series C round as well work “to become the largest and most ambitious dark stores network of Latin America.”

Alejandro Rodríguez, managing partner at IDC Ventures, is naturally bullish on Merqueo’s potential.

“From all the opportunities we looked into, Merqueo is undoubtedly the most advanced in the region. … The Merqueo team has proved they know how to scale the business and how to get to profitability,” Rodríguez told TechCrunch.

Online grocery delivery is a business with many technical and operational complexities, he said. In his view, Merqueo’s technology and operational expertise allow it to tackle those issues in a way that has led to “the best customer experience that we have seen in a scalable way.”

“They have the best combination of both great service metrics and healthy unit economics,” Rodríguez added.

#apps, #berlin, #brazil, #celtic-house-venture-partners, #china, #colombia, #companies, #delivery-hero, #domicilios-com, #ecommerce, #european-union, #food-delivery, #funding, #fundings-exits, #grocery-store, #idc-ventures, #latin-america, #mexico, #online-food-ordering, #online-groceries, #palm-drive-capital, #recent-funding, #sao-paulo, #startups, #tc, #turkey, #united-states, #venture-capital

Last-mile delivery in Latin America is ready to take off

In the United States, same-day and next-day Amazon Prime deliveries have become the de facto standard in e-commerce. People want convenience and instant gratification, evidenced by the fact that an astonishing ~45% of U.S. consumers are Amazon Prime members.

Most major retailers are scrambling to catch up to Amazon by partnering with last-mile delivery startups. Walmart has become a major investor in Cruise for autonomous-vehicle deliveries, and Target acquired Shipt and Deliv last-mile delivery startups to increase its delivery speed. Costco partnered with Instacart for same-day deliveries, and even Domino’s Pizza has jumped in by partnering with Nuro for last-mile delivery using autonomous vehicles.

E-commerce in LatAm has taken off at a compound annual industry growth rate of 16% over the past five years.

The holdout: Latin America

Venture capitalists have been investing heavily in last-mile delivery over the past five years on a global scale, but Latin America (LatAm) has lagged behind. Over $11 billion has been invested globally in last-mile logistics over the past decade, but Latin America only saw about $1 billion over the same period (Source: PitchBook and WIND Ventures research).

Within this, only about $300 million was in Spanish-speaking Latin America — a surprisingly small amount for a region that has 110 million more consumers than in the U.S.

Brazil-based Loggi accounts for about 60% of last-mile VC investment in Latin America, but it only operates in Brazil. That leaves major Spanish countries like Mexico, Colombia, Chile and Argentina without a leading independent last-mile logistics company.

In these countries, about 60% of the last-mile delivery market is dominated by small, informal companies or independent drivers using their own trucks. This results in inefficiencies due to a lack of technologies such as route optimization as well as a lack of operating scale. These issues are quickly becoming more pronounced as e-commerce in LatAm has taken off at a compound annual industry growth rate of 16% over the past five years.

Retailers are missing an opportunity to give customers what they want. Customers today expect free, reliable same- or next-day delivery — on-time, all the time, and without damage or theft. All of these are challenging in LatAm. Theft, in particular, is a significant problem, because unprofessional drivers often steal products out for delivery and then sell them for a profit. Cost is a problem, too, because free same- and next-day deliveries are simply not available in many places.

Operational and technological roadblocks abound

Why does Latin America lag when it comes to the last mile? First, traditional LatAm e-commerce delivery involves multiple time-consuming steps: Products are picked up from the retailer, delivered to a cross-dock, distributed to a warehouse, delivered to a second cross-dock, and then finally delivered to the customer.

By comparison, modern delivery operations are much simpler. Products are picked up from the retailer, delivered to a cross-dock, and then delivered directly to the customer. There’s no need for warehousing and an extra pre-warehouse cross-dock.

And those are just the operational challenges. Lack of technology also plays a significant role. Most delivery coordination and routing in LatAm are still done via a spreadsheet or pen and paper.

Dispatchers have to manually pick up a phone to call drivers and dispatch them. In the U.S., computerized optimization algorithms dramatically cut both delivery cost and time by automatically finding the most efficient route (e.g., packing the most deliveries possible on a truck along the route) and automatically dispatching the driver that can most efficiently complete the route based on current location, capacity and experience with the route. These algorithms are almost unheard of in the Latin America retail logistics sector.

Major retail brands are the last-mile catalyst

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China Roundup: What’s going on with China’s data security clampdown?

Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world.

A tectonic shift is underway in how Beijing regulates and accesses the troves of citizen data collected by its tech giants. More details of China’s new cybersecurity rules have recently come to light as Didi, the SoftBank-backed ride-sharing dominator in China, became the target of the Chinese government’s latest effort to heighten data protection. This week, we look at what this changing landscape means to Chinese tech firms wooing investors in the United States.

Data sovereignty

The new wave of discussion around China’s cybersecurity rules started with the bombshell dropped on Didi. Just two days after its $4 billion IPO in New York, the ride-hailing giant was hit with a probe by China’s Cybersecurity Review Office on July 2. Two days later, the same government agency ordered the Didi app, which has amassed nearly 500 million annual users, to be yanked because it was “illegally collecting user data.”

The Cybersecurity Review Office is an agency within the Cyberspace Administration of China, the country’s top internet regulator. It has existed for a few years but its roles were only made clear in April 2020 when China put forward its rules on internet security reviews.

Didi appears to be the first target of the department’s enforcement actions. A memo of an “expert meeting” shared among Didi’s investors, which TechCrunch reviewed, said the ride-hailing firm had failed to assure Beijing its data practices were secure before going public in New York. A major concern was that Didi’s data, if unguarded by Chinese laws, could be subject to scrutiny by U.S. regulators. But a Didi executive claimed that the firm stored all its China data locally and it is “absolutely not possible” that it passed data to the U.S.

Before long, the Cybersecurity Review Office was onto other players that could similarly compromise the data security of Chinese users. On July 5, it put SoftBank-backed truck-sharing platform Full Truck Alliance and recruiting site Boss Zhipin — both of which recently IPO’ed in the U.S. — under the same review process as it did with Didi.

The probes were just the beginning. On July 10, the Cybersecurity Review Office unveiled the draft of a revised version of the data security review rules passed last year. One of the major changes is that any business commanding over one million users is subject to security checks if it is seeking an overseas IPO.

Just as the U.S. government frets over Chinese companies commanding Americans’ data, as in the case of TikTok, China is now making sure that its citizen data stays onshore and protected from U.S. authorities. Foreign players operating in China have to comply, too. Giants like Apple and Tesla have pledged and moved to store their Chinese user data within the country.

The new data rule is no doubt a stumbling block for Chinese companies that want to list abroad. TikTok owner ByteDance indefinitely put on hold its plans of a U.S. listing after Chinese officials told it to address data security risks, according to a report by The Wall Street Journal. But how about incumbents like Alibaba that have traded their stocks on Wall Street for years? And do the revised rules apply to companies listing in Hong Kong, which is being increasingly integrated with mainland China?

Also in the news

  • Tencent and Alibaba may tear down their “walled gardens.” According to The Wall Street Journal, the archrivals are considering opening their services to each other. This means users may be able to pay via Alipay on the WeChat app, which currently excludes Alibaba-affiliated Alipay. China has recently been working to rein in its tech darlings and already slapped anticompetition penalties on a cohort of tech firms. Jack Ma’s fintech behemoth Ant Group has been put on the spot and forced to restructure into a financial holding company that would potentially curb its profitability and subject it to more regulatory oversight.
  • TikTok tops 3 billion downloads from the App Store and Google Play, according to Sensor Tower. This makes the hit video platform the only app not owned by Facebook to cross the milestone across the two app stores, said the research firm, and it’s only the fifth one after WhatsApp, Messenger, Facebook and Instagram to achieve that. TikTok is also generating big bucks for ByteDance. Globally, it has made more than $2.5 billion in consumer spending since its launch.
  • Tencent ups its stake in food delivery giant Meituan to 17.2%The deal cost Tencent, a longtime patron of Meituan, $400 million. The proceeds will allow Meituan to invest further in “cutting edge tech” such as unmanned delivery cars and drones, an area where other tech firms have also made similar promises to automate parcel and food deliveries.
  • The smart vehicle craze continues. These days, hardly a week goes by without a major announcement by an autonomous driving or smart car company in China. The news last week came from Banma, which was set up by Alibaba and state-owned carmaker SAIC Motor to make internet-connected cars. It just raised $460 million from Alibaba and SAIC Motor, among others and claimed its technology now serves three million users. It raised its first round in 2018 with 1.6 billion yuan (around $250 million) and was already valued at over $1 billion at the time.

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