q-commerce belt-tightening continues: US category veteran GoPuff, the SoftBank-backed delivery platform juggernaut — which was valued at $15BN as of 2020, and was rumored to be preparing for an IPO earlier this year (uh, no, that didn’t happen!) — is in Europe. He is calling his wish.
The fast-casual grocery delivery player is planning to exit Spain to shrink its capacity and push profitability, according to a report in Bloomberg, citing people familiar with the matter – a move that would also increase its regional focus. In the UK market, according to the report.
The news publisher says the UK is one of GoPuff’s fastest-growing markets, with revenue there increasing at a compounded monthly rate of 30%.
A spokesperson for GoPuff declined to comment on the Bloomberg report, but we understand the content of the story is accurate.
GoPuff will only launch in Europe in November 2021. At the time, he was talking wildly about major regional expansion – saying it would go to “every country in Europe” – so it’s a reversal of fortune, though not unique to GoPuff. The q-commerce category as a whole has been hit hard post-pandemic, as individual mobility has returned to urban living – and especially as the economic downturn has taken a bit of a toll on consumer demand, encouraging consumers to value value over convenience (or indulgences like late-night ice cream).
In July, GoPuff announced it was closing 10 percent of its global workforce (about 1,500 employees) and dozens of warehouses, saying it needed to control costs after the pandemic spread too quickly.
Earlier, in the spring, he confirmed that any IPO filing was on ice because of the market crash.
As well as the UK and Spain, GoPuff operates in France – starting in March in Paris and most of Île-de-France, as well as parts of Marseille, Lille and Toulouse – with talk of further expansion there. in near. But this may not be on the cards if it is set to prioritize the UK market.
It is also currently served in several cities in Germany, such as Munich – with fast-grocery rivals such as Gorilla and Flink.
The latter has attracted investment from GoPuff’s US rival, DoorDash and others. While the former group has grown a lot, it’s also showing signs of tightening its belt recently, including laying off staff and reducing its regional footprint to double down on meat markets such as Germany and the UK.
While the UK market is still in flux with a number of ‘quick grocery’ players, Deliveroo (which will also be pulling into mainland Europe soon), Gethir and Zap to name a few are fiercely competitive. There have been some recent market exits, though (like Addsbi Jiffy, which quickly moved into b2b this May).
GoPuff has used investor money and acquisitions to grab itself a fast-moving slice of European q-commerce – snapping up smaller UK rivals Deja and Fancy to get the ball rolling in the region. (And according to Bloomberg, the Spanish ops, which includes about 180 employees and five dark shops in Madrid, is a result of the Deja acquisition – so it’s unfortunate for employees who have had to cycle through multiple employers in a few years and face either a new owner soon or they may find themselves out of a job.)
GoPuff’s rollout in Spain could be a boon for local rival Glovo, which in recent years has focused on the dark store game by expanding into q-commerce. Despite the tough economic conditions hitting the brand in demand locally – and at the start of the new year it quietly agreed to be bought by its German rival, Delivery Hero, ruling out the possibility of its own IPO.
Also last month, the offices of Glovo and DeliveryHero were targeted in antitrust probes by the European Commission – which it says is investigating preliminary concerns about violations of EU competition rules against cartels and other restrictive business practices. No formal objections have been filed — and the investigation may still be nothing. But what will be left of Europe’s dynamic q-commerce landscape in a few years – or even months – time is anyone’s guess!
Also on the horizon: EU-wide regulation of platform workers, which will further increase the pressure on gig economy players.
Tightening the law on workers’ rights in the EU helps explain decisions by several gig platform giants to prioritize the UK market – it is no longer a member of the EU, so will not be subject to future changes. On-demand platform Deliveroo has won a number of workers’ rights challenges in UK courts – potentially providing a template for rivals to thread the tricky operational-legal needle across the English Channel.