Groceries a major driver of e-commerce M&A deals

A new report from Hampleton Partners outlines how challenging the environment is for both those on the High Street and online in the growing ‘Amazon economy’.

It was consumers' most basic need (food) which fuelled e-commerce M&A in the second half of 2017. From GrubHub and Deliveroo to Amazon, JustEat, UberEats, and Ocado, the business of delivering restaurant, takeaway meals and groceries directly to homes is undergoing rapid transformation as online platforms acquire aggressively in the race to capture market share at home and abroad. Meanwhile new online food strategies, demonstrated by the rise in meal kits provided by the likes of Blue Apron and HelloFresh, are increasing consumers’ choices, providing more convenient options than ever before and promising a new wave of future consolidation online, and contraction and failure offline.

Amazon's $13.7 billion acquisition of Whole Foods Markets, attracted a lot of attention as the e-commerce giant bought its way onto the High Street that it has been disrupting for years. But over the past 30 months, the most active acquirer in the online food sector was Minnesota-based food retailer Bite Squad, which consumed 17 online food delivery companies to propel it to the top place, including Café Courier Ohio and 256ToGo. UK-listed takeaway food app, Just Eat, and Chicago-based online food ordering company, GrubHub, took joint position as the sector's third most active buyer, with eight acquisitions each.

“Amazon‘s counter-cyclical acquisition of Whole Foods has driven a chain reaction of acquisitions, for instance, Walmart’s purchase in quick succession of ShoeBuy, Moosejaw, Bonobos, Parcel, Hayneedle, ModCloth and Spaitaland. We expect Amazon to continue its M&A spending spree throughout 2018, expanding into and disrupting other online consumer service segments such as financial services, and we’re watching closely how other big online players like Alibaba, Walmart/Jet, Flipkart and OTTO will react,” says Ralph Huebner, Digital Marketing and E-commerce Sector Principal, Hampleton Partners.

“The continuing high growth rate of online retailing and consequent declining footfall is increasing pressure on traditional retailers and their suppliers. As bricks and mortar businesses also continue to struggle with rising rents and hefty business rates they need to turn to M&A quickly to not just remain competitive, but to stay alive. Recent High Street and big box failures such as Maplin’s and Toys R Us demonstrate clearly that standing still is not an option.”