Is the jig up for the gig economy as former rapid delivery poster child Getir gets out of here?

Getir, the rapid grocery delivery company that was valued at $12 billion just two years ago, quit the UK recently, and is also leaving the US and western Europe. According to parcel delivery firm, Parcelhero, this is because establishing a sustainable home delivery network is expensive and the ultra-fast food delivery market looks unappetising post-Covid.

Getir has pulled the plug on all services outside its home market of Turkey.

Parcelhero cautions that ultra-rapid deliveries are especially costly, particularly those based on Getir’s hybrid gig economy model.

Parcelhero’s Head of Consumer Research, David Jinks, says: ‘At the beginning of the year, we warned the food and grocery delivery market had a bad case of indigestion and predicted there would be casualties.”

“Online food sales fell by -13% YOY in 2022 as people returned to restaurants and fast food outlets and sales continued to tumble last year. Services such as London’s Jiffy, Bother, Oja and Gorillas disappeared and we couldn’t see how a number of surviving services could be sustainable long-term.”

He adds: ‘Getir’s ultra-fast grocery network looked particularly vulnerable. Its hybrid gig economy model meant it gave its couriers hourly pay rather than per delivery as, for example, Deliveroo does.”

“That’s not sustainable on the margins its users were prepared to pay for the convenience of ten-minute deliveries.”

“The promotional offers it launched within the UK in September 2021 looked too good to be true, and that’s because they were. As it was forced to charge a saner amount after its initial funding revenues were burned through, orders declined.”

That was a big problem for Getir as falling sales meant further private equity and venture capital funding also started to dry up.

To look at the scale of the difficulties facing the company, it’s worth noting that rival Uber Eats’ parent company, Uber, made its first operating profit just last year, yet it was founded in 2009. Investors need patience and deep pockets to support tech startups.

Getir’s whole model was also more expensive than, for example, Deliveroo’s restaurant delivery service.

It created its own dark stores (small fulfilment centres packed with groceries and household essentials). And that added cost and complexity.

Jinks says: ‘In a remarkable exercise in chest beating, Getir also paid £1.2 billion for its closest rival, Gorillas, a company based on a similarly flawed model.”

“To add insult to injury, Deliveroo, Just Eat and Uber Eats started stealing Getir’s lunch by offering grocery deliveries with lower overheads in addition to their existing restaurant service.”

“Meanwhile, Ocado ramped up its same-day offering with its Zoom service. Deliveroo’s straight gig economy model of just paying its riders for each delivery carries far less overheads.”

He continues: “The home delivery market is not to be entered lightly. Retailers and investors need to be cautious when choosing partners.”

“Getir’s latest funding round has evidently come at a price. A company statement says it has raised a new investment round, led by Mubadala and G Squared. Getir will utilise these funds to bolster its competitive position in its core food and grocery delivery businesses in Turkey.”

“Clearly, its investors were unwilling to see good money poured after bad, and with sound reason. Staggeringly, it has now revealed the UK, US and remaining European services outside of Turkey accounted for just 7% of the company’s total revenue.”

He concludes: ‘The fact is that home delivery is not cheap. Businesses spend between 5% to 30% of their entire annual revenue on shipping, with billions of pounds wasted every year on inefficient processes and often inflated costs.”

“It’s with this in mind that Parcelhero is introducing our own SaaS (software as a service) platform to enable retailers to reap the economies of scale that our individual customers enjoy.”

Parcelhero Pro’s technology will enable businesses to ship in bulk, optimise cost and completely outsource their after-sales customer support, Jinks says. He claims that it is set to disrupt the domestic and international B2B logistics industry when it launches this year.

Getir did not respond to our request for comment.