Tech

Big Tech wants to pay for your groceries

One of the few reassurance factors of normality during the blockade, at least in some places, has jumped into supermarkets in search of a pint of milk, fresh bread and ripe avocados. But just as millions of vaccinated consumers rush back to stores in Europe, the UK and the US, tech investors rather want you to stay home.

Venture capitalists are so eager to use the new grocery delivery app they helped that they will pay you not to go to the supermarket. After suspending taxis, cinemas and eating out, a stay-at-home order has appeared in grocery stores, promising superlative logistics, immediate satisfaction and, for now, significant discounts. The app developer declared war at the corner store.

Investors spend billions of dollars On-demand grocery delivery service such as Instacart, Glovo, Getir, GoPuff Since the pandemic began. The hottest new approach isDark store— A small local warehouse designed to serve people within a few miles of a radius — We have thousands of popular items in stock and can be delivered slightly by electric bike. 10 minutes..

In this category of express delivery apps, investors say the frenzy of financing these latest tech unicorns (starters worth over $ 1 billion) is just beginning. This concept was pioneered by GoPuff in Philadelphia (already worth it) $ 9 billion) And Getir in Istanbul (final value $ 2.6 billion), but copycats are growing rapidly in Berlin, London and New York.

You’ll want to call them GoPuff and the seven little people (Weezy, Fancy, Jiffy, Flink, Dija, Gorillas, Zapp (all real names for express delivery services)), but there’s more than I can track.

Branding, location and speed are essential elements for fast-delivery startups. But as they grow, the battle for customers is taking on the taste of Uberish. The home screen of my iPhone is full of giveaways. The first was a Gorillas tenant. Next, a £ 15 voucher from Getir. Then if I placed two orders a week, Weezy offered me £ 40. With the new app arriving in the London neighborhood every week, you’ll probably be able to bring a month’s worth of groceries to your doorstep for free.

Even veterans of previous generation food delivery app technology are wary. “People don’t mind losing $ 20 million, $ 30 million, and $ 40 million in vouchers,” because there is so much capital available to tech starters today. [that there are] Service to lose [money] For each order ” Niklas Östberg, CEO of Delivery Hero, one of the world’s largest restaurant delivery groups, has more than 600 unique “dark stores” in the Middle East and Asia.

Is it sustainable to flood the market with vouchers, Östberg asks. “Number. Is it a good way to get attention? Maybe … once the voucher is over, another [competitor] I will come out and voucher again. “

After spending billions of dollars in similar battles to acquire and retain customers, investors begin to fuel, first with ride-hailing services, then with restaurant deliveries, and more recently with bike and scooter sharing. You may hesitate. For yet another cash bonfire. This is doubly true if most express delivery apps are too young to know what life was like before Covid-19.

But when asking venture capitalists why they didn’t learn the lesson, they tend to comment on Deliveroo’s dull stock market debut and point to Uber instead. Rocky for the first few years as a public company, it’s now worth about $ 100 billion. It was still in the red and many of its competitors went bankrupt on the way, Uber Survival Most of the success of the food delivery unit over the past year has helped, but Silicon Valley only proves that survivors can be hugely rewarded.

Grocery app investors bet billions that the habits formed during the pandemic will be tolerated, especially among young and wealthy people who are becoming regular customers of GoPuff, Getir, or Gorillas. I am.

However, because I’ve played the game many times before, each cycle of overinvestment burns out faster than last time. Multiple delivery unicorns are born and quickly trampled by the herd.

So enjoy Silicon Valley’s latest inspirational packages while it continues. Have your venture capitalist carry groceries for a few weeks and take the surplus by taxi to a restaurant or cinema instead.

Tim Bradshaw is FT’s Global Technology Correspondent.

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