The cards are being reshuffled in the online grocery trade: Rewe is now even more committed and is joining the Flink fast delivery service. What kind of calculation is behind it.
There is a gold rush atmosphere in online grocery stores. An almost unmistakable number of new providers such as Gorillas, Flink, Getir, Knusper or Picnic are currently pushing their way onto the highly competitive German food market.
Lured by the significantly increased online sales during the Corona crisis and financed with hundreds of millions of euros in venture capital, the start-ups are competing with established grocers in more and more cities. Often the newcomers promise delivery of the ordered goods in just ten minutes. Even the big top dogs Edeka and Rewe have to reposition themselves.
60 percent more groceries sold online
It’s about a billion dollar market: The online grocery trade is one of the biggest winners in the Corona crisis. According to the “Online Monitor” of the German Retail Association, people bought around 60 percent more food online in 2020 than before the pandemic. And growth could have been even greater if delivery capacities had not reached their limits.
The game is played with high stakes. The delivery services Gorillas, Flink and Getir have each collected hundreds of millions of euros from venture capitalists in their latest financing rounds in order to be able to expand into other cities as quickly as possible and thus gain a competitive advantage.
Heavyweight Getir wants to start soon in Berlin
Gorillas, Flink and Getir are not only relying on speed when it comes to expansion. Your promise: The ordered goods will be delivered by bicycle courier from decentralized warehouses in the city districts within just ten minutes.
Flink is now present in 19 cities in Germany, gorillas in 17 municipalities. The Turkish express grocery supplier Getir wants to start in Berlin in the coming weeks. Even if the company is still largely unknown in Germany, it is still a heavyweight among start-ups. In the latest financing round, Getir was valued at 7.5 billion US dollars, according to its own information.
Crunch and picnic are more comfortable
But is the delivery speed really that important? Other start-ups take a little more time. The Czech online grocery retailer Rohlik and its daughter Knuspr want to open up the German market from Munich from the end of July. It should be delivered within three hours. On the other hand, the range of goods with up to 16,000 products is also significantly larger than that of Flink or Gorillas.
Dutch competitor Picnic is taking even more time with delivery. Because like the milkman in the past, he only delivers the products on certain days at fixed times. In this way, deliveries can be bundled in one street or in a quarter. This guarantees better utilization of the vehicles and lower costs.
So far this has not harmed the success of the Dutch. In the Corona year 2020, Picnic was able to increase the number of its customers from 50,000 to 200,000. Picnic is now preparing the nationwide expansion of its delivery network.
Rewe supplies Flink exclusively with goods
The large grocery chains Edeka and Rewe are watching developments with eagle eyes. The Cologne-based Rewe Group, currently the market leader in the e-commerce business with fresh food according to experts, even got a minority stake in the start-up Flink on Friday. In addition, the retail giant will exclusively take over the supply of goods to the Berliners.
Rewe boss Lionel Souque stated that it could be seen “that the food delivery business in Germany is currently very differentiated”. In addition to comprehensive full-range providers such as Rewe with up to 20,000 items that can be ordered, there are fast delivery services that deliver a smaller selection of goods within a few minutes. Rewe wants to benefit from this market segment through the cooperation with Flink.
Edeka participates in Picnic
Germany’s largest grocery retailer Edeka, which for a long time acted rather cautiously in e-commerce, relies on a stake in Picnic. “Picnic will become Edeka’s online arm,” said Edeka boss Markus Mosa recently. At the same time he emphasized: “We are not aiming for a majority in the company, no control.”
Such a complex business is best left to those who can. “In the end, no stationary retailer can be better online than a real e-commerce retailer.” But Edeka also secured a key role in supplying the start-up.
Expert does not believe in the Flink business model
The e-commerce expert Gerrit Heinemann from the Niederrhein University of Applied Sciences considers the participation strategy of the top dogs to be quite sensible: “If the experiment works, it ensures more growth – if not, the damage is manageable.”
However, he is not really optimistic about the chances of success for express delivery services such as Gorillas or Flink. “It cannot be ruled out that the business model of Gorillas, Flink and Co. will work, but I don’t believe it in its current form. They serve a rather small target group with a lot of effort, and so far nobody has proven that they can can make money in Europe. “