Getir and Zapp have been the latest rapid delivery startups to slash jobs, in a further blow for the speedy grocery category.
Turkey-based Getir told workers it intends to slash its global headcount by 14 per cent, representing some 840 job losses.
“With a heavy heart, we today shared with our team the saddening and difficult decision to reduce the size of our global organization,” Getir said.
The start-up, one of the largest players in the rapidly growing sector, said it would also cut back on marketing spending, as well as promotions and expansion.
London’s Zapp is also set to cull some 10 per cent of its workforce, according to internal emails seen by Sifted. The job cuts represent between 200 and 300 employees.
The business is planning for the redundancies to include both delivery driver roles and office-based positions, CityA.M. understands.
Despite the firm achieving a base of “hundreds of thousands” of customers, the current macroeconomic climate had become “incredibly challenging, with very little visibility of when things will improve,” a Zapp spokesperson said.
This uncertainty is seeing investors reduce their risk appetite considerably, favouring profitability over growth,” they added. These “difficult decisions” would allow the company to “build a sustainable business for the long-term.”
The spokesperson added: “We remain well capitalised, but as a venture-backed scale-up that will need to fundraise again in the future, we therefore need to adjust our business plan to reduce costs and accelerate our path to profitability, including proposing to make redundancies.”
Earlier this week, Berlin-headquartered Gorillas said that with a “heavy heart” it had opted to lay off almost 300 office employees, as it eyed profitability in key markets including the UK.
The company said it was hoping to double down on hitting profitability in key markets – Germany, France, UK, Netherlands and the US – where more than 90 per cent of Gorillas’ revenue arises from.
Both Getir and Gorillas have seen blockbuster funding raises and valuations. Getir has raised $1.8bn to date and was valued at $12bn in March while Gorillas has raised $1.3bn and has been valued at $3bn.
What’s more, rapid delivery firm Gopuff was reportedly readying to lay off hundreds of employees earlier this year, after a $15bn valuation last year.
Some three per cent of the start-up’s workforce could be hit by job losses, according to The Information.
Job cuts are included in a bid to slash annual costs by some $40m, the news website said, citing two people close to the company.
Businesses have been hit by spiralling labour and fuel costs, as inflation in the UK now stands at a 40-year high.
“Despite all the buzz surrounding quick commerce, the economic reality is that 10-15 minute delivery can be a remarkably unprofitable business model until it scales significantly,” Xian Wang, vice president of Edge retail insight said.
She added: “This means that further acquisitions and consolidation will be inevitable as certain players scale, while others get swallowed up or run out of funding. Many of these businesses didn’t exist before the pandemic, so it makes sense that they’re now re-tooling their businesses for a new normal and assessing what a sustainable operating model could look like.
“By our forecasts, the global quick commerce market is set to reach almost $1tn by 2026 and will grow faster than the rate of e-commerce as a whole over this period. We don’t think quick commerce is going anywhere in the longer-term, but in the short term, expect to see some more ruthless culling.”