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Ultrafast grocery firm Jokr pulling out of US, selling assets

Will others follow suit in bumpy ultrafast delivery landscape?

As I wrote back in May, instant grocery delivery has reached an inflection point

Throughout the pandemic, investors poured boatloads of cash into ultrafast delivery startups, some of which had valuations north of $10 billion. But the promise investors initially saw in quick commerce has gradually evaporated.

It’s been a tumultuous few months for ultrafast delivery startups, and New York’s Jokr is the latest casualty. The company this week revealed that it would scrap its small share of the U.S. market to focus on countries in Latin America like Brazil, Chile, Colombia and Mexico. 

Previous reports hinted that Jokr was looking at selling its entire U.S. business, but a source within the company told Modern Shipper that it would be selling some assets to U.S. players and shuttering the rest. The source also indicated that Jokr is not ruling out a return to the U.S.

“We have decided to stop our business activities in the U.S. for now, which have lately only accounted for about 5% of our business and with a very differently structured opportunity,” Jokr lamented in a statement viewed by Modern Shipper. “We greatly appreciate the hard work and commitment of our U.S. team, and we don’t take this decision lightly.”

Jokr is just one of many struggling startups in a space analysts see as fraught with issues.

The landscape

Ultrafast delivery apps got off to a hot start largely due to venture capital rather than strong unit economics. Jokr, for example, raised enough funding to hit a $1 billion valuation just eight months after launch. At the same time, though, The Information reported that the startup was losing up to $159 per order in the U.S.

With the wave of investments, customers started flocking to the platforms. According to Barron’s, Getir in 2021 had 3.5 million customers and 34 million app downloads, while Gopuff had 2.6 million customers and 11.3 million downloads.

The model used by the startups resembles the hub-and-spoke model used in middle-mile logistics. Each startup has a network of microfulfillment centers spread across its target market, allowing orders to be positioned close to customers. Some, like Gopuff, use independent contractors, similar to DoorDash or Uber Eats. Others, like Jokr, hire drivers outright.

The quick commerce meltdown began in earnest in December. That month, New York’s 1520 shut down after burning through cash, and two months later, rival startups Buyk and Fridge No More followed suit.

Then, the problems began to work their way up to the very top. Gopuff, with a valuation over $15 billion, is considered the poster child of instant delivery startups. But in March, it emerged that the company would be reducing headcount by 3% globally despite reports that it was targeting an IPO this year.

“A few weeks ago, I probably would’ve said Gopuff seems like it’s doing the best,” said CB Insights analyst Laura Kennedy. “But now, it seems like there’s a lot of turmoil.”

And it didn’t end there. Last month sources said Gopuff plans to shut down up to 22 warehouses. Earlier that week, rival startups Gorillas and Getir, which operate in New York City, also made headlines for the wrong reasons when they announced significant layoffs. Berlin-based Gorillas laid off 500 employees, while Turkey’s Getir axed nearly 4,500.


Read: Gopuff plans to lay off hundreds of employees ahead of potential IPO

Read: Getir laying off thousands of workers, cutting expansion plans


Even companies that haven’t touched the U.S. market are feeling the pressure. London-based Zapp last month told employees that it would be reducing headcount by 10%, or between 200 and 300 workers.

With the bad news vastly outweighing the good in recent weeks, it would seem that quick commerce’s honeymoon is definitively over.

What are analysts saying?

Some analysts were skeptical of instant delivery from the very start. Hendrik Laubscher, an analyst at Blue Cape Ventures in South Africa, opined, “Some of these companies raised too much money and the valuations at which they raised make absolutely no sense.”

Several ultrafast grocery startups are valued over $1 billion, and two of them — Getir and Gopuff — are even worth more than $10 billion … at least they were at one point. But with inflation on the rise and brick-and-mortar stores on the rebound, analysts are questioning whether those valuations hold up.

Premium delivery services that bring groceries to your door in 15 minutes will likely be some of the first to go as consumers save and shop in person more.

“I don’t think it really matters if you get the item delivered in 10 to 20 minutes,” Laubscher added, pointing out that the services are much more convenient than they are necessary.

“These companies are everything 2021 was and everything 2022 is not,” said FirstMark Capital founder Rick Heitzmann, agreeing with Laubscher that conditions now aren’t as favorable as they once were.

Other experts were taken by surprise. Citi analyst Monique Pollard said that while she had anticipated some layoffs happening, she was caught off guard by their frequency: “It’s happening quicker than we could have imagined.”

Making matters worse for instant delivery startups is that the capital investments keeping them afloat may be drying up. Getir and Gopuff both landed large funding raises in March, but since then, things have been quiet on the investment front. Experts worry that the silence could be indefinite.

“Given what’s going on with the economy, given what’s going on in the investment community, all these companies have now got a limited window to figure this out,” said Gary Hawkins, CEO of the Center for Advancing Retail and Technology. “The phase of cheap money is gone.”


Watch: Consumers still want premium and fresh items


Kennedy of CB Insights suggested that one way ultrafast delivery firms could get out of the pickle is by partnering with larger grocers. She pointed to Gorillas’ partnership with the U.K.’s Tesco as an example of a collaboration that could get them back on track.

“These companies need some scale behind them,” she said. “That kind of partnership could be really interesting to help both parties involved.”

Citi’s Pollard, though, was skeptical. In her view, instant grocery companies need to improve their unit economics rather than relying on other brands to help them stay afloat.

“If private market capital is no longer willing to back the business model,” she speculated, “then a company needs to rely on its own cash generation ability.”

Analysts are even panning efforts from larger companies to promote ultrafast delivery. DoorDash, for example, launched a 15-minute grocery delivery pilot in New York City, but it was immediately met with scrutiny.

“As a very frequent grocery delivery customer, I am not sure I understand all the investment in ultrafast grocery delivery,” said Dave Bruno, director of retail market insights at Aptos. “Ultrafast restaurant delivery is a no-brainer, but how many times do people really need groceries within 15-20 minutes?”

Neil Saunders, managing director at Global Dara, added, “I wonder how these companies intend to turn a profit. Most of their business models don’t stack up.”

A glimmer of hope

Yet it isn’t all doom and gloom — some analysts are actually optimistic about instant delivery’s long-term prospects. Insider Intelligence analyst Blake Droesch, for example, believes that speed will ultimately win over customers’ hearts.

“The way people get ahead is by offering faster delivery,” he said. “That is how Amazon got where it is now, they figured out ways to get people products they needed way faster than the other guys.”

Droesch described himself as “bullish.”

Other experts predicted that a slowdown in instant grocery now could translate into strong economics down the line. Larry Illg, chief executive of food businesses for tech investor Prosus NV, thinks that the next few months could be something of a weed-out period that ultimately benefits the survivors.

“We are seeing slower rollouts of new dark stores, lower levels of marketing investment and diminished discounting from competition,” he said. “So aggregate growth is slowing down, but economics for the space are healthier.”

Sajal Srivastava, co-founder at debt financing firm Triple Point Capital, agreed. He predicts that demand will hold firm and that as the market for instant delivery clears out, a few players will be left to claim the spoils.

“So every country will have multiple players, but do they need six? Probably not,” he opined. “Do they need two or three? Yes, and I think that’s where it will come out.”

Regardless of which school of thought is correct, the next few months will be a critical period for instant delivery platforms to prove that consumers still have an appetite for 15-minute groceries.

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Jack Daleo

Jack is a staff writer for FreightWaves and Modern Shipper covering topics like last mile delivery and e-commerce fulfillment. He studied at Northwestern University, majoring in journalism with a certificate in integrated marketing communications. Previously, Jack has written for Backpacker Magazine and enjoys travel, the outdoors, and all things basketball.