Start Express Grocery Delivery Jobs Getir, Gorillas slash

Fears of an imminent recession are forcing express grocery delivery companies to rein in growth.

This week, two of the biggest instant grocery apps, Getir and Gorillas, announced decisions to lay off hundreds of employees. Another company, Zapp, said it was proposing layoffs on its UK team.

Getir told employees on Wednesday that it plans to cut its global staffing number by 14%. The Turkish company employs more than 6,000 people worldwide, according to LinkedIn.

“It is with a heavy heart that our team today shared the sad and difficult decision to downsize our global organization,” the company said in an emailed statement.

“We will also reduce spending on marketing, promotion and expansion investments.”

Gorillas said Tuesday it is making a “very difficult decision” to lay off about 300 of its employees, citing the need for long-term profitability.

The Berlin-based company is evaluating a potential exit from Italy, Spain, Denmark and Belgium, among other “strategic options”, as focus has shifted to more profitable markets such as the US, UK and Germany.

“These are necessary steps that will help Gorillas become a stronger and more profitable company with a strong focus on its customers and its brand,” Gorillas said in a statement.

According to a Sifted report, Gorillas is struggling to raise additional funding. The company was not immediately available for comment when contacted by CNBC.

Getir and Gorillas have raised $1.8 billion and $1.3 billion to date, respectively. Getir posted a $12 billion valuation in March, while Gorillas was last valued at $3 billion. The two companies have exhausted large amounts of cash to expand into the United States

London-based grocery startup Zapp on Wednesday confirmed reports that it is considering laying off up to 10% of its staff. A final decision has not yet been made as consultations are ongoing with the company’s UK staff.

“The current macroeconomic climate has become incredibly challenging, with very little vision of when things will improve. This uncertainty is causing investors to reduce their appetite for risk considerably, preferring profitability over growth,” a company spokesperson said.

“As it scales up supported by a project that will need to raise funds again in the future, we therefore need to adjust our business plan to reduce costs and accelerate our path to profitability.”

Zapp raised $200 million in a funding round in January. The investment was backed by Formula 1 driver Lewis Hamilton.

Companies like Getir and Gorillas have experienced seismic growth during the coronavirus pandemic. These services operate from small warehouses known as “dark shops,” promising to deliver items to shoppers’ doors in less than 10 minutes.

The latest batch of industry layoffs highlights a broader shift in investor sentiment toward high-growth technology companies, many of which have taken steps to cut costs recently on the back of a sharp downturn in global stock markets. Earlier this week, Klarna, buy now, pay later, said it was laying off about 10% of employees after reports that the company was seeking a new round of funding that would cut its valuation by a third.

Instant grocery delivery services have long faced questions about the viability of their business models, which tend to sell staples at a premium to supermarkets while relying on offering generous discounts to attract new users. Now, with Covid restrictions largely gone worldwide, and prices soaring, the future is uncertain for the space.

In March, Jobov said it would cut its global workforce by 3% as part of a restructuring plan.

Meanwhile, New York startups Fridge No More and Buyk — which raised money from Russian investors — have ended their operations after facing fundraising problems after the Russian invasion of Ukraine.

“Grocery express delivery companies live and die based on how much capital they raise,” Britten Ladd, an e-commerce consultant for CNBC, told CNBC.

“The problem with players like Getir and Gorillas is that they are deceptive companies,” he added, noting that the platforms promised 10-minute delivery times.

Getir’s CEO had previously said his company had “worked to democratize the right to sloth”.

On-demand food and grocery delivery platforms have gone through a major consolidation in the past year, with Getir buying UK startup Weezy, Germany’s Delivery Hero taking a majority stake in Spanish food delivery company Glovo and DoorDash acquiring Finnish company Wolt.

Earlier this month, London-based grocer Jiffy said it would stop making deliveries and instead shift its focus toward collecting groceries in person, in a bid to convince investors of the potential for profitability. The company has since announced plans to resume deliveries through a deal with Zapp.