Appetito, an Egyptian platform that delivers groceries and homewares to shoppers from 11 dark shops across three cities in the North African nation, is acquiring Lamma, an identical startup operating in the Maghreb regions of Tunisia and Morocco.
Appetito did not disclose the size of the deal in a statement, nor did CEO Shehab Mokhtar when asked about it by email. But sources familiar with the matter said the deal was between $10 million and $15 million. Mokhtar declined to comment on the proposed price. The deal is expected to close by the end of the third quarter of 2022.
“From day one, we have been very profitable thanks to a robust unit economy. The fact that we were able to do so much with so little is great proof,” Mokhtar replied when asked how Appetito funded the acquisition by raising just $2.5 million. “Moreover, we will close the eight-figure round soon to further promote our expansion.”
The acquired Lamma launched a car-sharing service in Tunisia two years ago. It has evolved into a fast commerce platform that delivers groceries, personal care and fashion items to users in Tunisia and Morocco (launched this year) in less than 45 minutes. Lamma was founded by CEO Yassir El Ismaili El Idrissi, former CEO of Careem, Hamza Gesmi and Kussi Aymen and is backed by Orange Ventures.
The Lamma team, its three dark stores and distribution center will be integrated into Appetito as both teams “explore synergies”. El Idrissi will join Appetito as director of expansion and development.
Appetito said the deal will make it the biggest q-commerce player in Africa. The company’s claim is based on the number of markets it currently operates in Egypt, Morocco and Tunisia. “No other q-commerce player in Africa operates in such large markets,” Mokhtar told TechCrunch.
The company said it plans to become the biggest q-commerce player in frontier and emerging markets. Similar upstarts like Rabbit operate in Egypt and Saudi Arabia, while older players like Breadfast, although only active in Egypt, have over 50 dark shops.
Since the start of the pandemic, q-commerce platforms have generated a lot of interest from venture capitalists – and money – as consumer habits have changed and people have been buying products online, expecting to get them in minutes, as these platforms promised.
But as the number of platforms offering less than 20-minute groceries and household items delivery has grown, it has become obvious that most of them will not survive with their small margins and dubious unit economy. Consolidation began at the end of last year. Big players like Getir, Flink, Gorillas and Gopuff have since acquired smaller platforms like Weezy, Cajoo, Frichti and Dija.
Appetito’s acquisition of Lamma is a first in the African market, albeit among smaller players. They use similar models, especially with delivery times ranging from 45 minutes to two hours; Appetito also allows you to schedule daily or weekly deliveries. This timing model is different from the “less than 20 minutes” pitch as in Breadfast and Rabbit.
The company’s prioritization of quality and affordability over speed and convenience is one of the reasons Mokhtar is confident in the company’s continued growth – Appetito claims it’s reaching double-digit margins – despite the cuts and shutdowns q-commerce platforms face during all over the world. GetirZapp and Gorillasfor example, they cut staff, and the Australian company Send closed.
Africa’s fragmented retail market is creating a solid economic foundation for q-commerce models like Appetito, the CEO said. “We are committed not only to convenience, but also to eliminating huge inefficiencies in the supply chain and delivering real value to our customers and suppliers,” he added.
Egypt, which has over 100 million people, has retail. FMCG Market Size is about $50 billion and is highly fragmented and inefficient. The same can be said for other African countries, so Appetito plans to enter these markets in the coming quarters.
Credit: techcrunch.com /