Gorilla retreat signals payback for delivery apps

- Advertisement -

banana it a recurring motif on the Gorillas delivery app: fruit is sometimes given away to customers for free, a testament to the company’s promise to deliver fresh produce within minutes. But in the company’s warehouse in the Eilandier district of Antwerp, Belgium, the symbol has been rotting for the past few months. Piles of rotten bananas and old lettuce had to be thrown away every three days due to over-ordering, one warehouse worker told WIRED. “If you know you only have to sell 50 bananas a day, why are you ordering 400?”

- Advertisement -

In retrospect, this could be taken as an omen. The company arrived in Belgium in June 2021 amid a flurry of funding and enthusiasm for quick commerce apps. A year later, the German company decided to leave, as the mood in the sector soured. Six Belgian Gorillas warehouses, also known as dark shops – two in Antwerp and four in Brussels – have been closed since June 25, with local media reporting that more 200 people were fired. The Berlin-based company is expected to leave Denmark, Spain and Italy to focus on more lucrative markets.

- Advertisement -

“We cannot provide accurate figures on how many employees will ultimately be affected by our strategic transition to long-term profitability,” says Melissa Largent, spokesperson for Gorillas. She adds that products that expire before they are sold have been a problem faced by the entire industry, including in traditional supermarkets.

Gorilla had plenty of money during the pandemic. The company has collected almost 1 billion dollars in October, a sum that even the CEO of the company, Kagan Zümer, called “extraordinary”. But the fast commerce sector has become another victim a new investor distaste for money-losing startups as they worry about the economy. The retreat of the gorillas symbolizes the pain felt throughout the sector of Europe. Gorillas rival Getir said it plans to cut its global headcount by more than 800 peoplewhile Zapp said it expects fire 200 workers leaving British cities Cambridge and Bristol completely, while Jiffy has stopped deliveries generally to focus on the software.

- Advertisement -

“You can see that all these supply chains, supply chains and IT companies that rely on cheap money are panicking now,” says Roel Gevaers, a professor at the University of Antwerp who researches last mile delivery.

Part of the problem in Belgium, where Gorillas charged consumers €1.8 ($1.90) for delivery, was that demand remained low. One person who worked at the Gorillas warehouse in Brussels said that some warehouses were only receiving 80 to 90 orders a day, with orders stalling after coronavirus restrictions were lifted. At the same time, the cost of labor in the country is high. Guevars calculates that a Belgian courier or warehouse worker costs the company about 25 euros per hour, including taxes such as social security, more than 20 percent more than in neighboring Netherlands.

Companies that planned to repeat the path of the Uber application to a global presence (Uber operates in more than 10,000 cities) are forced to change direction. Investors no longer have the patience for business over ten years get your first profit. “We realized that, well, we need to adapt, the course is right and we need to do it quickly. So there were some really hard decisions and now the focus is really on profitability,” said Ugur Samut, co-founder of Gorillas. Global Summit Conference of the Consumer Goods Forum on June 22.

Gorillas isn’t the only fast delivery app to suffer from these issues. “Rising inflation and the deteriorating macroeconomic outlook around the world have pushed all companies, especially in the technology industry, including Getir, to adjust to the new conditions,” said Turankan Salur, general manager of Getir in Europe.

Companies like Gorillas and Getir planned to burn huge amounts of money by aggressively buying up market share, Gevaers said. “Then at some point it’s not your business that becomes interesting, but your customer base.” Getir has proven its business model works because many of its stores in the company’s first market in Turkey are profitable, Salur said.

Gorilla workers in Belgium who lose their jobs are being relaxed by the country’s labor rules, which give full-time contract workers at least four months’ wages in compensation. Some of the office workers were hired by the Belgian food delivery company Efarmz, which bought “local quick trade business intelligence” from Gorillas. statement. The company declined to provide details of the deal.

In Spain, Gorillas employees are nervously watching the fate of their Belgian colleagues. As in Belgium before the layoffs, they were told that the Spanish subsidiary had a limited amount of time to find a buyer or investor. Rough 300 workers official notices were sent in the country that their dismissal was imminent.

The app continues to work, but management is encouraging employees to look for new jobs, according to one current employee who works in the Madrid office and spoke on condition of anonymity. “There are no new products coming into warehouses,” they say, adding that the number of warehouse orders has fallen to about 20 a day. “They’re just waiting for their supplies to run out.” Spanish labor law is less generous than Belgian. Gorilla workers facing layoffs will be entitled to at least 20 days of pay per year worked. Gorillas declined to comment on their agreements with individual employees.

The gorillas in Denmark are also waiting to learn their fate as the branch struggles to find a buyer or cash infusion. Over the past year, the company has struggled to meet sales targets, as warehouses only received 70 to 80 orders per day, according to one employee who asked not to be named. Local areas also faced staffing issues, and managers’ requests for help regularly appeared on the internal Slack channel because not a single bike messenger showed up for work, they add. Gorillas declined to comment on what she called “the specifics of her daily activities.”

Rider bands in Belgium are concerned that Gorillas’ departure will give the impression that gig companies that hire their staff on permanent contracts are not viable. “Many of us are returning to work on platforms like Uber Eats,” says Camille Pieters, driver for the Brussels-based Couriers Collective, adding that Uber Eats does not hire drivers as employees. “At a time when some of them have announced their exit from the market, Deliveroo strongly believes in fast trading and fast delivery in Belgium,” says Rodolphe Van Nuffel, spokesman for Deliveroo Belgium. Company drivers in the country are self-employed.

Gorillas says it believes it will be profitable in about three months and the company will be profitable at the group level in about a year. But for analysts, the departure of Gorillas casts doubt on something more fundamental: The current delivery app economy isn’t adding up. As these companies have sought to dominate the big cities, they have resorted to some dubious paths, says Marc-André Kamel, Bain & Company’s head of international retail consulting. “They ignored the laws of gravity and built a business with no clear path to full profitability,” he says. “They promised ultra-convenience, but in most countries, customer satisfaction is very low.” Claiming delivery within 10 or 15 minutes sounds like a marketing gimmick, he adds, but it creates huge expectations for service that is often disappointing. In December the gorillas quietly remote his promise to deliver within 10 minutes from his website.

“Recently, the market has been sending a wake-up call to all these startups,” says Kamel, “reminding them that they need to find a path to profitability and become better retailers by delighting customers if they want to stay in business. ”

Credit: www.wired.com /

- Advertisement -

Stay on top - Get the daily news in your inbox

DMCA / Correction Notice

Recent Articles

Related Stories

Stay on top - Get the daily news in your inbox