Getir: No Worries Here?

Founded in 2015 by Nazim Salur in Istanbul, Getir has expanded its footprint across Europe, establishing operations in nations like France, Germany, Italy, Portugal, the Netherlands, and Turkey. It made its debut in the competitive U.S. landscape in late 2021, launching services in Boston, Chicago, and New York.

Getir's operational framework resembles that of other ultrafast delivery startups such as GoPuff and JOKR. It is vertically integrated, managing its inventory and deploying numerous micro-fulfillment centers (MFCs) stocked with around 1,500 essential items, including frequently purchased goods like eggs and toilet paper. Salur believes that vertical integration is vital for ensuring quick delivery. The company currently employs over 32,000 people globally, including delivery personnel, and Salur emphasizes superior working conditions compared to gig-based companies like DoorDash and Uber, albeit minimally—his definition of better conditions includes access to restrooms, seating, and beverages.

Despite the ongoing struggles of unprofitable tech companies, Getir has managed to remain resilient. Its valuation surged from $2.6 billion to nearly $12 billion within the past year. Notably, it raised $550 million in a Series D round at a $7.5 billion valuation in June 2021, followed by a $768 million Series E round in March 2022 led by Mubadala Investment Company, with other notable investors such as Abu Dhabi Growth Fund, Alpha Wave Global, Sequoia, and Tiger Global, bringing its valuation to $11.8 billion. This valuation is comparable to that of Wayfair, which reported $13.7 billion in revenue and $2.9 billion in gross profit in 2021, alongside over 27 million active customers.

Flush with funds, Getir is actively pursuing expansion. Salur envisions ultrafast grocery delivery evolving into a substantial industry and anticipates significant investments in this sector. He raises a critical question: will the capital be distributed among 20 to 30 competitors, or will it consolidate around a select few? He is betting on the latter scenario and aims for Getir to emerge as the last player standing.

With abundant capital, Getir is now operating on a different level than in previous years. It secured $38 million in 2020 compared to over $1 billion within the past year. Effectively allocating tens of millions is distinctly different from scaling aggressively with hundreds of millions. Rapid growth brings its own challenges, with mistakes becoming magnified when everything operates at full throttle—a sentiment echoed by The Notorious B.I.G.: "mo money, mo problems."

In discussions, Salur is reticent to divulge specific operational insights, particularly given that Getir faces more than 20 competing clones. The current ultrafast delivery landscape mirrors the early days of Groupon and daily deals: substantial capital influx, fierce competition, and minimal distinguishing factors among providers, except perhaps the colors worn by their couriers—purple and yellow for Getir, light blue for GoPuff, and hot pink for Buyk.

Profitability remains elusive in the delivery sector, with ultrafast delivery presenting even more challenges as demand is localized to neighborhoods. While Uber and Lyft expanded city by city, ultrafast grocery delivery companies compete on a block-by-block basis. This may explain Salur's reluctance to discuss profitability openly. He mentions that it takes about six months for an MFC to reach maturity and that Getir could achieve profitability today if it weren’t focused on expansion, yet detailed financial disclosures are lacking.

One metric Getir does disclose is app downloads. In 2021, it recorded 3.4 million active users and 34 million cumulative app downloads. By March 2022, this figure rose to 40 million. However, app downloads can be misleading, especially for a company leveraging aggressive promotions for first-time orders. Generally, app downloads correlate with the amount of capital raised (which Getir has plenty of) and the marketing team’s flexibility. More pertinent metrics would include retention rates, purchase frequency, and average order value. While a business may buy app downloads, it must cultivate the trust needed for repeat purchases that drive customer lifetime value (LTV).

No single brand commands the global grocery market. Salur envisions ultrafast delivery evolving similarly, with two or three major players dominating each market. At its current valuation of nearly $12 billion, Getir is priced for success in what is projected to be a lucrative industry, though there are numerous uncertainties tied to that price tag.

Getir is already consolidating the ultrafast delivery market by acquiring companies such as Block in Spain and Weezy in the UK. However, companies like DoorDash, Lyft, and Uber illustrate that achieving scale and consolidation does not guarantee profitability. As Warren Buffett famously stated:

> "When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."

Watch Out for Competitors

Getir is not the only player pouring funds into marketing. Competitors like DoorDash and Uber are also heavily investing in grocery and convenience delivery. For instance, Uber Eats aired a Super Bowl advertisement showcasing non-restaurant delivery, featuring celebrities like Gwyneth Paltrow, Trevor Noah, and Cousin Greg from Succession.

Uber has been developing its delivery services since 2014, supplementing its growth with acquisitions like Cornershop (grocery delivery) in 2019, Postmates (food delivery) in 2020, and Drizly (alcohol delivery) in 2021. These acquisitions form the core of Uber’s delivery business, which now includes all non-restaurant offerings.

In Q4 2021, new vertical bookings reached a $4 billion run rate, reflecting a 10% quarter-over-quarter growth, accounting for 7% of total delivery bookings. Approximately 12% of Uber’s monthly active users have engaged with these new offerings. Unlike Getir, Uber has openly discussed delivery profitability. On the Q4 earnings call, CEO Dara Khosrowshahi remarked:

> "Delivery reached an important milestone in Q4, generating $25 million in segment-adjusted EBITDA and marking the first profitable quarter of many to come. We view the turn to EBITDA profitability as a significant moment, but ultimately just a step toward creating a self-sustaining and incredibly valuable business."

Uber is also exploring ultrafast delivery through partnerships, collaborating with GoPuff in the U.S. and Carrefour in France.

DoorDash has also experienced success in branching out beyond restaurant deliveries. In Q4 2021, 14% of its 25 million monthly active users shopped in categories outside of restaurants. Moreover, it doubled the number of non-restaurant merchants available on its marketplace during 2021.

While Uber forges partnerships with ultrafast delivery services, DoorDash is constructing its own infrastructure. In August 2020, it launched DashMart, a dark store model akin to a convenience store. DashMarts serve as virtual retail spaces for snacks, groceries, and other frequently purchased items, directly competing with Getir and GoPuff.

During its Q4 2021 earnings call, DoorDash CEO Tony Xu emphasized the growing demand for DashMart and a long-term investment strategy:

> "If you think about all the other products and services that merchants need to build to compete digitally in today’s economy, it certainly expands far beyond just logistics. DashMarts are a form of infrastructure to store inventory, potentially enter new markets, and extend service hours. We plan to invest in this area for a long time for those reasons. The investment philosophy remains consistent, ensuring we achieve great product-market fit before scaling."

DoorDash's investment approach is logical: establish product-market fit, then grow. In contrast, many instant grocery delivery startups prioritize rapid expansion and later seek to refine their product-market fit, relying on substantial venture capital to adopt a "fake-it-until-you-make-it" strategy.

Lightning Round

Both DoorDash and Uber possess robust balance sheets, liquid public currencies, and the capability to endure prolonged periods of unprofitability and cash depletion. It’s likely they will remain viable over the next five years, a luxury not extended to many of the over 20 ultrafast delivery startups. Some will be acquired, while others may exhaust their capital and cease operations. This trend is already observable:

• 1520 shut down in December 2021 due to cash depletion.
• Buyk, a U.S. branch of the Russian delivery startup Samokat, filed for bankruptcy in March as sanctions hampered funding access, likely hastening the inevitable.
• Fridge No More, also backed by Russian investors, faced a similar fate as Buyk.
• Gorillas abandoned its 10-minute delivery promise, opting for slower speeds to reduce the number of delivery drivers needed and, consequently, cut costs.
• GoPuff, which once boasted a valuation of $40 billion, is struggling to attract secondary investors willing to buy shares at values as low as $15 billion. The company is also rumored to be considering a 2022 IPO, but given the harsh public market conditions for unprofitable tech, its S1 could face scrutiny similar to that of WeWork.
• JOKR is reportedly looking to divest its New York City operations, which have been financially unsustainable since their inception in June 2021, presumably seeking a return based on app downloads. Investors are pushing JOKR to concentrate on its Latin American operations, where competition and labor costs are more manageable.
• Instacart is entering the ultrafast delivery scene to counter both Amazon and startups like Getir, planning to develop MFCs and offer 15-minute delivery. The company is piloting this service in collaboration with Publix in Atlanta and Miami.

On March 24th, citing market volatility and unfavorable conditions for tech stocks, Instacart reduced its valuation by 38% from $39 billion to $24 billion (approximately two Getirs). For ultrafast delivery startups, Instacart's valuation adjustment signals potential challenges ahead.

Further Reading

For more insight, check out Petition's overview of ultrafast delivery, the BBC's report on the industry's growth, a VC20 interview with Getir's founder Nazim Salur, and Below The Line's analysis of GoPuff and JOKR.

Originally published at https://kjlabuz.substack.com on March 27, 2022.