Instant delivery is reaching an inflection point. Ultrafast delivery startups like Jokr, Getir and the king of them all, Gopuff, hit the ground running, seeing tremendous growth in the early months of operation as customers embraced the promise of 15-minute delivery. But it seems the spell has begun to wear off.
In the latest blow to the young instant delivery space, Berlin-based startup Gorillas, one of several ultrafast platforms delivering in New York City, announced plans to lay off nearly 300 employees, or about half of its global office workforce. The news comes amid a tumultuous stretch for 15-minute delivery that has seen several startups shut down — and there could be more to come.
Gorillas said Tuesday in a blog post that the company is shifting its strategy away from hypergrowth and toward profitability. To support that aim, the startup will hone in on five core markets — Germany, France, Netherlands, the U.K. and the U.S. — that account for 90% of its revenue. Gorillas indicated that the change in strategic priority is the main driver of the planned layoffs.
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“With this focus comes a change in staffing needs,” the blog post reads. “We thoughtfully and carefully looked at our teams against our focused business objectives and have decided with a heavy heart to adjust the size of our global workforce. In line with the focus on our new key priorities, on our core European markets and on our path to profitability, nearly 300 team members of our global office workforce will be leaving Gorillas.”
The company also said it is “looking at all possible strategic options” for the brand in countries like Italy, Spain, Denmark and Belgium. It’s unclear whether that means pulling out of those markets. But Gorillas’ comments about focusing on core markets hint that it may be considering it.
Layoffs are never a good sign, and the news from Gorillas only furthers instant delivery’s already-shaky outlook.
Gorillas is one of many startups to embrace an ultrafast delivery model that leverages a network of urban microfulfillment centers, adopting a miniature version of the hub and spoke model seen so often in last-mile delivery. But questions about the sustainability of that model have always existed, and it seems they’re finally being answered.
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The first domino fell in December, when New York’s 1520 shut down after burning through cash. Just a few months later, rival startups Buyk and Fridge No More followed suit, ceasing operations entirely just months after launch. Jokr, meanwhile, has been rumored to be shopping its business after reports suggested that the company loses up to $159 per order in the U.S.
Even Gopuff, the poster child for ultrafast delivery, has had its struggles. Late in March, it was reported that the Philadelphia-based company would lay off 3% of its workforce. That news came after reports of a hiring freeze and the resignations of several key executives earlier that month.
Experts suggest that several factors are undermining the profitability of services like Gorillas. Americans by and large are saving money as inflation is on the rise. And when they do spend, a larger proportion of that money is being spent at brick-and-mortar stores as pandemic fears subside. Simply put, experts believe 15-minute delivery services are one of the first things consumers will cut when faced with those pressures.
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