- Getir, a Turkish grocery delivery company, announced on Wednesday that it aims to cut its global workforce by 14%.
- Gorillas, a Berlin-based food start-up, announced it would lay off roughly 300 staff due to a lack of profitability.
- The layoffs are part of a larger shift in investor sentiment toward high-growth tech firms.
Fears of a looming recession are prompting fast grocery delivery services to slow their expansion. Getir and Gorillas, two of the leading fast grocery apps, revealed plans to let off hundreds of people this week. Another company, Zapp, has announced that it will be laying off employees in the United Kingdom.
Getir announced to its employees on Wednesday that it aims to cut its global workforce by 14%. According to LinkedIn, the Turkish company employs over 6,000 employees worldwide.
In an emailed statement, the firm stated, “With a heavy heart, we today discussed with our staff the saddening and difficult decision to reduce the size of our worldwide organization.” “We will also cut marketing efforts, promotions, and growth spending.”
Gorillas announced on Tuesday that the company was making the “very difficult decision” to lay off around 300 staff, citing the necessity to achieve long-term profitability.
As it switches its focus to more profitable markets like the United States, United Kingdom, and Germany, the Berlin-based corporation is also investigating a possible exit from Italy, Spain, Denmark, and Belgium, among other “strategic possibilities.”
In a statement, Gorillas said, “These are important steps that will help Gorillas become a stronger and more lucrative organization with a concentrated focus on its customers and brand.”
Gorillas has been struggling to raise new funding, according to a Sifted article. When CNBC phoned the company, no one was immediately available to comment. To date, Getir and Gorillas have raised $1.8 billion and $1.3 billion, respectively, in funding. Getir was valued at $12 billion in March, while Gorillas was valued at $3 billion at the time. Both companies have spent a lot of money to expand in the United States.
Zapp will be laying off employees
Zapp, a London-based grocery start-up, said on Wednesday that it is considering laying off up to 10% of its workforce. A final decision has yet to be made, while a consultation with the firm’s UK employees is underway.
“The current macroeconomic environment has grown extremely difficult, with little indication of when things may change. Investors are reducing their risk appetite as a result of the uncertainty, favoring profitability above growth, according to a corporate representative.
“As a venture-backed scale-up that will need to raise capital again in the future, we must alter our business model to minimize costs and expedite our road to profitability,” says the CEO.
In January, Zapp raised $200 million in a fundraising round. Formula One driver Lewis Hamilton supports the investment. During the coronavirus pandemic, companies like Getir and Gorillas witnessed explosive growth. Such firms, which operate out of small warehouses known as “dark stores,” promise to deliver things to customers’ doors in as little as 10 minutes.
The industry’s current round of layoffs reflects a broader shift in investor sentiment toward high-growth tech firms, many of which have recently taken moves to slash costs in the face of a steep dip in global stock markets. Following rumors that the company was seeking a new round of funding that would cut its valuation by a third, Klarna indicated it will lay off around 10% of its workforce earlier this week.
Instant food delivery services have long been questioned about the feasibility of their business models, which rely on offering large discounts to attract new customers while selling necessary commodities at a premium to supermarkets. With Covid limitations virtually gone over the world and prices on the increase, the future of the space is looking bleak.
Gopuff announced in March that it would eliminate around 3% of its global employees as part of a reorganization plan. Meanwhile, Fridge No More and Buyk, two New York start-ups that obtained money from Russian investors, have shut down their activities due to financing concerns following Russia’s invasion of Ukraine.
According to Brittain Ladd, an e-commerce analyst, “rapid grocery delivery companies live and die largely on the amount of funding they raise.” “The trouble with Getir and Gorillas is that they’re gimmick firms,” he continued, alluding to the platforms’ 10-minute delivery promises. Previously, Getir’s CEO stated that his company “democratized the right to laziness.”
Getir bought UK start-up Weezy, Germany’s Delivery Hero bought a majority share in Spanish food delivery company Glovo, and DoorDash bought Finland’s Wolt in the last year.
Jiffy, a London-based grocery delivery service, announced earlier this month that it will stop doing deliveries and instead focus on in-person food pickup in order to persuade investors that it could be profitable. Following a partnership with Zapp, the company has announced preparations to begin delivery.