The coronavirus pandemic has accelerated changes in commerce, injecting online sales even more aggressively. The changes are also related to grocery shopping. Last year, a company appeared on the Polish market from time to time, Which offered home delivery within a quarter of an hour or even 10 minutes.
In the professionally called express trade model, deliveries are made not from traditional stores, but from the so-called dark stores (literally translated dark stores). These are actually small warehouses located in city districts. Customers are not allowed in – this is where carriers complete their orders for a bike or scooter and have it delivered to customers’ homes.
Services of this kind are developing in many cities of the world. Now, however, companies from this sector are reporting further cuts and layoffs. – 300 of our teammates will have to leave the team. I am so sad to be parting from our people who have built such a unique story – Gorillas CEO Kagan Sommer said recently. This company was founded in Germany, which already operates in 60 cities around the world.
Zapp, which operates in London and Amsterdam, has announced that it intends to lay off about 10 per cent. your crew. One of the few profitable companies was launched, such as the Turkish company Getir. Most recently, the position was taken over by, among others, the British Weezy Company. It is now planning to reduce employment by about 4.5 thousand. People.
Businesses slow down and more investments are held back. why? During the pandemic, the express commerce model has been well suited to the needs of consumers looking for fast and safe ways to shop. Now the situation has turned 180 percent. Both Macroeconomic factors (unstable geopolitical situation, rising operating costs, slowdown in venture capital investments) and microeconomic factors (change in consumer behavior after the pandemic, shrinking household budgets) lead to the fact that fast-paced business players must choose the battlefield carefully.And – says Artur Stackzuk, a former senior manager at Bain & Company, and for several months Chief Strategy Officer at Packhelp.
Two companies have already disappeared from the market in Poland. In December, the Swyft platform, developed by the former Biedronka Network COO, suspended operations. In turn, Jaker announced in mid-March his decision to leave Poland. It was related to the corporate headquarters’ decision to focus on less competitive markets. The outbreak of war in Ukraine at the end of February prevented a quick sale of the company to an investor. Jokr closed his Polish businesscompetition took over some warehouses and employees.
Despite the advertisements, Gorillas did not enter the Polish market, and the company Grove, about which the media wrote about, did not appear.
The development of the express trade market in Poland did not start with international players, but with applications Lisek, which began delivering purchases in the Wola district of Warsaw in 2018. Then it halted its operations to return one year after the outbreak of the Corona virus. It is a Polish startup founded by Marek Konek and Michal Kroinski. The main investors are the founders and the Manta Ray Fund, owned by Sebastian Kulkczyk.
today Laszek is a flexible playerLtd., which operates in several Polish cities, has established a network of 40 warehouses. The service can be used by residents of Warsaw and neighboring cities, among others Piaseczno, Marek, Zubek or Prochkov; In addition to Krakow, Wroclaw, Pozna, Katowice, ód, Gdask, Gdynia, Katowice and Dubrova Gorna. The company said its app has been downloaded more than 500,000 times. Lisk’s goal for 2022 is to reach 10 million Poles.
The company recently boasted that customers who have tried Lisko shopping come back and do business 5-6 more times a month on average. And that’s in the best dark stores, one courier delivers an average of four orders per hour. After a year of working in Warsaw, the cost of acquiring a client also decreased significantly. For several months, it remained at PLN 12 for the user who made the first purchases.
In the first quarter of 2022, the company generated 300 percent revenue. higher than in the whole of 2021 (detailed data not provided). This happened even though the epidemic was over. Warehouses opened in April and May last year, They are close to profitability.
The company also implements innovations – In May, it was the first company to introduce shopping delivery service to the beach or parkIn June, it launched an online purchase service without an app.
Companies are delivering shopping even to the beach or the park
Entered the market in the fall of 2021 The Jush service is developed as part of the Żabka . group. It currently operates in five cities: Warsaw, Gdansk, Krakow, Katowice and Piaseczno. – Another city where you will be able to meet our couriers is Poznan. We’ll start working there any minute – reporting to the press office of Lite Commerce, under which Jush operates. The company, in the footsteps of Liska, began delivering purchases to the park or to the beach.
The company does not specify average demand and does not share other financial data. We note that our service responds to different customer needs. That’s why orders vary—some are a few staples for breakfast or lunch at work, and some are more than one, says Jusha. they confirm. That customers received the service well, as evidenced by, among other things, the very high frequency of purchases made by one customer.
When will Josh start earning? – From the beginning, we focused on building a company and serving that would be profitable. Structurally, we’ve invested in technology and established processes to make this possible. Very significant synergies with the Żabka group are of key importance to profitability. Despite the fact that we were built with the goal of profitability in the future, for the time being, the constant increase in service penetration is of key importance to us – says Lite Commerce.
In the fall of last year, the Biedronka chain also entered this business, launching it with Glovo Pedronica Express Service. Completes the delivery offer for purchases from Pedronka stores. – We carry out orders from 14 warehouses in the six largest cities in Poland, the average order cost exceeds PLN 60 – Wirtualnemedia.pl says Kamila Frąckowiak-Jankowski, Senior Director of E-Commerce Business Development at Jeronimo Martins Polska. This means that the range of service is still roughly the same as it was in October last year, when it was launched.
– We will develop the network of warehouses from which we offer, as well as work on the presentation of the assortment, since the needs of customers in this channel differ from the needs of customers in stationary stores – declares, however, the representative of Biedronka.
To date, there are only two active players in Warsaw. Both, like Glovo, come from the restaurant meal delivery business.
Wolt Market currently offers shopping only in Śródmieście and Mokotów. This has been the case since last summer. – We plan to develop this service also outside the capital, but we haven’t revealed any detailed plans yet. We see the huge potential of the e-commerce marketplace – according to PwC, it is the food this concept is largely based on that will drive e-commerce growth in the next five years at a rate of 30 percent. Annually – says Wirtualnemedia.pl Krzysztof Dłużniewski, Head of Marketing at Wolt Poland.
In December, deliveries of purchases from warehouses in the capital also began Bolt as part of the Boltt Market Service. For now, stop in Warsaw. – During this time, our network of dark stores has expanded its portfolio to more than 2.5 thousand. products, expanding the selection of fresh produce or making the offer more attractive to young parents – says Agnieszka Cymbała, country director of Bolt Market in Poland.
When do express trade companies start making money?
Most players do not want to talk about when it will be profitable. From Bain & Co. Analytics. Conducted for the European market shows that this type of business begins to earn when the average value of the basket fluctuates around 40 euros (about 190 PLN), and one dark shop serves an average of about 1.2 thousand. Daily orders
– By creating a similar model for Poland, it can be expected that this threshold is between PLN 40-45 and 1000-1200 requests.. These are very general estimates. Given the pace of inflation, these numbers will change quickly. An additional difficulty is the fact that companies are constantly improving operations and presentation, which also affects the threshold – says Wirtualnemedia.pl Artur Stańczuk.
What should subsequent players do to avoid sharing the fate of Swift or Jokra? Take on multiple challenges. Or not It is about increasing the size of the average transaction amount.
– Players can do this in many ways, but it is not easy. Increasing the quantity of products in the basket is limited in possibilities, because a basket that is too large may mean that the delivery is not fast or requires a completely different process. Players are looking for alternative routes, for example through premium/private label products (such as Glovo Concepts) or additional services for merchants, such as package sales (such as Detpak and Uber Eats), says Stańczuk.
The challenge for players in this segment is to increase the local scope of operations This is to increase the use of dark stores which constitute the largest fixed cost of the operation. The third issue is the desire to reduce operating costs.
The current business model has high levels of variable costs such as driver wages and the cost of food itself. There is also scope for collaboration with Packhelp on returnable packaging, which can reduce costs and improve the image of today’s unsustainable-thinking fast-trading companies, Stańczuk explains.
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