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What’s next for delivery services in Germany?

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What’s next for delivery services in Germany?

A new startup is founded, another lays off employees, another enters into an exclusive partnership. What’s next in the German delivery services market?

Is it enough to simply deliver food these days? Shutterstock/ giggsy25

One billion US dollars for Gorillas in October 2021, 750 million US dollars for Flink in December 2021. First billions of dollars flowed into German food delivery startups, then came the setbacks. And now? What is the future of delivery startups? And what role do established companies and retailers play in the market? We summarized the current events in the field and considered what could happen next for the various players in the industry.

In an interview with Gründerszene, delivery service expert Stephan Soroka expressed his opinion on the at the end of 2023 Fast delivery services. According to him, no one actually expected a viable business model. “But everyone wanted at least a small piece of the pie as quickly as possible and got involved. In the hope that, in the best case scenario, someone will buy it.†The quick delivery services benefited enormously from the corona pandemic. But due to increased interest rates and inflation, the business model is no longer as attractive for investors. Now there will be more consolidation, he explains.

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Partnerships, acquisitions, new business models

We look at the latest developments in the market.

Cooperation between Rewe and Flink is about to end.

After Getir’s takeover of Flink failed, the Berlin startup found itself in dire straits. As part of emergency financing, Flink received 150 million euros from existing investors such as Rewe and Doordash in the summer of 2023. Rewe has invested 50 million euros of this and therefore holds 12% of the shares in Flink. Since 2021, Rewe has been exclusively responsible for supplying goods to Flink. This cooperation is now about to end. As research by the Küchenzeitung (LZ) shows, opponents of the cooperation are becoming louder in the Rewe supervisory board and top management. The reason given is persistent doubts about a “sustainable business model”. Maybe now is the time for Getir to strike at Flink. This would allow Getir to further expand its market position in Germany. The company had already taken over the ailing Berlin delivery service Gorillas in 2022. Getir and Flink have a common investor in the sovereign wealth fund Mubadala Investment Company from Abu Dhabi. Mubadala had apparently advocated for Getir to take over Flink.

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Wolt Market back in Germany.

In the first attempt, Wolt’s concept of a virtual supermarket for grocery orders didn’t work. Just a year and a half after closing the three warehouses, the company has been trying Wolt-Market again since February. The delivery service, which is aimed at restaurant orders, has already offered its customers groceries from local retailers, Spätis, Flink and Nah&Gut markets via the app. You can now purchase products from your own supermarket via the app again. Rewe’s own brands are also available via Wolt-Market.

Delivery Hero breaks off Foodpanda sales negotiations.

For months there have been discussions between Delivery Hero and investors about a possible sale of the Southeast Asia business called Foodpanda. According to Handelsblatt Competitors Grab and Meituan were considered potential buyers. Delivery Hero founder Niklas Östberg is of the opinion that the Foodpanda shares are worth more than one billion euros, as he told Handelsblatt. On Wednesday However, Delivery Hero announcedthat the negotiations were broken off. The company and the main negotiator were unable to agree on the basic terms of the sale. Delivery Hero remains open to selling the Foodpanda shares and is examining potential strategic alternatives. It was only in January of this year that Delivery Hero sold its shares in British competitor Deliveroo. With a loss of millions.

Getir enters into partnership with Uber Eats.

As announced in January 2024, Getir and Uber Eats are launching a partnership in Germany. This means that Uber Eats customers can order products from Getir’s range via the app. The food orders are delivered by Getir couriers in Berlin, Frankfurt, Hamburg, Cologne, Düsseldorf and Munich. In the future, all Getir/Gorillas stores will be integrated into the Uber Eats app.

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These quick delivery services have the best chance of survival in the USA, say investors

What’s next for the delivery services?

According to an EY analysis Industry insiders have identified seven key developments from Asia and the US that could also be promising in Germany. Some of these have already been implemented in this country.

Platform models: Different offers can be booked via one platform. Wolt is already implementing this platform model with grocery deliveries from Wolt-Market and meal deliveries from restaurants.

One-Stop-Shop: Different products can be purchased through one provider. The CEO of Just-Eat-Takeaway, which operates in Germany as Lieferando, explains to Handelsblatt that other goods, such as iPhone cables or medication, will also be available via Lieferando in the future.

Strategic partnerships: Retailers and delivery services can expand their reach and improve delivery options through partnerships. Flink and Rewe, Lieferando and Media Markt, Bringoo and Edeka are just a few examples of existing partnerships in Germany. Targeted partnerships with local providers could also bring a decisive market advantage.

Ghostkitchens: These kitchens focus exclusively on preparing food for delivery, pickup or catering. Multiple restaurants or brands can operate under one roof without having to have separate physical locations. Two former Delivery Hero managers founded the virtual pizza chain Milano Vice. At Milano Vice, the partners buy ingredients for the pizzas, prepare them and send the orders.

Delivery services’ own products: Food delivery services can develop their own products and sell them via their platform. Flink tries Flink’s Finest. Gorillas also expanded its range to include its own brands in 2022.

B2B: B2B offers can be used to optimize food ordering processes. Companies like Smunch and Chef Coco are already focusing on delivering meals to offices. Restaurants can also book food deliveries through Choco.

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Delivery robot: The use of robots can create competitive advantages, especially in view of the shortage of drivers for delivery services. In Hamburg, Rewe is already testing deliveries with self-driving delivery robots in several districts.

Fast delivery services have no chance on their own

Stephan Soroka distinguishes between three types of delivery services: on-demand delivery providers (Flink, Getir), aggregators (Delivery Hero, Lieferando), and those of the retailers themselves (Rewe, Aldi). According to him, on-demand delivery providers will not be able to achieve sustained success on their own. The high costs for logistics, personnel, storage and marketing will be your downfall. Providers need the most stable frequency of orders possible so that the model is worthwhile. “This is where the aggregators can particularly score points: they already generate volume with ready-made food – at meal times.“ You could offer on-demand deliveries as an additional service carried out by the existing driver base.

Retailers such as Rewe, Aldi or Edeka can also set themselves apart from their competitors by offering delivery services as an extra service and thus retain their customer base. The existing range of goods and the storage space are particularly advantageous. Soroka is sure that retailers will be “sustainably successful”. It is ideal if you can offer several models via one platform. “In this sense, successful partnerships can arise.”

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