Layoffs hit online delivery tech startups as instant grocery delivery boom comes to a grinding halt
The current bear market has sent ripples around the world and the tech sector is not immune from the global economic downturn. As we reported early this month, big tech companies lost more than $1 trillion in market value in just three trading days as turmoil in the stock market continues. Now, the carnage is slowly spreading to tech startup companies.
Two of the biggest hit technology sectors are fintech and the online delivery space. Fears of a looming recession are forcing tech startups in the grocery delivery space to slow their hiring and slam the brakes on growth.
This week, Istanbul-based Getir and Berlin-based Gorillas, two of the largest instant grocery apps, announced plans to lay off hundreds of staff. London-based Zapp, another grocery delivery startup, said it’s planning to reduce the staff count of its U.K. team.
Getir told employees on Wednesday that it plans to reduce its global headcount by 14%. The startup currently employs more than 6,000 people worldwide, according to its LinkedIn profile.
Gorillas says that it will let go of around 300 people. The 2-year-old startup is also mulling an exit from Italy, Spain, Denmark and Belgium and whether to shift its focus to more profitable markets such as the U.S., U.K., and Germany.
In an emailed statement to the company’s employees, the startup said: “With a heavy heart, we today shared with our team the saddening and difficult decision to reduce the size of our global organization. We will also decrease spending on marketing investments, promotions, and expansion.”
Gorillas on Tuesday said it was making the “extremely hard decision” to let go of about 300 of its employees, citing the need to reach profitability in the long run.
“These are necessary moves that will help Gorillas to become a stronger and more profitable business with a sharpened focus on its customers and its brand,” Gorillas said in a statement.
We wrote about Gorillas back in October 2021 after it raised $1 billion in funding led by Delivery Hero. Getir and Gorillas have raised $1.8 billion and $1.3 billion to date, respectively.
Getir scored a $12 billion valuation in March, while Gorillas was last valued at $3 billion. Both firms have burned through significant amounts of cash to expand in the U.S.
Meanwhile, Zapp on Wednesday confirmed reports that it is considering making layoffs of up to 10% of staff. A final decision hasn’t yet been made as a consultation is underway with the firm’s U.K. employees.
“The current macroeconomic climate has become incredibly challenging, with very little visibility of when things will improve. This uncertainty is seeing investors reduce their risk appetite considerably, favoring profitability overgrowth. As a venture-backed scale-up that will need to fundraise again in the future, we, therefore, need to adjust our business plan to reduce costs and accelerate our path to profitability,” a company spokesperson said.
Founded in May 2020 by Jörg Kattner, Kağan Sümer, and Ronny Shibley, Gorillas is a grocery delivery provider as it aims to aggregate supermarket product ranges delivered to consumers within 10 minutes of ordering. The startup has grown at a rapid clip as demand for its service took off during the coronavirus pandemic.
Gorillas is one of the dozens of European startups competing in an increasingly crowded space. Others include Turkish company Getir, British firm Zapp, and German peer Flink.