q-commerce belt-tightening continues: US category veteran GoPuff, the SoftBank-backed delivery platform juggernaut — valued at $15BN as of 2020, and rumored to be preparing for an IPO earlier this year (uh, no, that didn’t happen!) — is taking over Europe. He is calling his wish.
The fast-casual grocery delivery player is planning to exit Spain to shrink its capacity and push profitability, according to a report in Bloomberg, citing people familiar with the matter – a move that would also increase its regional focus. In the UK market, according to the report.
The news publisher says the UK is one of GoPuff’s fastest-growing markets, with revenue there increasing at a compounded monthly rate of 30%.
A GoPuff spokesperson declined to comment on the Bloomberg report, but we understand the gist of the story is correct.
GoPuff launched in Europe in 2011. Only in November 2021. At the time, he was talking aggressively about major regional expansion — saying he was going to “every country in Europe” — so while not unique to GoPuff, this is a reversal of fortune. The q-commerce category as a whole has been hit hard post-pandemic, as individual mobility has returned to urban living – and especially as the economic downturn has taken a bit of a toll on consumer demand, encouraging consumers to value value over convenience (or encourage indulgences like late-night ice cream).
In July, GoPuff announced it was closing 10 percent of its global workforce (about 1,500 employees) and dozens of warehouses, saying it needed to control costs after the pandemic spread too quickly.
Earlier, in the spring, he confirmed that any IPO filing was on ice because of the market crash.
As well as the UK and Spain, GoPuff operates in France – starting in March in Paris and most of Île-de-France, as well as parts of Marseille, Lille and Toulouse – with talk of further expansion there. in near. But this may not be on the cards if it is set to prioritize the UK market.
While the UK market is still in flux with a number of ‘quick grocery’ players, Deliveroo (which will also be pulling into mainland Europe soon), Gethir and Zap to name a few are fiercely competitive. There have been some recent market exits, though (like Addsbi Jiffy, which quickly moved into b2b this May).
GoPuff has used investor money and acquisitions to grab itself a fast-moving slice of European q-commerce – snapping up smaller UK rivals Deja and Fancy to get the ball rolling in the region. (And according to Bloomberg, the Spanish ops, which includes about 180 employees and five dark shops in Madrid, is a result of the Deja acquisition – so it’s unfortunate for employees who have had to cycle through multiple employers in a few years and face either a new owner soon or they may find themselves out of a job.)
GoPuff’s rise in Spain could be a boon for local rival Glovo, which in recent years has focused on the dark store game by expanding into q-commerce. Despite the tough economic conditions hitting the local demand-driven brand – and at the turn of the new year it quietly agreed to be bought by German rival, Delivery Hero, ending any hopes of an IPO of its own.
Additionally, last month, the offices of Glovo and Delivery Hero were targeted by the European Commission’s antitrust probes – which it said is investigating preliminary concerns about violations of EU competition rules against cartels and other restrictive business practices. No formal objections have been filed — and the investigation may still be nothing. But what will be left of Europe’s dynamic q-commerce landscape in a few years – or even months – time is anyone’s guess!
Also on the horizon: EU-wide regulation of platform workers, which will further increase the pressure on gig economy players.
Tightening the law on workers’ rights in the EU helps explain decisions by several gig platform giants to prioritize the UK market – it is no longer a member of the EU, so will not be subject to future changes. On-demand platform Deliveroo has won a number of workers’ rights challenges in UK courts – potentially providing a template for rivals to thread the tricky operational-legal needle across the English Channel.
This report has been updated with a correction: We originally stated that GoPuff was operating in Germany, but that’s incorrect – it shouldn’t be available in that market.
