The Financial Times has a story about how $142 billion worth of new investment into the food delivery segment - supporting new apps with names like GoPuff, Getir, Gorillas, Weezy and Dija - is rattling the leadership at delivery companies that have been around for awhile. The concern is that they will use "their war chests to offer heavy discounts, a tactic used by the more established food apps as they battled for market share."
This expected approach to growing market share would then force existing companies to lower their prices and reduce profitability, not to mention "complicate efforts by Delivery Hero, Deliveroo, Uber and others to branch out into grocery deliveries, potentially a larger opportunity than delivering food from restaurants."
Meanwhile, FT writes, "DoorDash, the US-based food delivery group, and Amazon have also been looking at making an investment or acquisition in the sector in Europe, according to people familiar with the situation. Both companies declined to comment. Any deal would bring DoorDash into Europe for the first time."
The story goes on: "Venture capitalists have taken a particular interest in apps that promise to deliver groceries in as little as 10 minutes, thanks to a network of 'dark stores' across urban centres in London, Berlin and beyond. 'It’s received a ton of venture capital dollars in an incredible amount of time,' said Will Shu, Deliveroo’s chief executive, adding that the apps’ growth was 'pretty staggering'."
- KC's View:
The things that these delivery companies will need to do to cut costs at a time when competition is increasing should be of some concern to retailers whose brands are being represented by the contractors/employees used by these services.
I'd certainly be worried that the corners being cut could have an impact on how my brand is being defined by people who do not necessarily have my best interests at heart.