It has been a big month for online grocery, with funding pouring in by the billions for new and existing companies to grow their grocery delivery capabilities. On Monday (Aug. 2), Estonia-based multinational mobility platform Bolt announced a 600 million euro fundraise (about $713 million) to get into ultra-fast online grocery delivery. The news follows reports in July of food and essentials delivery service GoPuff’s $1 billion fundraise to continue its expansion in North America, the U.K. and Europe; of India-based food delivery startup Swiggy’s hyperlocal grocery service Instamart bringing in $1.25 billion; and of 15-minute delivery company Jokr raising $170 million in a Series A funding round.
In South Korea, food delivery startup Kurly raised 225.4 billion South Korean won (just under $200 million) in Series F funding, even after a low valuation forced the company to reconsider its initial public offering (IPO) plans for the United States and instead turn its attention to going public in its home country. The round brought the company’s total funding to around $2.2 billion, with The Korea Times reporting that the spread of the Delta variant could have a positive impact on the company’s IPO, as the resurgence of infections boosts online grocery orders.
Meanwhile, a handful of smaller online grocery delivery startups around the world announced fundraises to the tune of millions or tens of millions of dollars in the last week of July. Merqueo, a Colombia-based grocery delivery company that creates dark stores throughout Latin America, revealed that it raised $50 million in Series C funding to build out its network. Indonesian third-party online grocery platform HappyFresh announced a $65 million Series D fundraise to expand to more supermarkets within the country. Egyptian grocery delivery startup GoodsMart raised $3.6 million, the company announced in late July, to grow its service, which installs drop-off boxes outside users’ homes, delivering groceries overnight to be ready when users wake up in the morning.
As the online grocery space grows, a few different trends are beginning to emerge as companies seek to differentiate themselves from the competition. Some aim to offer the lowest prices; others the most seamless experience; and others aim to meet consumers’ desire for environmental, social and corporate governance (ESG) best practices. One of the most competitive metrics in eGrocery right now is delivery time, with a handful of companies aiming to provide the quickest possible order fulfillment.
“What we’re excited about is the chance to change the concept of how people shop,” Jokr Co-Founder Zach Dennett told Karen Webster in a recent interview. “We’re seeing customer behavior is very sticky because once [they] stop planning ahead and [they] realize that [they] can just make the grocery choices [they] want the minute [they] want them, it’s kind of hard to go back to that planning.”
Even as funding rushes into the online grocery space, sales are actually falling, at least in the United States. The most recent Brick Meets Click/Mercatus Grocery Shopping Survey, which looked at the online grocery market June 2021, found that sales have decreased each month since March 2021, and that in June they were down 27 percent from March levels. Granted, industry leaders believe that this only a temporary decrease occasioned by the vaccine rollout, and that sales will rebound and continue to grow. Still, it is unclear for now whether consumer demand will be enough to make this massive wave of investments profitable in the end, or whether it will prove to be a bubble that is about to burst.