The quick commerce model is expanding at great speed, with the arrival of German, Turkish, British and Russian companies on the French market. Fund raising is ongoing.
In less than a year, a large number of express grocery delivery companies, known as "quick commerce", have emerged on the French market. Cajoo, Gorillas, Yango Deli, Dija, Flink, Getir, GoPuff, Bam Courses... all these start-ups offer to deliver consumer goods in less than 15 minutes - by scooter or electric bike - and to offer a wide range of services. A service available from 7am to midnight (until 2am on weekends) and an average delivery cost of less than 2 euros.
"These companies are altering the retail landscape," says retail marketing expert Frank Rosenthal. Until now, the added value of home delivery was that the customer didn't have to carry his shopping. They still had to reserve a time slot and wait for 2-3 hours before receiving their order. Quick commerce removes this constraint: the consumer chooses when he consumes." L'année 2020, marquée par la crise sanitaire, a profondément transformé les comportements d'achat des consommateurs.
Estimated at €4.7 billion in 2020 by Nielsen, food e-commerce has gained two points of market share compared to 2019 by being around 8%. The trend continued in 2021. FMCG e-commerce is still growing by 13%, strengthening its market share to 9% year-to-date. While the market still remains unbalanced in favor of the drive-through, the growth of home delivery amounted to over 44% in 2020. Locally, its share is increasing in large cities, such as Paris, where the weight of home delivery remains more important. This segment represents 404 million euros in sales (Iri Institute).
A market driven by new consumer habits
These shifts in consumption have opened a gap for these new agents. "The idea originated during the curfew period, when shopping became a real chore," explains Henri Capoul, co-founder and CEO of Cajoo. In France, there was no service that allowed you to have your daily errands shipped on demand, unlike in the United States and Europe." Cajoo, the first player to launch on the French market, began its activity in February, after raising 6 million euros from investors. The quick commerce model is developing at great speed, with the arrival of German, Turkish, British and Russian companies over the months. The fundraising is one after the other and is all the more impressive: $550 million for Getir, $240 million for Flink, €40 million for Cajoo, $950 million for Gorillas...
A permanent race for territorial networking
For all these players, the operational model is based on a mobile application to place the order, mini-warehouses "dark stores" - around 300 square meters - close to the heart of the city, in order to prepare the products as quickly as possible. Our stores (dark stores) are located within a radius of 1.5 to 2 kilometers from the delivery area," explains Pierre Guionin, general manager of Gorillas France. We cater to population cradles between 70,000 and 140,000 people per store." The goal is to cover each major city (Paris, Lille, Lyon, Bordeaux, Toulouse, Nice, Montpellier, etc.) with several warehouses, by opening one or two per month. Cajoo and Gorillas have about 20 dark stores, more than half of which are in Paris and its inner suburbs. A specificity of the market is that the delivery staff are employees or even on permanent contracts.
The range of products is between 2,000 and 2,500 items: frozen food, fresh produce, fruit and vegetables, groceries, hygiene... "Consumers find 95% of the products of a traditional Franprix," says Gorillas' French CEO. We are expanding our offer as we receive feedback from our customers on the most popular items. We also work with local retailers (bakers, coffee roasters, etc.) to reference their products on our platform, which account for about 30% of our product range.
Retailers in tune with the market
Unsurprisingly, this new express delivery service is attracting the curiosity of supermarkets, in direct competition with their local stores. Carrefour was the first to back one of them, Cajoo, by investing in its €40 million fundraising in September. "Carrefour had missed the drive train," says expert Frank Rosenthal. This time, it didn't want to miss out on the trend." The start-up thus gains access to the retailer's central purchasing unit, allowing it to optimize its offer, a major element of differentiation from the competition. "Previously, we had to talk directly with the different brands, which is very time consuming, agrees Henri Capoul, the CEO. Now we are more relevant in our assortment, having the right products, higher rotations and small exclusive brands. We have almost doubled our margins and spend less money than our competitors. The other benefit is that we can launch in new cities (and soon countries) without having to rebuild supply networks every time."
In November, the Casino Group and Gorillas announced the signature of a strategic agreement, with the acquisition of an equity stake in France and at Group level. Casino gives access to its national brand products and Monoprix brand products. They will be available on the Gorillas platform and delivered by express delivery in Paris, Lille, Bordeaux, Lyon and Nice. In a second phase, the Casino group will rely on the technological and operational expertise of the quick merchant, which will handle the preparation and delivery of online orders placed by customers on the Monoprix and Franprix websites from its stores in France. "Quick commerce is a customer relationship issue, underlines Maguelone Paré, innovation director of Monoprix. We must not lose our customers. So it's vital to broaden our touch points and distribution channels. We were already on this fast delivery response via our partnerships with Uber Eats, Deliveroo or Amazon Prime Now."
A business model to sustain
The potential of quick commerce is nevertheless unknown. "It will depend on satisfaction and loyalty indicators.", tips Frank Rosenthal. The market still seems very small. "We estimate the quick commerce, including Frichti, at 122 million euros over the last 12 months.", says Emily Mayer, Director of Business Insights at Iri. On the consumer side, only Cajoo reports nearly 250,000 active users. "The local trade represents about 30 billion euros but it is not very digitalized,, says Pierre Guionin de Gorillas. With a digital penetration rate of 8% in food retail, we can achieve a market share of between €2 and €3 billion."
To meet delivery costs, volumes must be large. "This business model has to prove itself, Linda Gmati, retail expert at Sia Partners. The offer is very limited. The competition is also very important, we will inevitably see a consolidation of the market. By promising a delivery in 10-20 minutes, these players are actually dealing with order after order. It is therefore not possible to optimize the supply chain to offer competitive prices. They will be forced to back themselves with a large retailer."
In the coming months, the promise of speed, customer experience, breadth of range and quality will be key. "Today, no company is cost-effective because this integrated model requires considerable upstream investments (warehouses, personnel costs, etc.)," says Henri Capoul. Nevertheless, with a good execution, it allows to reach a better profitability than the food platforms. We expect to achieve this in 3-4 years."
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