The Times - UK (2021-11-10)

40 Wednesday November 10 2021 | the times

Business

The co-founder of Gopuff has accused
his rivals of being “super-lossmaking”
as the $15 billion American delivery
business launches an ambitious
national expansion across Britain.
The rapid delivery market has roared
into life in the past 18 months, with in-
vestors pouring hundreds of millions of
pounds into new start-ups that deliver
groceries to impatient shoppers within
minutes.
Gopuff is the world’s most valuable
rapid delivery business after Yakir Gola,
28, founded it with Rafael Ilishayev, 28,
in 2013. “We have been operating for
eight years. We created the instant
needs category, so we know a thing or
two about this market,” Gola said.
As students at Drexel University in
Philadelphia, they started the company
after Gola became fed up with being
asked by friends to make late-night
runs to the convenience store for
snacks because he was the only one
with a car. It now has more than 500
small fulfilment centres and owns two
liquor stores in the United States and
Europe.
In Britain Gopuff will employ its fleet
of drivers as workers, rather than using
the gig economy model adopted by
Deliveroo. They will deliver a range of
2,000 goods from 30 “dark stores”.
Amid reports of a forthcoming stock
market listing, Gopuff was valued at
$15 billion in its most recent $1 billion
fundraising and counts institutions
including Blackstone, Guggenheim
Investments, Fidelity and SoftBank as
investors. Gola said in response to the

Gopuff scorns ‘super-lossmaking’ rivals

listing: “We are always evaluating our

options.”

The American business bought

Fancy and Dija, two British rapid

delivery start-ups, this year, which Gola

said had helped to inform the business

about British customer habits despite

them operating for only a year. Gopuff

now plans to be in 33 British cities by

the middle of next year and claims that

the company’s total global market will

be $10 trillion because it plans to sell

nappies, over-the-counter medicines,

and hot food alongside groceries.

The business already competes with

a host of start-ups with unusual names

including Gorillas, Weezy, Zapp and

Jiffy in Britain, while traditional gro-

cers are rushing to launch speedier ser-

vices as more shoppers switch online.

Traditional retailers have raised

doubts about how it is possible to make

money in a market that has steep costs

and relies heavily on discount codes.

Gola responded: “We have a track

record of making profits. No one else

can say that in this space. They are

super-lossmaking and they cannot

show the path to profitability or

existing profitability.”

Gopuff charges £1.79 per order,

but Gola said that most of its profit

margin came from its products

and advertising as brands increas-

ingly were willing to pay to test

new launches with Gopuff

customers. He said basket

sizes were larger than

many experts thought as

the mix of customers

had evolved from

students to families.

Ashley Armstrong Retail Editor

Food prices have risen by 2.1 per cent

over the past four weeks, driven higher

by the rising cost of ingredients and

supply chain pressures.

Despite recent comments by bosses

at Tesco and Sainsbury’s that they were

holding firm on food prices, figures

from Kantar, the research group, show

that grocery inflation has hit its highest

rate since August last year, when super-

markets stripped out promotions to

maintain supply.

Cash-conscious shoppers are begin-

ning to shop around, visiting an average

of 3.3 supermarkets a month to find the

best value for money.

Wheat prices have risen by almost

40 per cent in the past year while the

costs of palm oil, olive oil and sugar are

rising sharply.

Analysts reckon that Tesco will be

best placed to weather the inflationary

pressures because of its huge buying

power. According to Kantar, it was the

only supermarket to record year-on-

year sales rises over the past four weeks.

Tesco sales increased by 0.3 per cent

over the longer 12-week period to

October 31, while Sainsbury’s recorded

a 2.8 per cent slip, Asda sales fell by

2.3 per cent and Morrisons suffered a

4.3 per cent fall. Ocado sales fell by

2.1 per cent during the period. Mean-

while, Lidl sales were flat and Aldi

suffered a smaller fall of 0.4 per cent.

Ingredient

costs push up

price of food

Ashley Armstrong

Gopuff will employ its riders as workers rather than part of the gig economy

Behind the story

Y

akir Gola,

right, insists

Gopuff wasn’t

coined after

his student smoking

sessions and late-

night snack cravings

(Ashley Armstrong

writes).

However, the

company joins a

growing list of

quirkily named

entrants disrupting

the British grocery

market. Valued at

$15 billion in a recent

fundraising, Gopuff is

the biggest in the

market. Its UK

expansion plans make

it a competitor for the

likes of Getir, valued

at $7.6 billion,

Gorillas, at $3 billion,

Flink, at $2.1 billion,

and the smaller rivals

Zapp and Weezy.

Industry experts say it

is inevitable there will

be winners and losers

as traditional retailers

join the race, so firms

will have to keep

offering discounts

to win customers.

Last month Tesco

signed a trial with

Gorillas, while

Morrisons

has a ten-

minute Hop

service

with

Deliveroo.