Rewe acquires a stake in Flink: This is what lies behind the cooperation

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The cards are being reshuffled in online grocery retailing: Rewe is now getting even more involved and is joining the fast delivery service Flink. What the calculations behind this are.

There is a gold-rush atmosphere in the online grocery trade. An almost incalculable number of new providers such as Gorillas, Flink, Getir, Knusper and Picnic are currently entering the highly competitive German grocery market.

Lured by the significant increase in online sales during the Corona crisis and financed with hundreds of millions of euros in venture capital, the start-ups are competing with established grocers in more and more cities. The newcomers often promise delivery of ordered goods in just ten minutes. Even the big top dogs Edeka and Rewe are having to reposition themselves as a result.

60 percent more food sold online

A market worth billions is at stake: online grocery is one of the biggest winners in the Corona crisis. According to the “Online Monitor” of the German Retail Association, people bought around 60 percent more food from online retailers in 2020 than before the pandemic. And the growth could probably have been even greater if delivery capacities had not reached their limits.

Played for high stakes. Delivery services Gorillas, Flink and Getir each raised triple-digit millions from venture capitalists in their latest funding rounds to expand into more cities as quickly as possible and gain a competitive edge.

Heavyweight Getir plans to launch in Berlin soon

Gorillas, Flink and Getir aren’t just setting their sights on speed when it comes to expansion, however. Their promise: Ordered goods will be delivered by bicycle courier from decentralized warehouses in city districts within just ten minutes.

Flink is now present in 19 cities in Germany, Gorillas in 17 municipalities. Turkish express food delivery company Getir plans to launch in Berlin in the coming weeks. Although the company is still largely unknown in Germany, it is a heavyweight among startups. In its most recent round of funding, Getir said it was valued at $7.5 billion.

Knuspr and Picnic deliver more comfortably

But is speed of delivery really that important? Other startups take a little more time. The Czech online grocer Rohlik wants to roll up the German market from Munich with its subsidiary Knuspr from the end of July. Deliveries are to be made within three hours. In return, however, the range of goods is significantly larger than at Flink or Gorillas, with up to 16,000 products.

The Dutch competitor Picnic takes even longer to deliver. Like the milkman in the past, it only delivers the products on certain days at set times. This means that deliveries can be bundled in a street or neighborhood. This guarantees better utilization of the vehicles and lower costs.

So far, this has not harmed the success of the Dutch company. In the Corona year 2020, Picnic says it was able to increase the number of its customers from 50,000 to 200,000. Now Picnic is preparing to expand its delivery network nationwide.

Rewe exclusively supplies Flink with goods

Major grocery chains Edeka and Rewe are watching the development with a wary eye. The Cologne-based Rewe Group, currently the market leader in the e-commerce business with fresh food according to experts, even entered the start-up Flink on Friday with a minority stake. In addition, the retail giant will exclusively take over the supply of goods to the Berlin-based company.

Rewe CEO Lionel Souque said it was apparent “that the food delivery business in Germany is currently becoming very differentiated.” In addition to comprehensive full-range providers such as Rewe with up to 20,000 items that can be ordered, there are fast delivery services that deliver a smaller selection of goods within a few minutes. Rewe wants to profit from this market segment through its cooperation with Flink.

Edeka acquires stake in Picnic

Germany’s largest grocer Edeka, on the other hand, which has long been rather cautious in e-commerce, is betting on a stake in Picnic. “Picnic will become the online arm of Edeka,” Edeka CEO Markus Mosa said recently. At the same time, he stressed, “We’re not seeking a majority stake in the company, not control.”

Such a complex business is best left to those who can, he said. “No brick-and-mortar retailer can ultimately be better online than a true e-commerce retailer.” But Edeka also secured a key role in supplying the startup.

Expert does not believe in Flink business model

E-commerce expert Gerrit Heinemann from Niederrhein University of Applied Sciences believes the top dogs’ investment strategy makes perfect sense: “If the experiment works, it will ensure more growth – if not, the damage will be manageable.”

However, he is not really optimistic about the prospects for success of fast delivery services like Gorillas or Flink in particular. “It can’t be ruled out that the business model of Gorillas, Flink and Co. will work, but I don’t believe it in its existing form. They serve a target group that is ultimately quite small at great expense, and so far no one has proven that you can make money with it in Europe.”

 

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