Gorilla retreat signals settling of accounts for delivery apps
The banana is a recurring motif on the Gorillas delivery app: fruit is sometimes given out to customers for free, representing the company’s promise to deliver fresh food in minutes. But in the company’s warehouse in the Eilandje district of Antwerp, Belgium, that symbol has spent the last few months rotting. Piles of spent bananas and old salads had to be thrown away every three days due to over-ordering, a person who worked in the warehouse told WIRED. “If you know you only need to sell 50 bananas a day, why are you ordering 400?”
In hindsight, this could have been considered an omen. The company arrived in Belgium in June 2021 amid a flurry of funding and enthusiasm for fast commerce apps. A year later, the German company decided to leave, as the mood towards the sector deteriorated. Gorillas’ six Belgian warehouses, also known as dark stores – two in Antwerp and four in Brussels – have been closed since June 25 and local media have reported that more than 200 people were fired. The Berlin-based company is also expected to exit Denmark, Spain and Italy to focus on more profitable markets.
“We are unable to provide a definitive number on the number of employees who will ultimately be impacted by our strategic shift to long-term profitability,” says Melissa Largent, spokeswoman for Gorillas. Products reaching their expiration date before being sold was a problem across the industry, including in traditional supermarkets, she adds.
During the pandemic, Gorillas were teeming with money. The company raised nearly $1 billion in October, an amount that even the company’s CEO, Kağan Sümer, called “extraordinary”. But the fast trade industry has become another victim of investors’ new aversion to loss-making startups as they worry about the economy. The retreat of the gorillas is emblematic of the pain felt across the sector in Europe. Gorillas rival Getir said he plans to cut his global squad by more than 800 peoplewhile Zapp said he expected fire 200 workers, leaving UK cities Cambridge and Bristol entirely, and Jiffy has deliveries stopped entirely to focus on the software.
“All these logistics, supply chain and IT companies that depend on cheap money, you can see they are panicking now,” says Roel Gevaers, a professor at the University of Antwerp, who studies last mile delivery.
Part of the problem in Belgium, where Gorillas charged consumers 1.8 euros ($1.90) per delivery, was that demand remained weak. A person who worked at a Gorillas warehouse in Brussels said some warehouses only received 80-90 orders a day and order growth came to a halt after the coronavirus lockdowns were lifted. At the same time, labor costs in the country are high. According to Gevaers calculations, the salary of a driver or storekeeper in Belgium costs a company around 25 euros per hour, once taxes such as social security are taken into account, i.e. more than 20% of more than in the neighboring Netherlands.