What are the key observations in the online grocery market since the outbreak of COVID-19?

Guest: So far what has happened in this space with Uber, Deliveroo, Glovo and all of these players is that they chose to monetize the grocery space by diverting their existing user base the ability to order via participation with like, some of the major grocery chains, like Tesco, Waitrose. They had strategic partnerships whereby they would use stores as trans-shipment points and use that to deliver the last mile. So using their existing fleet and almost hacking the existing system together to deliver things.

That's what happened a couple of years ago and it started moving in that direction. Now that model didn't actually work. Didn't acquire customers in a very effective manner. It didn't retain them for long. The idea is that it didn't form a lot of habits, hence stickiness or AOV wasn't actually predictable in that space.

That model persisted until basically, the entire lockdown happened. So what happened is a lockdown, suddenly forced people to find other alternatives and baskets and order value started really picking up over here. What led to is additional investment in the space to kind of build out that category.

For each of these players, I think people that first started doing dark store in Europe was Glovo. After that Deliveroo started looking at some sort of dark stores alongside their dark kitchens. Essentially, they are using some of that space as inventory. 

But basically, I think starting with Gorillas and Dija and Getir, all of these guys, this wave started towards the end of the pandemic where they essentially said: Hey, let's build this model of dark store delivery. And now there are a good six or seven players, at least in the UK itself that have been funded and are competing in this space.

Largely all of this was happening while the goPuff model was happening in the US unperturbed for all of this, goPuff and Cornershop, there were two businesses that were competing in the US. goPuff basically really blew up and started doing really well. Those businesses were primarily very focused on purely niche baskets. So, alcohol drinks, cigarettes, those kinds of deliveries, but what ended up happening after that was startups started coming in to try to capture that a hundred-pound bucket, order size, which is your weekly groceries.

Grocery basically splits into two things. One is, drinks, cigarettes, desserts or ice creams, impulse buys basically. The other stuff is regular grocery baskets, which in the UK Ocado and Waitrose and all of these guys have been delivering for a while.

What you're trying to do is disrupt that market by making it instantaneous on their own supply chain, in an instantaneous supply network, which basically creates these transshipment points that are much closer to the neighborhoods, that’s allowing you for 10 to 20 minute deliveries. That model has picked up in the last six to eight months. And it's hyper slash almost one could argue overfunded, to the point that there's going to be a decent amount of they're still yet to have anyone prove that demand use case.

And yet to have that consolidation or that understanding of what business model is actually going to survive in which ones are going to die off. So it's a very early stage for that industry.