By Emily Hawkins
GoPuff has said its rivals in the rapid delivery sector face mass extinction over the next year, as the app hones in on accelerating UK market share.
The Philadelphia-based firm, which was valued at $15bn last summer, has previously said it intends to amp up its focus on the UK as it departs Spain, in an endeavour to close in on profitability.
The “majority, if not all” of the firm’s direct competitors “won’t be in existence in the next six-12 months, Dan Folkman, GoPuff’s senior vice president, told CityA.M. yesterday.
The firm launched in the UK last year by snapping up rivals Dija and Fancy, which Folkman described as “an overnight solution” for the US firm to make the tricky transition into the European market.
However, the firm now views M&A opportunities of direct rivals as “not worth the price being asked,” due to an “evolving” competitive landscape.
“It would be silly of us to deploy any capital in the space,” he added, although suggested the company would be eager to pursue M&A opportunities of “market adjacent” businesses.
It comes as GoPuff slashed its headcount by 10 per cent in July and shuttered dozens of warehouses, with rivals Getir and Zapp also reducing staff by 14 and 10 per cent respectively.
After an explosion of apps and billion-dollar valuations a couple of years ago, Folkman said many rivals did had not focused enough on investing in their technology and infrastructure.
“When money grows on trees, there’s an opportunity to do anything,” he said. However, when profit becomes “the pure focus […] if you don’t have a structurally sound core business, it is going to be very hard to endure especially when you have astronomical cash deployment rates,” he added.
Folkman was sceptical of the longevity of brands that merely connected couriers to grocery stores, compared to GoPuff’s network of fulfilment stores and own brand products.
While there were “maybe 30 instant commerce players” across the US and Europe two years ago, there were now just around four, Folkman said. “We expect that number to dwindle,” he added.
“We’ve made a lot of progress so far in 10/11 months,” Folkman said of the UK expansion, forecasting an acceleration of market share over the next year, “based on the fact the competition landscape has changed and that we are a value based option for consumers.”
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