Forgot that one tasty vegetable while you just turned on the pit? Having a lazy sunday but craving for that one ice cream? Having a busy day and no time to pass by the supermarket? No issue anymore!
Gorillas, originated in Berlin in May 2020, provides groceries delivery services and makes sure that your order will reach your doorstep within ten minutes. Next to Germany, it currently operates in the Netherlands, France and the United Kingdom. The company is one of Europe’s fastest growing start-ups as it has already reached the so-called Unicorn-status. While not even one and a half years old, the company’s valuation is estimated at over 1 billion dollars.
How does Gorillas work? Users can download the app in the app stores on both iOS or Android. Users will fill in their personal details and payment method, and off to go. Based on your location, the app will connect you to the nearby warehouses that Gorillas itselves own (also called dark stores). People can buy a variety of products. After selecting the desired groceries, a delivery fee of 2 euros is being asked for. After the payment, Gorillas makes sure that your order will arrive within the promised ten minutes.
So how can this enormous success be explained? Gorillas accurately responded to people’s changing habits. Nowadays everyone owns a smartphone in developed countries, increasing the success rate of an upcoming application. People get busier and ask for more spontaneous (eating) plans, instead of having planned what to eat a week in advance and buying everything at once. Moverover, the pandemic has significantly increased the need for grocery deliveries.
Gorillas can be considered as a disruptive innovation as it is a relatively small company with little resources that is challenging established incumbents (traditional physical supermarkets). Technology is rapidly increasing disruptions like Gorillas. Nowadays you can basically order everything online, from everywhere in the world. While these new business models have significant advantages like time efficiency and cost efficiency (e.g. lower stock for Gorillas), one should take other (negative) implications into consideration as well. For example, is it good for people to stay inside and order Gorillas instead of getting fresh air and biking to the supermarket? Moreover, technologies like these decrease employment opportunities (e.g. no cashiers needed with Gorillas). How far should technology go? What do you think?
Sources:
Madhav. (2021). Gorillas Business Model | How Does Gorillas Make Money? Retrieved from- https://seoaves.com/gorillas-business-model-how-does-gorillas-make-money/.
Meoli, C. (2021). How Gorillas Is Disrupting
The Grocery Delivery Industry. Retrieved from https://stableton.widelab.co/insights/how-gorillas-is-disrupting-the-grocery-delivery-industry/.
O’Hear, S. (2021). Gorillas, the on-demand grocery delivery startup, raises $290M and ‘surpasses’ $1B valuation. Retrieved from https://techcrunch.com/2021/03/25/gorillacorn/.
Partington, M. & Pratty, F. (2021). Gorillas: The new WeWork? What does the future hold for on-demand grocery startup Gorillas?. Retrieved from https://sifted.eu/articles/gorillas-wework/.
Firstly, great piece about Gorillas! I’m still intrigued by the way they get their deliveries everywhere within such short notice. Fine description of how Gorillas is disruptive. But there is something I do not understand. You say that Gorillas has certain cost advantages such as cost efficiency. However, that is something I do not believe to be true. From the customer side it is not cost efficient because the prices of the groceries are higher than when bought at a normal supermarket. Gorillas itself is also not cost efficient due to the warehousing costs all over the cities. They have to have multiple mini warehouses in the city in order to get the groceries at their clients within 10 minutes. Keeping stock up and running of such mini warehouses is expensive. Can you explain why you used the term cost efficiency?
Thank you!
Hi Sophie! Thankyou for your comment. I agree with the points your making. From the customer side, one could argue that it is more expensive to let groceries being delivered at home as it will include a delivery fee. However, consumers going to the supermarket with their car (e.g. big amount of groceries) save fuel costs and possibly parking costs. Moreover, I believe that consumers might experience indirect cost reduction as instead of going to the supermarket and losing half an hour of your time, people are now able to work that half an hour extra which leads to higher income.
For Gorillas, they indeed have to have multiple mini warehouses. However, this might cost less in comparison to one big local supermarket (comparing the surface of the buildings). Moreover, those mini warehouses have less employees, for example no need to hire cashiers. All in all, there are multiple cost benefits and disadvantages with Gorillas.
Hi Kirsten, I really enjoyed reading your post! I’m fascinated in Gorillas as a company and their business model. To answer your question, I believe that it doesn’t decrease employment opportunities to such an extent because to keep a warehouse running, there are several employees required for this. I guess you could say the riders are the replacement for the cashiers you would have at a regular supermarket. They are not freelance workers like the riders at Deliveroo or UberEats are as their shifts are given to them without the flexibility. A good friend of mine worked for Gorillas the past 6 months as an expansion manager and his job basically involved moving around to different cities and setting up these mini warehouses. Behind the scenes there are an awful number of problems due to the time pressure of getting the warehouse up and running. Currently the way Gorillas operates is not at all cost efficient and unfortunately, they produce quite a lot of waste, especially from the fresh fruits and vegetables that go off, or often are damaged goods already at arrival to the warehouse. I think Gorillas will never expand to a level where it could replace going to Albert Heijn, simply because of logistics. The issue is simply the lack of choices available in comparison to regular grocery stores and for them to change this, would require a huge increase in investments (which btw is declining most recently). In my opinion it is not cost efficient for consumers to shop there since prices are higher and you must pay the delivery cost. I see your comment above about fuel costs, but I believe this not so relevant since Gorillas is only available within cities where it would be unlikely that you would drive to the supermarket in the first place. Despite being negative towards the way they operate, I really do hope they make some changes since I still believe the concept is something that has huge potential in disrupting the market.