The development of quick commerce in the UK

Date : 22 March 2021

Rachel Sibson

Retail Analyst

2021 has seen a rush of news flow about the financing, launch and expansion of specialist on-demand rapid delivery startups in the UK, operating from dark stores.

Fancy, Jiffy, Weezy, Dija, Genie, Getir and Gorillas are all now operating, or on the verge of operating, in one or more UK towns or cities; offering ultra-quick delivery on grocery and convenience essentials from hyperlocal dedicated fulfilment hubs.

In this article we highlight the latest players to launch and recent investment and acquisition developments.

Why is this happening now?

Take-up for online shopping and delivery services has exploded in the last year and shoppers are now more ready than ever to try new online offers and to use delivery to bring increased convenience to their lives.

Quick commerce is an evolution of ecommerce that has been developing across the globe. As the name suggests, it is all about being fast and bringing small quantities of goods to customers almost instantly. Delivery Hero is a leader in this space. It operated 400 delivery only dark stores by the end of 2020 across its active markets.

How do they differ from other delivery services?

In the UK, Deliveroo and Uber Eats have been the established players in on-demand rapid delivery. The COVID-19 pandemic saw these last milers change focus to grocery after being impacted by restaurant closures. They then partnered with supermarket and convenience retailers across the county, which were struggling to keep up with online demand, to increase their order capacity. Retail Analysis subscribers can learn more on the opportunity of these last milers in our guide to working with them here.

These new operators are building their proposition around a reliable, high-speed delivery service, targeting people who need items ASAP and who are often fine with paying a bit extra for that.  While other services can offer delivery within half an hour or so, the on-demand dark-store retailer is targeting sub-30 minute, and often sub-15 minute, fulfilment.

This can be achieved because instead of picking orders from retailer partners’ stores, these startups run an in-house, dedicated operation. They run their own fulfilment centres, or dark stores, in urban high population areas for quick delivery.

These dark stores can be located in neighbourhoods closer to where customers live and in cheaper locations, as they aren’t open to customers, reducing costs. As the operation is dedicated to fulfilling just online orders, operators should also have a clearer view of stock levels and therefore have better product availability versus the in-store pick solution. This improves the experience for customers as they will not receive product substitutions. Stock in these hyperlocal fulfilment centres is often also tailored to the particular neighbourhood it is serving.  

Subscribers can learn more about dark store fulfilment and other methods in our Ecommerce fulfilment models report.

Another point of difference is extended, and specifically late night, opening.  Mostly operating until the early hours, these services clearly target a time of day when people will be least inclined to leave home to find a still-open store anywhere nearby.

Here are some developments of the latest players to emerge…

Weezy expands operations to Bristol

Weezy launched in 2020 in London, offering shoppers access to 2,000 locally-sourced products with 15-minute delivery. It has now expanding its service to Bristol. It has introduced a new offer for the month of March that entitles shoppers to free deliveries for three months if their order is delivered in more than 15 minutes.

Dija acquires Cambridge-based Genie

Dija is a startup founded by senior former Deliveroo employees, Alberto Menolascina and Yusuf Saban. In December, it secured $20m in funding, led by Blossom Capital. It offers 10-minute delivery, with a flat fee of £1.99, and operates four dark stores in South Kensington, Fulham, Islington and Hackney. Each store carries 2,000 products. Dija plans to launch a further 20 hubs by the summer.

Dija recently acquired Genie, which offers similar delivery services in Cambridge, to support UK expansion.

It offers new customers £10 off their first order, clearly displayed on the app home page, as well as on its social media pages. There is also a dedicated page for Easter products on its app, allowing Dija to benefit from seasonal opportunities.

Source: Dija

Jiffy launches in the UK

Jiffy is the latest quick commerce player to launch in the UK. It offers fresh groceries and household essentials in 15-minutes. It said it has raised undisclosed amounts in an initial seed-funding round to aid its launch. Its dark stores offer 2,000 producs from both popular brands and local suppliers. It will initially be available in Westminster, Waterloo, Lambeth, Battersea, Clapham Town, Shoreditch, Bethnal Green, Hackney, Whitechapel, and Stepney Green. Jiffy plans to launch a further 20 local fulfilment centres across the UK later this year.

Berlin-based Gorillas launches in the UK

Gorillas, a startup initially launched in Germany, has brought its services to London. It offers delivery within 10 minutes across Angel and Shoreditch. In December, Gorillas raised investment of $44m and will use the funding to roll out to more cities in Germany and throughout Europe.

On its app, it offers a wide selection of locally sourced products under the ‘London Locals’ tab and has a focus on products catering to the meal-for-tonight and food-to-go missions. The range also includes non-food categories such as pharmacy, toiletries, pet and household. Like Dija, Gorillas features a page for Easter products on the app.

Source: Gorillas

Is there a sustainable market for these operators?

It’s no surprise that the sweet-spot location for these players is a densely populated metropolitan centre, especially if affluent.  Of course, the UK has more of these urban locations, and these are more closely spaced than in most countries, hence the interest being shown by companies of overseas origin such as Getir from Turkey.

With these new launches, the sector is becoming increasingly crowded. Faced with competition and profitability challenges, the chances for failures and consolidation are likely. Another operator, Fancy, has reportedly attracted takeover attention from a much larger US equivalent, Go Puff. There’s no doubt that gaining some scale quickly is going to give any one of these operations a significant advantage over the others in terms of resilience, and thereby a much better shot at longevity.

Keep it local

We highlighted ‘Keep it local’ as one of our five key ecommerce trends for 2021. As mentioned, the acceleration of online sales growth has resulted in pureplays and specialists building more dark stores. The development of quick commerce forces the bricks and clicks retailers to get their own rapid delivery operations up and running in city centres to prevent the loss of volume. Retailers facing into this competition will be responding with bespoke local strategies. They will prioritise increasing online order capacity and customer acquisition and retention marketing.

Looking for more insight on rapid delivery?

Subscribers can read these reports: