Specialist
Former executive at Getir Perakende Lojistik AS
Agenda
- UK and European q-commerce (quick commerce) competitive landscape evolution, focusing on consolidation activity and resulting strategic and profitability implications
- Getir’s December 2022 acquisition of Gorillas – likely strategic rationale, resulting strategic implications, competitive dynamics and execution risks
- Longer-term view on marketing spend trends, consolidation and path to profitability
Questions
1.
An inevitable consolidation wave hit the q-commerce [quick commerce] space as a whole – we saw multiple players getting acquired and some inorganic partnerships were being formed with delivery-first players, so consolidation has hit the space itself and the q-commerce players and food delivery players. How do you think the industry structure between the two verticals is going to evolve over the next 1-2 years?
2.
Coming back to the overarching thesis we discussed of q-commerce and the food delivery space merging together, we find that most of the remaining pure-play q-commerce players have either been consolidated or have left the market. Flink still remains in the market today, Gopuff from the US is still gaining a degree of traction, and of course there’s Getir. Across these three players that are still q-commerce first, how will consolidation play out?
3.
What do you think is the likelihood of Getir acquiring Gopuff? If you think about the fundamentals of this and how it might work, when it comes to the CEOs’ personalities and perhaps the viability of the two cultures coming together, do you sense this is potentially something senior management is looking at within either of the companies or will egos get in the way?
4.
You mentioned the European market, and as you said, Gorillas has access to a majority of the markets. Interestingly, I think a member of the Flink business said it’s a very traditional, conservative business and describes itself as a little boring, but this is one of the main players that has traction in the market. Do you think Getir might also be looking at acquiring and consolidating Flink? What’s the likelihood of that happening or will the market inevitably have a duopoly with both Flink and Getir coexisting?
5.
Let’s talk about food delivery, or the players that were food delivery first in terms of their nature. They have also expanded quite aggressively to this space. One of Deliveroo’s growth drivers now appears to be its roll-out of the space with the Hop model. There’s Just Eat Takeaway, which does have this relationship with Getir that it’s rolling out now in the UK and will be rolling out across Europe. Uber has a partnership with Gopuff, and of course there’s Delivery Hero with Dmart, so we’re seeing these traditional food delivery players also ramp up significantly. Across M&A activity for maybe a Deliveroo looking at acquiring a Getir, anything between these two sectors or these major players acquiring each other, how do you see consolidation taking place between these two sectors now?
6.
What do you think is hypothetically up for acquisition or could potentially merge? When I’m looking at how players such as Deliveroo, Delivery Hero and others have performed over 2022, they have underperformed. The market cap of these companies is not too high and there’s always a threat of some acquisitions or M&A taking place. Even the q-commerce players, because of the CAPEX outlay, are bleeding substantial cash. Who do you think might be looking at acquiring someone else? Do you sense that a Getir might be looking at acquiring a Deliveroo or will a Just Eat Takeaway be a better fit? What sort of cross-industry M&A do you think will happen?
7.
We discussed the importance of the sectors coming together for numerous synergy buckets. Why do you think food delivery isn’t a core proposition that Getir Founder Nazim Salur or the team is looking at, given how important it might be and how advantageous the synergies could be? What’s the logic of not being aggressive on this?
8.
Let’s discuss Getir’s corporate strategy, breaking that down into the geographic mix expansion and service line expansion. As you said, the company has GetirMore, GetirLocals, GetirFood and GetirWater. If I think of product or a company that’s very similar to this in the realm of Southeast Asia, there’s Gojek, which became the super-app of sorts for the Indonesian market. Could you outline how Getir is thinking about the super-app development? How does that super-app logic work around the core business vs the ancillary businesses for the Turkish market and beyond Turkey?
9.
How is Getir allocating capital? According to the company’s recent financial results, there were losses across the entire board, and there isn’t currently a lot of dry powder in the market, with huge valuation cut-downs. How is the business looking at allocating capital into new ventures and testing new ventures vs getting the operations done right and gaining leadership in the markets it’s currently present in? How is it thinking about that trade-off?
10.
I’d like to understand the magnitude of Getir’s revenue contributions. Looking at how much revenue the company is generating from the rapid grocery space, could you share a ballpark figure around how much revenue is coming out of the US vs Turkey and surrounding regions vs Europe? What might the revenue contribution pie look like now?
11.
Going back to the point around franchising, something I really liked about Getir’s model was that the company went ahead with the franchising of the dark stores, which we know in terms of the CAPEX outlay and the economics is quite a financial burden on these firms. I think you mentioned it only has the franchise model in Turkey currently. Can you outline which markets it currently operates in that have that franchise model, and how is executing that franchising model going for the business?
12.
I’m seeing that the CAPEX outlays for each of the stores – the onus of that, the inventory management and so on – still falls onto Getir, but the company doesn’t have to deal with the actual day-to-day logistical operations of the business. Is that correct?
13.
If the entrance fee is equal to or more than the capital amount, as you said, could that theoretically be a longer-term profitability driver for Getir?
14.
Getir’s December 2022 acquisition of Gorillas wasn’t the company’s first acquisition. If I’m not mistaken, it also acquired Blok in July 2021 and Weezy in November 2021. What has been the company’s historical acquisition strategy, and what has been its approach to post-merger integration?
15.
I think Getir bought Gorillas for about USD 1.2bn. What do you think of the USD 1.2bn price tag? Did Getir potentially overpay? Do you think it’s about right? What are your thoughts on this price tag and can this price justify the synergies and the overall opportunity?
16.
When it comes to the geographic overlap between the existing markets of Getir and Gorillas, how significant is that overlap and the geographic difference between the two businesses? How do you think this will now shift Gorillas’ market share in the core markets? What are your thoughts on the similarity or dissimilarity of that geographic mix, and what might be the end result on its share in those markets?
17.
What do you think is the likelihood of Getir doing something similar to Delivery Hero, where it has an umbrella of different brands under it? We spoke about a potential acquisition of Gopuff in the US, where it also has the brand of Gopuff under it. Do you think we could ever see a house of brands being created or do you sense that’s not management’s vision for the business?
18.
I understand the CAC [customer acquisition cost] and customer retention costs, even in delivery right now, remain a substantial problem across the board. How material do you think these marketing cost synergies are going to be for Getir now that it has acquired Gorillas? How significant is that saving?
19.
What core risks do you anticipate from a marketing integration perspective between the Getir and Gorillas businesses? What core execution risks do you expect as that post-merger integration process goes along?
20.
When it comes to the future of the employee model, Getir is one of those interesting companies that went ahead and didn’t go with the gig economy model – the company actually has full-time employees that work for it. Do you think Getir will continue with and sustain the full-time employee model or will it have to shift to gig economy? How are you thinking about this, given it’s now expanding even further in Europe?
21.
We spoke about how Getir actually owns a lot of the inventory. I would think the company is going to be more advantaged from a supplier perspective now that it has acquired Gorillas. Do you think this is the case, and how attractive are synergies for the pricing power it has with suppliers?
22.
We spoke about how acquisitions are going to play out for Getir, the company’s global ambitions and Founder Nazim Salur. As you look at this business, what do you think are the key risks or concerns that could derail this global ambition? Everything seems strong in principle, but what are the execution risks and what should analysts be looking out for in terms of potential red flags or something that indicates the business is really sticking to its strategy? What are the good and bad things?
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