Getir, the Turkish instant grocery delivery startup, has expanded its U.S. presence through the acquisition of FreshDirect, a New York-based online grocery delivery service. The terms of the deal were not disclosed. FreshDirect, founded in 1999, initially raised $517 million in its startup phase, with subsequent ownership changes, including its sale to Ahold Delhaize and Centerbridge for $300 million in November 2020. Despite the acquisition, FreshDirect will retain its branding. This move comes amid challenges for Getir, once valued as high as $11.8 billion but more recently reported to be raising $500 million at a $2.5 billion valuation. The grocery delivery landscape has seen consolidation and challenges, with companies like Flink and Gopuff operating in Europe, and even Flink rumored to be an acquisition target for Getir.
The broader context of grocery delivery reflects shifts in consumer behavior. The industry experienced significant growth before 2020, but the COVID-19 pandemic accelerated the trend as people sought to avoid in-person shopping. This led to a surge in funding and the emergence of "instant" delivery, where goods could be delivered within minutes. However, the economic viability of these models came into question, with companies seemingly pouring money into the market to gain market share. Many grocery delivery startups struggled as demand normalized post-pandemic, and consumers returned to in-person shopping. The unit economics of these instant delivery models, akin to those of Uber and Lyft, faced scrutiny.
Getir and FreshDirect quietly announced their deal through a brief press release, outlining plans for significant synergies. The acquisition aligns with Getir's strategic ambitions to grow in the U.S., leveraging FreshDirect's technology and operational footprint for faster services. FreshDirect, in turn, benefits from access to Getir's quick convenience service. The acquisition aims to enhance the quality and variety of products, particularly fresh items, making it more appealing to New York customers. The grocery delivery market continues to evolve, with companies adapting their strategies to navigate changing consumer habits and economic landscapes.