Gorillas — Dark stores and e-bikes
Jargon and buzzwords
The acceleration and diversification of e-commerce has seen a corresponding increase in brands, buzzwords, and jargon, leading to possible encounters with opaque and seemingly nonsensical phrases like ‘Gorillas is a unicorn’, ‘Dark store riders go electric’, or ‘Two tap top-up solutions’. If all of those make perfect sense to you, you can scroll down to the next section.
Still here? ‘Unicorn’ is venture capital speak for a privately held startup valued at US$1 billion or more. The ominously named ‘dark stores’ are simply warehouses or depots used by retailers who only sell online, analogous to Amazon’s ‘fulfillment centers’ but generally much smaller. In fact Gorillas even calls its dark stores ‘micro fulfilment centers’. ‘Top-up grocery shopping’ describes small volume purchases that complement or supplement the traditional (and possibly endangered) weekly shop - typically items like milk, eggs and bread, or depending on your priorities, perhaps beer, snacks and oven-ready pizzas. Top-up delivery services generally offer a range of products that can number in the thousands of individual items and are eating into a market hitherto served by big-box stores.
The inexorable expansion of e-commerce
E-commerce is not a new concept, but anyone suspecting that this electronic arm of the retail industry had reached anywhere near its full potential has had to revise their opinions in the past year or so, in no small part due to that ‘thing’ that has so thoroughly disrupted our lives, and which we are strenuously trying to avoid mentioning here.
App-based unicorn
One fast-moving app-based unicorn is Gorillas. Its business model is two pronged — it is both a retailer and a delivery service. Both of these activities are inextricable. Operating from dark stores, the company promises shoppers top-up grocery delivery in an astonishing ten minutes or less, a promise which by all accounts it keeps.
One of the keys to the speed of delivery is the way Gorillas handles deliveries. Rather than vans or trucks, instead it uses electric bicycles ridden by a dedicated team of riders clad in custom livery. Gorillas’ delivery riders’ ability to move more swiftly through traffic than traditional delivery vans saves the precious minutes that give the company its competitive edge.
Rapid deliveries and rapid expansion
In a very short time Gorillas has expanded from its Berlin base to reach at least sixteen other German cities. Gorillas has also made significant inroads on the Dutch market, serving nine cities at the time of writing. The service is also now available in several targeted neighbourhoods in Paris, London, Manchester, Milan, and has been just launched on the competitive New York scene.
Couriers in a climate crisis — a missed selling point?
Despite its admirably eco-friendly delivery system, Gorillas seems to largely ignore promoting the more sustainable, near silent, non-polluting virtues of its business model as a selling point. Given the current climate context, and the fact that environmentalism has gone from marginal to mainstream, it’s not unreasonable to think that many consumers would choose a more sustainable delivery system given the choice, regardless of the element of speed.
We asked Gorillas about this. They told us that they don’t have any data about their customers’ environmental sensibilities or how much that aspect weighs in shoppers’ considerations when choosing Gorillas over its competitors. But its website includes promises to use as little plastic as possible and to work with local farmers in order to guarantee freshness and reduce food miles, so Gorillas isn’t entirely underselling its green credentials.
Breakfast in bed? — what Gorillas told us
Answering our queries about its most popular products, Gorilla’s Dutch representatives wrote: “during the week, there’s a constant high demand for fresh products, local products and products that are common for the daily and weekly groceries. The closer we get to the weekend, there’s an increase in products that are consumed during weekend (drinks) or at an extensive weekend breakfast.”
E-bike employees — changing the gig-economy
Unlike other delivery services, reliant on the precarious gig-economy where workers are paid for what amounts to modern-day piecework, Gorillas riders are full-time employees, guaranteed a basic wage. Though this might sound like a pro-social initiative, all might not be as rosy as it seems. Since the business model’s number one selling point is speed of service and near-instant gratification, inevitably workers are under pressure to meet stringent deadlines.
It’s hard not to be reminded of Fredrick Taylor standing over workers with his stopwatch. Though Taylor was applying his principles of scientific management more than a century ago, the reaction by workers then was the same as that of some of Germany’s Gorillas riders today — unionize, a move Gorillas seems to have attempted to mitigate by sharing a 1 million US$ bonus among its riders and warehouse workers, which is certainly more conciliatory than Fredrick Taylor ever was. Shoppers also have the opportunity to boost the riders’ earnings by adding a tip via the app during the ordering and payment process.
Here in the Netherlands Gorillas has attracted the attention of those worried that the ‘need for speed’ may lead to accidents, and the idea of a special driving license for delivery riders has been mooted.
Flat fee for the final mile
In the world of transport and delivery the ‘last mile’ is said to account for at least fifty percent of the total shipping cost. By operating with dark stores as hubs, Gorillas’ riders are able to operate in that expensive or lucrative zone. In addition, a flat fee of €1.80 is charged per delivery, regardless of the number of items bought. Not having to maintain brick and mortar stores also reduces overheads.
Gorillas' grail — an untapped expanding market
Gorillas’ target market consists of an untapped demographic which is set to grow.
Picture the potential shopper faced with the hassle of masking up and heading out to brave the elements, while remembering to bring a reusable shopping bag of course, or abandoning a planned recipe because it needs more flour or butter than happens to be in the fridge or cupboards, or interrupting the kids busily doing their homework to drag them along to the shops for those last minute purchases, with all the inconvenience and bargaining that entails, or the party is in full swing but the snacks are running low (assuming parties will be a feature of the future) — the scenarios are endless. Now picture that same potential shopper realizing that there’s an app for that. Or imagine an app-less scenario and the millions of potential sales lost because the inconvenience of going to the shop didn’t win out in an off-the-cuff cost-benefits analysis.
Once a new technology that answers a previously unmet need is adopted it can lead to rapid societal and consumer change. ‘This is amazing’ can very quickly become ‘it’s hard to imagine how we ever lived without it.’ As people become increasingly familiar and comfortable with the concept of buying groceries by app it will become more firmly entrenched as a valid and extremely convenient shopping option.
Ice cream doesn’t even have the time to melt
Spaaza co-founder Sam Critchley recently ordered some ice cream through Gorillas’ app. “Not only did the ice cream not have time to melt, I didn’t have time to make a cup of tea between placing the first order and it arriving. It took just 6 minutes!”
Public transport and WFH — a boon for app-based grocery shopping
In cities with good public transport infrastructures an increasing number of people are forgoing car ownership. With the increase and normalization of ‘working from home’ (WFH) this trend is likely to continue. For the car-less, online shopping or app-based top-up shopping are a very attractive proposition. The speed of delivery offered by Gorillas makes that proposition even more seductive.
The Achilles heel of app-tapped top-up
Gorillas’ ongoing success and expansion is due in no small part to the simplicity of its business model, a simplicity that makes it very replicable. It is unsurprising that an increasing number of competitors are looking hungrily at the same market segment.
At the moment Gorillas has the advantage of being one of the frontrunners in the field, essentially creating its own markets as it goes. But eventually through saturation and overlap by competitors Gorillas’ current meteoric growth will slow and stabilize. Given how new a service Gorillas’ proposes there has been little time to build customer loyalty. Anecdotal accounts suggest that customers are very satisfied, and with repeated use start to increase the number of items bought with each new order. Investors certainly seem to concur. But …
Customer loyalty — an unexploited opportunity
A recent survey by a US-based industry magazine shows that online grocery shoppers lack loyalty.(https://www.winsightgrocerybusiness.com/retailers/online-grocery-shoppers-lack-loyalty). This raises questions about what Gorillas can do to maintain its customer base in the future. Moving fast and breaking things, whether eggs, or unions, or ten-minute promises, comes with risks.
How can Gorillas focus on keeping the new customers it wins beyond offering the service it supplies?
Do customer loyalty programs feature in the future of Gorillas and the pack of competitors following hotly on its (w)heels? We think so. Once a novel service establishes itself as the norm, brands will have to distinguish themselves by offering their faithful customers added benefits, or risk losing them to their competitors that do.
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