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Does “swift trading” still have a future in France?
Jul
Cajoo, Dija, Gopuff, Koll, Zapp, Gorillas, Frichti, Zap, Getir, Flink, Yango Deli… There were many of them two years ago who were on the starting line and wanted to introduce “swift trade” to France, grocery delivery. Today, after a wave of buyouts and discontinuation of several initiativesIn France, only the Turkish Getir and the German Flink continue their operations.
Or, According to Financial TimesGetir is currently in talks with Flink to buy its rival, which would leave just one operator in the long run… if it manages to free up the money, which is all the more uncertain now that Getir has listed its French subsidiary in court debt collection at the beginning of May and that swift investors did it recently lost the regulatory battle led by the cities, and in particular the Paris City Hall.
Is swift trading definitely becoming a thing of the past in France? Or, like the living dead, will one or more players succeed in imposing this model in the coming years?
Deliveries in 15 minutes
The concept of swift trading has been developing dynamically in Europe, the United States and Asia for several years. The Covid-19 pandemic has undeniably accelerated the development of the situation, especially during periods of isolation that favor online shopping. It is based on the marketing promise that consumer goods will be available within 10-15 minutes of placing an order on a website via an application.
To keep such an ambitious promise (we’re talking about “instant deliveries”), players have created their own logistics system based on “murky stores,” diminutive warehouses that aim to provide ultra-fast deliveries. Located in the heart of cities, the murky store takes the form of a “ghost store” with sections where products are stored.
[Près de 80 000 lecteurs font confiance à la newsletter de The Conversation pour mieux comprendre les grands enjeux du monde. Abonnez-vous aujourd’hui]However, unlike a conventional store, it is not accessible to shoppers, but only to order pickers who collect products, which are then transported by delivery people on electric bikes or scooters to the home or workplace of online shoppers.
Portrayed as a breakthrough in the delayed 2010s, flash trading is now emerging as a full-fledged explosion, fueled by several unfavorable factors.
Economic model challenging to find
The first explanation for the difficulties of swift trading is the difficulty that start-ups had in finding a viable business model. This is due to the fierce initial competition between many players in this market. Because they all settled in the same city centers, at a time when demand was not yet high, “swift merchants” had difficulty in obtaining enough orders, as well as in increasing the average shopping basket, which remained very low.
This did not allow them to profitably invest in having murky stores and in the numerous expenses for IT and marketing systems necessary to promote their services (advertising, promotion at the time of ordering, etc.).
While initially in the post-Covid economic context, when e-commerce was growing and liquidity was available, these start-ups had no difficulty in self-financing despite the lack of profitability, the situation changed abruptly in 2022. Galloping inflation effectively put an end to free money, which gradually dried up the sector’s financing and led to the bankruptcy of many companies.
Competition from pedestrian drives
A second explanation for the difficulties faced by swift traders is the enhance in pedestrian traffic, particularly driven by Leclerc and Auchan, as shown in maps published in the 2023 edition of the report.test (Free download) Basics Drive and e-commerce grocery (Dauvers Edition). Based on their disks located on the outskirts of cities, they have set up relay points in urban centers from which consumers can pick up their purchases. Unlike fast-paced retail, the consumer has to make an effort to pick up the products on foot. He also has to wait a while to pick up the order: if he places it in the morning, it will be available after an average of 3 hours.
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As we can see in the comparison of both services, which is the subject of the research that will be published in the journal Law and the cityif the associated logistics service is therefore degraded compared to fast-paced trade, with foot traffic, the consumer benefits from a much more diverse assortment (10,000 products stored on disks compared to 2,500 in murky stores) and a hypermarket offer price. Given the stunning expansion of these pedestrian routes in cities, it seems that consumers follow this value proposition and buy it…
Legal obstacles
The third explanation is related to the legal battle that cities have waged against this form of trade. In Paris, murky shops have been set up in former businesses (minimarkets, shops, restaurants), ground floor offices, and even former medical or paramedical practices. This novel activity sometimes causes noise pollution for local residents due to deliveries coming and going until delayed in the evening.
Read more: Flink, Getir, Cajoo… “Shadow shops” and “swift trade” are changing the shape of huge cities
Under pressure from disgruntled residents, in 2022, the Paris City Hall issued a notice to the Gorillas company (since purchased by Getir), ordering it to restore nine premises “to their original state” under an administrative penalty of €200 per day of delay. The main argument was the illegal nature of their status: not businesses, but warehouses, and as such they had to comply with the applicable legislation.
In an urgent procedure, the Paris Administrative Court occupied by Gorillas challenged this interpretation, arguing that they could be considered “urban logistics spaces” that, unlike warehouses, are not prohibited by the Paris local development plan. However, on March 23, 2023, the Council of State finally ruled that the murky shops are in fact warehouses and not shops within the meaning of the Urban Planning Code.
As of 24 March 2023, it is published in the Official Journal on Decree No. 2023-195 On 22 March 2023, on various measures concerning the purpose and sub-purpose of buildings that may be regulated in local development plans or documents replacing them. It confirms in every respect the position of the Council of State regarding the status of murky shops (adding to this the issue of “murky kitchens”, i.e. kitchens dedicated to food sold exclusively for delivery).
Rise of the undead?
Given this set of factors, the future of high-speed trading seems certain. However, as we conclude this review, we would like to emphasize that all is not lost and that there is still reason for hope for high-speed traders.
Today, there are only two global players left in this market: Gopuff profitable in some cities of the United Statesand Getir, for whom the situation is the same in Türkiye. While Gopuff has withdrawn from the French market, Getir could potentially succeed in France, when the market is no longer competitive and it will be easier for it to ensure the profitability of its operations with a larger volume of orders.
In that case, it seems to us that in the long term, the recent regulations on murky stores may be overturned. How can we explain the warehouse classification of murky stores when we know that the disks, which in this case are warehouses with an area of 5,000 m2are being considered by loi Alur How are companies?
Although there is a real the demand of the younger generation for this form of trade, that it is critical for busy city dwellers who no longer have time for anything, we can therefore assume that this form of trade still has a future. And that, if it does not fundamentally disrupt distribution, it can establish itself as one of many segments of the omnichannel offer in food distribution.
