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Getting a bunch of bananas and avocados from your favorite 15-minute grocery delivery company at 3 a.m. might be the greatest thing since sliced bread, but some of these companies are finding themselves in somewhat of a cost-related pickle in such a low-margin business.

While covering the recent news of Misfits Market acquiring Imperfect Foods, Misfits Market founder and CEO Abhi Ramesh noted it was difficult to reach profitability in the industry as sales leveled off in the past two years. Some companies have made layoffs or left markets due to “burning a tremendous amount of cash and not raising capital.”

With online grocery shopping in the U.S. poised to be a $187.7 billion industry by 2024, up from $95.8 billion in 2020, we found ourselves exploring whether other consolidation possibilities are in the pipeline, as well as the future of IPOs for startups in this space.

Experts say grocery startups are keeping a watchful eye on what happens with Instacart’s looming IPO as an indicator of additional public listings to come. But M&As could be part of the path to the public markets: Ramesh, for instance, said his company aimed to go public. The Imperfect Foods deal was a strategy for reaching profitability as one strong company.

Consolidation station

Instacart itself has been in acquisition mode lately. The delivery giant has acquired four companies in the past 12 months, including two in the past two weeks: Rosie, an e-commerce platform for local and independent retailers and wholesalers, and Eversight, an AI-powered pricing and promotions platform for consumer packaged goods brands and retailers.

Grocery delivery startups with low margins might drop IPO dreams for M&A reality by Christine Hall originally published on TechCrunch

Source: New feed

2022-09-16T19:00:02+00:00
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