Low-margin grocery delivery startups can drop IPO dreams to the reality of mergers and acquisitions • australiabusinessblog.com

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

While reporting on the recent news of the acquisition of Imperfect Foods by Misfits Market, Abhi Ramesh, founder and CEO of Misfits Market, noted that it has been difficult to achieve profitability in the sector as turnover has leveled off in the past two years. Some companies have taken layoffs or exited markets because they “burned a huge amount of cash and failed to raise capital.”

Of online grocery shopping in the US poised to be a $187.7 billion industry by 2024, up from $95.8 billion in 2020, we discovered whether there are other consolidation opportunities 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’s happening with Instacart’s impending IPO as an indicator of additional public listings to follow. But mergers and acquisitions can be part of the path to public markets: Ramesh, for example, said his company was aiming to go public. The deal with Imperfect Foods was a strategy to become profitable 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 promotion platform for consumer packaging goods brands and retailers.

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