360 million dollar acquisition of InstaShop by delivery hero

The E-commerce sector is one of the rapidly growing industries in the world. To attain a competitive advantage and economies of scale, mergers and acquisitions have been a sure-fit way for most eCommerce companies globally. With lots of potential avenues for turning a profit or finding new avenues, businesses have now ample room to grow and experiment. If you are someone who follows the startup space in the Middle East, you would have noticed the increase in the M&A activity in the region during the last year. Some of the big acquisitions include Uber-Careem, Amazon-Souq, and Delivery Hero-InstaShop.

With the influx of changes in the eCommerce landscape and consumer behavior post the pandemic, some companies stood to hugely benefit from the new normal for example - fintech, ed-techs, health tech startups, grocery delivery, and eCommerce ( https://www.yourretailcoach.ae/services/e-commerce-online-stores/ ). On the other hand, offline players such as those focused on brick-and-mortar stores ( https://www.yourretailcoach.ae/services/brick-mortar-physical-stores/ ) like outdoor entertainment, physical events, outdoor advertising took a big hit on their revenue during the pandemic. Some of them had to even completely shut down. This double-sided growth made some companies grow huge enough to acquire the other while the smaller companies were forced to sell to stay afloat. Mergers and Acquisitions can be very useful and enable both entities to take on competitive advantage in the market post the deal. However, necessary due diligence must be performed before acquiring, so that the execution is done right, and synergies are quickly aligned post the deal.

Let's now take a deep dive look at one of the major acquisitions in the Middle East – Delivery Hero and Insta shop.

Delivery Hero, the Berlin-based food company and grocery delivery giant, is markedly one of the biggest technology companies with local operations across the Middle East. Witnessing an increase of 126 per cent in the year it commenced its operations in the ME, it earned close to 800-million-dollar revenue from ME, North Africa, and Turkey in 2019. This amounted to half of the company's total revenue from its operations across the world.

As per the report published in Delivery Hero's newsroom, the company brought in revenue worth $725 million in the first nine months of 2020, despite the challenges faced during the multiple lockdowns across the region. There is, however, a single-minded strategy at the heart of the unprecedented growth of Delivery Hero in the ME – Acquisitions.

From its entry into the ME region in 015 till 2020 – the German company has spent over 1.2 billion, making it one of the biggest technology startup acquirers in the region. Delivery Hero had lined up acquiring food delivery companies until August, but with the acquisition of grocery company Insta shop, the lineup has now changed texture. Let us look at the Insta shop acquisition.

Instashop was launched in June 2015 in Dubai as part of Jabbar Internet Group and operates across UAE, Qatar, Bahrain, Egypt, and Lebanon. This could give an indication of the flurry of future growth opportunities for Delivery Hero. Starting as an on-demand grocery ordering platform, the app has since expanded to the pharmacy, pet shop, butcher, organic, and maids' services evolving into a one-stop-shop solution. The app was nominated as one of the most promising start-ups to watch by Forbes Middle East – from 2016 t0 2018. Insta shop's business model focuses on a two-sided marketplace that serves both the retailers and buyers. It facilitates the purchase by connecting customers with vendors while the shops take care of the logistics. Retailers that do not own a delivery service can collaborate with Instashop to expand the reach of their business and acquire a larger customer base.

Acquired earlier this year, Instashop is one of the most interesting acquisitions by Delivery Hero in the region as it is the first delivery start-up that has been acquired by the company in the region.
Instashop's business model is marked by four elements – customers, store or supermarket, delivery service provider, and admin. With its easy-to-use and compatible integrated customer interface, it has been growing since 2015. It now collaborates with 100's supermarket chains with a base of around 500,000 monthly active users. Under DH's leadership, Insta shop now works as a liberated brand and plans to launch new markets. Partnering with around 1500 vendors, Instashop promises scheduled on-demand deliveries within 45 minutes on average. The acquisition of Instashop delivery has reiterated its quest to pioneer q-commerce- the next generation of eCommerce. With a rapidly scalable and economically viable business model, Instashop is a complementary fit to Delivery Hero's strong vision for a quick commerce expansion strategy in the ME region.

Delivery Hero has been in the business of delivering groceries almost in all parts of the Middle East for over a year now. The acquisition of its Instashop has now added Qatar, Bahrain, and Egypt to its market map in addition to its home market in the UAE. The delivery hero now hopes to regain dominance in the food grocery market in the ME region by eating up all its competition. Dark stores have been part of its strategy since 2019 in both the Middle East and North Africa ( https://www.yourretailcoach.ae/dark-store ).
"People shifted to online purchasing because of indicators from the World Health Organisation to try to stay at home. I think a big amount of these new users who are trying e-grocery will stick to the convenience of it moving on," Cosmin Manea, founding partner and general manager of InstaShop, told Wamda in April.

For Insta shop, the acquisition has opened new opportunities to expand to a bigger market. It will operate as an independent brand under Delivery Hero which is further expanding its dominance in the Mena food tech space. With Delivery Hero's strong vision and capabilities to build a unique customer experience to reflect the change in customers' behavior from cooking to order, they are strongly focused on being the leading player in the market. Acquiring new markets with leading market positions and thereby broadening its geographical footprint is part of the growth strategy.

Delivery hero is strongly focused on delivering an amazing, fast experience. This vision might not seem extraordinary for any delivery service provider. However, with around 1 billion orders per year and with continued growth and expansion, it looks like the company is on its way to delivering its ambitious vision.

If you are a brand that is looking to establish your grocery or food delivery service or is overwhelmed with challenges in the existing service in the competitive environment, then consider partnering with management consulting services or retail consulting services in Africa like YRC ( https://www.yourretailcoach.ae/ ). YRC Retail Consultant ensures minimalistic manual intervention in the grocery delivery service system and helps build human-centric solutions that navigate the digital shopping landscape. With the enormous experience that YRC has accumulated over the years by working with international eCommerce brands in and out of the region, YRC has evolved as the single-point contact for getting the entire brand up & running for many high impact strategic projects. Surpassing the disruption through their end-to-end services, YRC challenges the current industry obstacles in-home delivery management and finds key solutions for their clients in the African market, consolidating their future success.

Get advise for E-commerce retail business : http://www.yourretailcoach.ae/contact-us/

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We help our clients build robust management systems which shall help to reduce their involvement in daily operations. We act as "Growth Partners" to our clients and help our clients grow in an organised manner. We have served more than 100 brands till date and are associated with 85% of them.

This release was published on openPR.