middle easten
Ecommerce frenzy puts last-mile delivery under the spotlight

Ecommerce frenzy puts last-mile delivery under the spotlight

21-07-2021 | Stunning statistics
Fast grocery delivery operator Getir saw its valuation reach USD 7.5 billion after a recent round of funding.
  • Jack  Neele
    Jack
    Neele
    Portfolio Manager
  • Richard  Speetjens
    Richard
    Speetjens
    Portfolio Manager

Speed read

  • The digitalization-of-commerce trend has many ramifications for investors
  • Growing focus on last-mile delivery challenges and opportunities is one of them 
  • Last-mile logistics is key from both a financial and a sustainability perspective

What has happened?

Istanbul-based fast grocery delivery company Getir recently said it had closed a USD 550 million ‘series d’ investment, setting its valuation to a staggering USD 7.5 billion. 1 This marks Getir's third round of investment in 2021, with nearly USD 1 billion raised since the beginning of the year. According to the firm, the latest capital injection will be used “to fuel its expansion” into the US.

Figure 1: Expected US total retail and retail ecommerce sales 2019-21

Source: eMarketer, May 2021

This development comes as the ecommerce frenzy triggered by the first Covid-19- induced lockdown remains unabated, despite the rapid progress in vaccination campaigns and the gradual reopening of economies. In the US, for instance, US ecommerce sales are expected to grow by 17.9% this year, and reach USD 933.30 billion, after a dramatic 32% rise last year (see Figure 1 for more details).2 

The rise of e-commerce is transforming the delivery and fulfillment industry. This is especially the case for the so-called ‘last-mile’ part of the process – an area Getir focuses on – as client expectations increase. Having launched its international operations in London and Amsterdam earlier this year, Getir is expanding into other European cities and preparing to set foot in the US.

Why is it important?

Last-mile delivery represents the final stage of the delivery process: the point at which goods finally arrive at the customer’s door, or at a pickup point. Last-mile supply chain is therefore crucial to customer satisfaction. But it is also expensive and time consuming. It accounts for 53% of the total cost of shipping, and 41% of total supply chain costs.3  

Last-mile logistics also has important consequences in terms of sustainability. Fast delivery means constantly crisscrossing territories, driving traffic congestion and pollution. Without any intervention, by 2030 the number of delivery vehicles in the top 100 cities globally could increase by 36%, according to estimates by the Word Economic Forum released before the Covid-19 pandemic.4 

Given the high stakes, both from a financial and a sustainability perspective, ecommerce players have been taking important steps to address these issues. One common approach taken by major players has been the creation of networks of local fulfillment centers, tasked with the collection and distribution of parcels for a given geographical area.

But besides local fulfillment networks, there are many other ways ecommerce specialists can reduce costs and delivery times, as well as their environmental footprint. Investing in innovative data and analysis tools, that help connect retailers and logistics providers and optimize last-mile delivery, is another example.

What does it mean for investors?

Growing focus on last mile-delivery challenges and opportunities illustrates the many ramifications the digitalization of commerce may have for investors. The spectacular ‘great acceleration’ in online retail sales seen since 2020 is only one of the many sweeping changes redefining the future of commerce and the long-term winners of this broader digitalization-of-commerce trend.

Other important developments, such as growing competition among ecommerce players, the emergence of regional champions, the advent of omnichannel retail frameworks combining online and offline retail, and the rise of the sustainable consumer are bringing about major changes in consumer spending globally.

As part of our Global Consumer Trends equity strategy, we closely follow developments in all these interconnected areas. For us, investing in the future of commerce goes well beyond following broad statistics regarding e-commerce adoption, and looking at a limited number of well-known online retail giants.

1Bringg, 16 June 2021, “Bringg Raises $100M Series E Round to Capitalize on Growing Momentum for Last-Mile Delivery and Fulfillment Technology”, press release.
2eMarketer, 9 June 2021, “US ecommerce forecast revised upward, 18% growth expected in 2021”, blog article.
3Pharand, A., 27 March 2021, “The sustainable last mile”, Accenture research report.
4World Economic Forum, January 2020 “the Future of the last mile ecosystem”, report.

Logo

Disclaimer

Robeco Institutional Asset Management B.V. (DIFC Branch) is regulated by the Dubai Financial Services Authority (“DFSA”) and only deals with Professional Clients and Market Counterparties, and does not deal with Retail Clients as defined by the DFSA.

Neither information nor any opinion expressed on the website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. An investment in a Robeco product should only be made after reading the related legal documents such as management regulations, prospectuses, annual and semi-annual reports, which can be all be obtained free of charge at this website and at the Robeco offices in each country where Robeco has a presence.

Please confirm that you are a professional investor and/or institutional investor and that you have read, understood and accept the terms of use for this website.

I Disagree