A Careem Quik driver ready to deliver a grocery order in Dubai, United Arab Emirates.
The ride-hailing app Careem, a subsidiary of Uber Technologies, joins the fast-growing dark store segment with the launch of its new fast food delivery service Careem Quik.
The service, which combines the warehouse infrastructure of specialized stores with reduced delivery times, adds Careem to an international pool of start-ups that are booming and have invested in a model aimed at completely shaking up traditional grocery shopping.
In addition to dark kitchens, dark stores are also shops and kitchens that are closed to the public and house goods that are only intended for online ordering.
“Our real competitor is the offline supermarket. This is where the majority of customers spend their time, ”Careem’s chief grocer, Chase Lario, told CNBC ahead of the launch announcement. “The grocery trade is one of the few industries that has not changed radically from the customer’s point of view in the last hundred years.”
“We generally don’t think it’s a great solution to the problem users are facing,” Lario said. “That’s really what we’re trying to do here, radically simplifying the way people shop for their groceries.”
The company plans to offer its fast delivery service to nearly half of Dubai by the end of this year and across the city next year. 100 stores in the United Arab Emirates and Saudi Arabia are slated for 2022, automating the process over time through its partnership with US start-up Kiwibot for providing robots for sidewalks.
Careem already offers grocery deliveries in its app through partnerships with local retailers whose delivery times vary but often exceed an hour. With Quik, Careem controls the entire supply chain, allowing greater control over prices, speed, reliability and inventory. A delivery time of just 15 minutes for groceries is aimed for.
The threat to supermarkets
The news comes against the backdrop of a global supply chain crisis that has gripped almost every aspect of e-commerce. But Lario says Careem Quik’s operation has not yet been affected.
“Part of the beauty of dark businesses is that they are relatively simple in their requirements. Fridges, freezers and shelves and some basic furnishings that allow them to be so efficient, ”he said. “They’re talking about 10 times the sales per square foot of a traditional supermarket. And luckily, everything we needed was readily available.”
The dark store model will bring the consumer price point to full parity with supermarkets, Lario said, emphasizing the threat it poses to conventional retailers, who often already have tight financial models and struggle to keep up with demand.
“It takes a lot longer to prepare and is a lot more complex,” added Lario. “You can see things like price inflation creeping in. With Careem Quik the model is really efficient and we’ll be able to compete with some of the biggest supermarkets out there.”
While the amount invested in the new service was not disclosed, Lario said the expansion of the service will be fully self-funded. He sees the company hiring hundreds and possibly thousands of new drivers to meet demand.
The grocery market in the Middle East and North Africa is now an industry of $ 0.4-0.5 trillion, according to Careem, and it predicts the online grocery market will generate more than $ 11 billion by 2025.
Massive appetite of investors
Careem’s foray into “dark store” grocery e-commerce will bring the Middle East to the already burgeoning shopping relocation that was charged during the pandemic lockdowns. By April 2021, investors had already invested more than $ 14 billion in on-demand grocery delivery services, according to PitchBook Data. In the first four months of 2021, venture capital investments in rapid delivery apps exceeded the total investment volume in the industry for 2020.
And investor appetite for delivery services continues to grow. Turkish startup Getir, which promises grocery deliveries in just 10 minutes, is currently valued at $ 7.7 billion after it announced it would take over UK competitor Weezy, previously owned more than $ 25 million by venture capital firms had applied.
Careem ride-hailing app is displayed on an iPhone in a shopping mall in Dubai.
Christopher Pike | Bloomberg | Getty Images
Getir raised more than $ 1 billion through November from investors including Silver Lake, Mubadala and Sequoia. Europe is also full of startups competing with brick and mortar supermarkets like German grocery supplier Delivery Hero, which recently acquired a minority stake in online grocery startup Gorillas.
The takeover of the British companies Dija and Fancy by the American food start-up Gopuff represent further deals in the heated market, which is now increasingly consolidating, as the numerous start-ups have difficulties differentiating their offerings.
The launch of Careem Quik comes amid reports that Uber is currently in discussions with Careem senior management to bring outside investors into the business and enable the Middle East subsidiary’s executives to better make decisions about their strategy. Careem did not comment on the coverage.
Careem is a great app, i.e. its range of services – from ride hailing to delivery of items, bike rental, food and grocery delivery, bank transfer, booking a cleaner or even planning a PCR test – can be ordered in the same app . The Dubai-based company was acquired by Uber for $ 3.1 billion in 2019 and operates in 13 countries and over 100 cities in the Middle East, South Asia and Africa.