Wed, 28 Jul 2021

Prosus, Europe's largest consumer internet company, is planning to expand its grocery services using "dark stores" as competition booms in the global market for food delivery.

Additional dark stores - small warehouses located in busy markets that carry the most popular items - will make deliveries more efficient because they're located closer to customers, Prosus Chief Executive Officer Bob van Dijk said in a phone interview on Monday.

Grocery delivery took off during the pandemic as customers avoided crowded shops, and food-delivery companies, which already had logistics in place for restaurant orders, took advantage of the demand. The concept is already being rolled out by portfolio companies including Delivery Hero, in which Prosus owns a 25% stake, and Brazil's iFood, Van Dijk said.

Amsterdam-based Prosus is also making investments in standalone grocery-delivery businesses, most recently in Berlin-based Flink.

"The most convenient way to operate dark stores is to own them and operate them," said Van Dijk. "This way one knows where customers are, what the volumes are, and what people like to order."

While its online food business is yet to turn profitable, Prosus values it at about $16 billion (~ R228.5 billion at current rates). Revenue at the unit grew 127% to $1.5 billion (~ R21.4 billion) in the fiscal year ending in March.

Still, not all of Prosus's competitors are convinced that it's a good way to make money. Jitse Groen, CEO of delivery service Just Eat, has said that while the company's running tests on grocery delivery, he was reluctant to sink much capital into it because of the amount of competition in the market.

With instant delivery, Prosus already has the networks, technology and drivers, that makes the expansion into grocery deliveries an easy progression, said Van Dijk. Prosus has invested $6 billion in its food unit to date, and the business operates across 69 markets spanning from India to Brazil.

Prosus shares rose 1.4% to 85.34 euros at 2:37 p.m. in Amsterdam trading. The stock has declined 3.4% so far this year.

Source: News24

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