This story initially appeared in East-West Digital News, an international news resource covering the Russian innovation scene.
Mail.ru Group and Sberbank have invested in food delivery service Localkitchen.ru (“Kukhnya na rayone”) through their joint venture O2O. Citing Russia’s company register, business Vedomosti reported yesterday that O2O committed a loan of up to 290 million rubles (nearly $3.9 million at the current exchange rate) convertible into a 30% share.
The news came just weeks after O2O announced plans to acquire Samokat, another Russian food delivery startup.
In late 2019 Sberbank launched its own delivery service, ‘SberMarket.’ Focusing on grocery products and essential items, the service is available in dozens of Russian cities.
Mail.ru’s archrival Yandex also operates a food delivery service, called Yandex.Eda (Yandex.Eats), following the acquisition of the startup Foodfox in 2017. More recently, the company launched a new service called Lavka, spreading small warehouses across the capital. These are stocked with about 2,000 items and uses bike couriers to deliver orders in just 15 minutes, as reported earlier this year by Bloomberg.
Meanwhile Perekrestok.ru, the online branch of a leading food retail network, is growing at an impressive pace: in 2019, the company processed some 1.4 million orders, a threefold increase from 2018, as reported by its owner X5 Retail Group. The group reported its April 2020 online sales increased 4.7 times year-on-year.
The coronavirus crisis has triggered a dramatic increase in online food delivery activity. However, this market grew even before the pandemic – by more than 40% in 2018, according to DataInsight.
Startup activity
On the startup scene, several deals took place over the past year:
- In July 2019, PIK Group, a leading residential property developer, invested in a St. Petersburg-based e-grocery service;
- In August, food delivery startup iGooods attracted nearly $5 million from Joom, a Russian-founded international marketplace;
- In April 2020, Russian food delivery startup Elementaree.ru secured $5 million from the French vegetable giant Bonduelle and Russia’s sovereign wealth fund RDIF.
However, neither a booming demand nor generous funding are enough to ensure startup success. In late 2019 and early 2020, no fewer than three delivery startups shut down, as noted by East-West Digital News.