E-Commerce Unicorns 2022: Motorway and Flink Meet Pandemic Driven Demands through E-Commerce

According to a report published earlier this year, the e-commerce market in Europe is expected to grow 7.3% annually to $363 billion by 2027 from $481 billion in 2022. The recent pandemic has accelerated the demand for e-commerce across various sectors. Supply chain issues have accelerated the demand, and values for used cars. One such player, benefitting from this growth, is UK-based Motorway, which entered the Unicorn club recently.

Motorway’s Offerings

Motorway was set up in 2017 by Tom Leathes and Harry Jones with a vision to help build a better car buying experience for everyone by leveraging advanced technology tools. It aims at providing sellers and buyers the ability to get the best deal on their vehicle using their phone. Initially, Motorway designed and scaled its price comparison technology by partnering with some of the UK’s biggest online car buyers. It gradually added dealerships to its car buying network to help get better prices for used cars.

Today, the company has a network of over 5,000 car dealers directly bidding on vehicles. The company claims that it is able to sell used cars for higher prices in as little as 24 hours, while supporting its car dealer partners to acquire the best used car stock. Since inception, it has helped value and sell over 2.5 million cars.

Motorway’s Financials

As of the third quarter of 2021, Motorway was clocking sales of over £300 million (~$411 million), a growth of 300% over the year. It plans to sell cars worth more than $2 billion by the end of this year.

Motorway has raised $273 million in funding so far from investors including Iconiq Growth, Index Ventures, Latitude, and Unbound. Its last round of funding was held in November last year, when it raised $67.7 million at a valuation of over $1 billion.

Motorway has plenty of competitors in the used car space though. Names like Maihaoche, Tire Agent, RealTruck.com, and KAVAK operate in the similar space and offer an e-commerce driven used car experience. Financial details of these companies are not widely known.

Flink’s Offerings

Besides used cars, grocery delivery services have also boomed in the recent past and have created many a Unicorn. Flink is a recent entrant to the space. Founded in 2020 by Oliver Merkel, Cristoph Codes, and Julian Dames, Berlin-based Flink is an on-demand delivery platform that allows customers to order groceries through its app or website, and delivers them within 10 minutes.

The company operates as a micro hub model through multiple warehouses across the cities it is present in. The service is currently available in Austria, Germany, France, and the Netherlands. It offers a variety of categories including fresh meat and fish, bakery products, eggs and milk, alcoholic beverages, and snacks.

Flink earns money by selling products on its website, and through a delivery fee. It purchases orders in bulk from wholesalers and is able to stock them up in its fulfillment stores from where it retails to the consumers. Despite marking up prices for margins, by avoiding costly retail store presence, it is able to sell goods at lower costs than other convenience stores. Both orders and riders can be tracked through the app. Additionally, by tracking buyer information, Flink is also able to offer recommendations, and upsell higher margin products.

Recently, the company announced its acquisition of Cajoo for $93 million. The acquisition allows Flink to expand into France and will help it overtake Getir as France’s biggest instant grocery business. Cajoo covers Paris in addition to eight other cities, has 30 hubs, and a footprint of nearly 6 million customers. Prior to the acquisition, Cajoo raised $47.2 million in 2 rounds of funding led by Headline, Frst, Carrefour, and XAnge. Its most recent round was in September 2021 where it raised $40 million.

Flink’s Financials

Flink says it is currently operating at an ARR of $500 million, with revenue growing at double-digit percentages week-on-week. It does not share detailed financials.

The company has raised $1 billion in 3 rounds of funding led by DoorDash, Target Global, TriplePoint Capital, Rewe Group, Prosus & Naspers, Bond, Northzone, Mubadala Capital Ventures and Cherry Ventures. Its most recent round was held in December 2021 where it raised $750 million at a valuation of $2.85 billion.

But things no longer seem to be so rosy in the grocery delivery world. Pandemic restrictions have eased, consumers are willing to go out on their own to grocery shop, and inflationary pressures are making investors more cautious of where they invest, and at what valuations. Getir of Turkey, known to be the biggest and oldest of these deliverers, Germany’s Gorillas, and UK-based Zapp are all looking at reducing costs and cutting staff. Plus the market is also becoming more competitive. Restaurant delivery service providers such as Deliveroo, and Uber Eats are also tying up with grocery chains to begin delivering groceries.  

I continue to have doubts about these exorbitant valuations. I suspect that like with other sectors, valuation of e-commerce companies will also tumble, especially as they are exposed to the scrutiny of public markets. Flink, Motorway and many more will soon have to deliver profits to make their investors happy. And that is when the tire will meet the proverbial road.

Photo Credit: Pexels from Pixabay

This segment is a part in the series : E-Commerce Unicorns 2022