Lessons from the rapid grocery delivery boom: $10B+ of VC money used for ads and promos created the market from nothing, app downloads are down ~90%, and more
Bryce Elder / Financial Times :
Context & Ripple Effects
Rapid grocery delivery was previously framed as a land grab, with European players pursuing scale through frantic dealmaking among instant-grocery challengers. In New York, the competitive model was already showing strain as some services reportedly lost more than $20 per order on average.
The subsequent retreats and closures of pandemic-era operators exposed the difficulty of making rapid delivery economics work. This account ties that retrenchment to a demand base built with venture-funded advertising and promotions rather than durable usage.
First-order effects
- A roughly 90% decline in app downloads leaves rapid-delivery operators with far less evidence of acquisition momentum once promotional spending recedes.
- The reported $10B+ spent on ads and promos recasts much of the category's early customer demand as subsidized, intensifying pressure on surviving services to retain customers without comparable incentives.
Second-order effects
- Competitors must choose between restoring costly discounts to defend order volume or accepting slower growth in pursuit of better unit economics.
- Investors and operators are likely to scrutinize customer-acquisition spending more closely, particularly after the earlier pattern of per-order losses and startup shutdowns.
Third-order effects
- If usage continues to fade after subsidies are removed, rapid grocery delivery is likely to consolidate around operators that can attach the service to broader logistics, retail, or customer bases rather than fund it as a standalone land grab.
- The episode reinforces a broader venture-market test: capital can accelerate category awareness, but it cannot by itself establish recurring demand at prices that support the operating model.
The trend: Rapid grocery delivery is part of a wider shift from venture-funded customer acquisition toward proof that convenience services can retain users and sustain economics without persistent promotions.