Appetito, an Egyptian service that delivers groceries and home items to consumers from 11 dark stores in selected cities across the North African country, is purchasing Lamma, a similar firm with activities in Tunisia and Morocco’s Maghreb regions. By the end of Q3 2022, the deal should be completed.
Appetito did not specify the size of the deal in its announcement, and CEO Shehab Mokhtar did not respond to an email inquiry about it.
According to insiders familiar with the situation, the deal was for between $10 million and $15 million. Mokhtar remained tight-lipped about the rumored price.
“From the beginning, we’ve been incredibly cost-effective with good unit economics. When questioned how Appetito funded the acquisition with only $2.5 million raised,” Mokhtar stated.
“That we were able to do so much with so little is wonderful evidence.” “In addition, we’ll be completing an eight-figure round soon to accelerate our expansion.”
Lamma, the acquiree, established a carpooling service in Tunisia two years ago. It shifted to a rapid commerce platform that delivers groceries, personal care, and fashion products in less than 45 minutes to people in Tunisia and Morocco (which debuted this year).
Yassir El Ismaili El Idrissi, ex-GM of Careem, Hamza Guesmi, and Koussi Aymen launched Lamma, which is supported by Orange Ventures.
As both teams “discover lots of synergies,” the Lamma team, its three dark storefronts, and a distribution center will be integrated into Appetito. Appetito’s chief expansion and growth officer will be El Idrissi.
Appetito claims that the deal makes it Africa’s largest q-commerce player. It bases its claim on the fact that it presently operates in three markets: Egypt, Morocco, and Tunisia. Mokhtar told a news outlet that “no other q-commerce business in Africa works in such large markets.”
Since the epidemic, q-commerce platforms have attracted a lot of VC attention – and money — as consumer patterns shifted and individuals began ordering groceries online with the expectation of receiving them in minutes, as these platforms claimed.
However, as the number of platforms promising grocery and personal item delivery in under 20 minutes expanded, it became clear that most of them would fail due to their low margins and shaky unit economics.
Late last year, a consolidation began. Smaller networks like Cajoo, Weezy, Dija and Frichti have since been bought by larger firms like Flink, Getir, Gopuff, and Gorillas.
The purchase of Lamma by Appetito is a first in the African market, however, it is among tiny businesses. They use similar business concepts, with delivery times ranging from 45 minutes to 2 hours; Appetito also offers daily and weekly supplies. This model contrasts from Breadfast and Rabbit’s “sub 20-minute” pitch.
The business is to become the biggest q-commerce player in frontier and emerging areas, according to the corporation.
Rabbit and other similar start-ups operate in Egypt and Saudi Arabia, whereas Breadfast, which is only active in Egypt, operates more than 50 dark stores.
One of the reasons Mokhtar is confident in Appetito’s continued expansion — the company promises to be reaching double-digit profits — despite the global layoffs and shutdowns of q-commerce platforms is the company’s prioritization of quality and value over ease and efficiency.
For example, Getir, Zapp, and Gorillas have reduced their workforces, while Australia’s Send has closed its doors.
Egypt, which has a population of over 100 million people, has a $50 billion retail FMCG sector that is severely fractured and inefficient. Other African countries are similar, which is why Appetito plans to expand into these markets in the next months.
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