Dubai based InstaShop, the delivery platform with over 500,000 users in five markets have been acquired by Delivery Hero, a Germany based restaurant delivery company.
The acquisition is valued at $360 million on a cash free and debt free basis. Both InstaShop and Delivery Hero are profitable companies.
Delivery Hero, that operates majorly in emerging markets, is already running grocery delivery services across most of its operations in Middle East/Africa, Asia, Europe and Latin America.
The aim is for InstaShop to remain under its current leadership team as an independent company, which will help Delivery Hero to both grow in MENA (Middle East & North Africa) and also to look at how its concept can be extended to other markets.
“The partnership with Delivery Hero is a great opportunity for us to continue to grow our business and put the group’s expertise to use. I really enjoyed working with Delivery Hero on this deal and am thrilled to continue to further expand the reach and quality of our service at InstaShop. Delivery Hero is a network driven by ambitious founders and entrepreneurs just like ourselves, and we are proud to become part of this family.”
Grocery delivery has become one of the biggest e-commerce categories over the past six months, partly owing to the pandemic that led many consumers to shop online due to the stay at home rules plus a general need to avoid crowded places.
Previously, the UAE and the broader MENA region were considered slow to accept online shopping, but demand has risen since the global COVID-19 pandemic and movement restrictions were enforced in March.
Although prior to the pandemic, only one quarter of consumers in the MENA region said they were shopping exclusively for grocery online, according to PwC data the number is now more than half.
InstaShop, which was launched in 2015, initially allowed customers to order from grocery stores or supermarkets and to receive them in about 45 minutes, or within a given time period.
It has grown to include a number of stores, from supermarkets, pet shops, cosmetics and beauty outlets to flower shops and bottled water delivery. It is also a platform for Maids Service, the home cleaning provider.
The app links stores or vendors with customers and offers the platform for payment while delivery is the responsibility of the vendors themselves.
Globally, the acquisition puts both companies a big step ahead of US companies such as Instacart, which was among the pioneers and most successful providers of the US grocery-on-demand model.