The global e-commerce sector is experiencing rapid growth, and mergers and acquisitions have become a cornerstone strategy for companies aiming to secure a competitive edge and achieve economies of scale. In the Middle East, the past year has seen a notable surge in M&A activity, reshaping the landscape of this dynamic region. High-profile acquisitions such as Uber-Careem, Amazon-Souq, and Delivery Hero-InstaShop have captured the attention of industry watchers.

In the wake of the pandemic, which dramatically altered consumer behavior and the e-commerce landscape, certain sectors thrived. Companies in fintech, ed-tech, health tech, grocery delivery, and e-commerce reaped substantial benefits from the new normal. However, brick-and-mortar businesses, including outdoor entertainment, physical events, and outdoor advertising, faced significant revenue declines, with some forced to shutter their operations entirely. This divergence in growth trajectories created opportunities for larger companies to acquire smaller ones, leading to a flurry of mergers and acquisitions. While M&As can offer advantages for both parties, rigorous due diligence is essential to ensure seamless execution and post-deal synergies.

One of the standout acquisitions in the Middle East is the merger of Delivery Hero and InstaShop.

Delivery Hero: A Behemoth in Middle East E-commerce

Delivery Hero, the Berlin-based food and grocery delivery giant, has become one of the most significant technology players in the Middle East, boasting operations across the region. Since entering the Middle East market in 2015, the company has achieved remarkable growth, with revenue in the Middle East, North Africa, and Turkey reaching nearly $800 million in 2019, constituting half of the company's global revenue.

Despite the challenges posed by regional lockdowns in 2020, Delivery Hero reported revenues of $725 million in the first nine months of the year. The driving force behind its unprecedented Middle East growth is its strategic approach to acquisitions.

InstaShop: A Strategic Acquisition

InstaShop, launched in Dubai in June 2015 as part of the Jabbar Internet Group, operates across the UAE, Qatar, Bahrain, Egypt, and Lebanon. Its evolution from an on-demand grocery ordering platform into a comprehensive one-stop shop, offering pharmacy, pet shop, butcher, organic, and maid services, presents Delivery Hero with significant growth opportunities.

InstaShop operates on a two-sided marketplace model, connecting customers with vendors and handling logistics. With partnerships involving hundreds of supermarket chains and around 500,000 monthly active users, InstaShop collaborates with approximately 1,500 vendors, guaranteeing on-demand deliveries within an average of 45 minutes.

The acquisition of InstaShop by Delivery Hero is a pivotal move in the region, marking the company's first foray into the delivery startup space. InstaShop's business model aligns seamlessly with Delivery Hero's vision for quick commerce (q-commerce) expansion in the Middle East.

Strategic Expansion and Dominance

Delivery Hero has been delivering groceries across the Middle East for over a year, and the acquisition of InstaShop has expanded its market presence to Qatar, Bahrain, and Egypt, in addition to its UAE home market. The company aims to solidify its position as the dominant player in the Middle East's food and grocery market, leveraging dark stores, a key element of its strategy in the region.

The global shift towards online shopping, accelerated by the COVID-19 pandemic, has prompted lasting changes in consumer behavior. Cosmin Manea, Founding Partner and General Manager of InstaShop, believes that many new e-grocery users will continue to embrace the convenience of online shopping.

For InstaShop, the acquisition opens doors to a broader market as it operates as an independent brand under Delivery Hero. The company is further establishing its foothold in the MENA food tech space, with a strong focus on providing an exceptional customer experience.

About Your Retail Coach (YRC)

For brands looking to establish or enhance their grocery or food delivery services in a competitive environment, partnering with management and retail consulting services can be invaluable. Your Retail Coach (YRC) offers solutions that streamline grocery delivery services with minimal manual intervention, focusing on human-centric approaches in the digital shopping landscape. With extensive experience working with international eCommerce brands in the Middle East and beyond, YRC serves as a single point of contact for comprehensive support in high-impact strategic projects. YRC addresses industry challenges in home delivery management and provides key solutions for clients in the African market, ensuring their future success.

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Rupal Shah Agarwal

YourRetailCoach

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