Grocery delivery company Buggy acquires startup Ninja Delivery

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Gonzalo Graham, product manager of super-fast grocery delivery company Ninja, checks a shelf in the company’s shadow store in Toronto on March 29.Frank Gunn/The Canadian Press

As competition begins to heat up in Canada between grocery e-commerce providers, Toronto-based service Buggy has struck a deal to buy 10-minute delivery startup Ninja Delivery.

Ninja, based in Waterloo, Ont., which operated from two locations in Toronto and one in its hometown before the transaction, is among a growing number of companies promising super-fast grocery delivery – sometimes in as little as 10 to 15 minutes. Inabuggy Inc. (which recently rebranded its consumer-facing service as Buggy) has been around since 2014, operating an Instacart-like grocery delivery service that sends worker-drivers to existing stores such as Costco COST-Q , Metro MRU-T and the LCBO to fulfill online orders.

Following a recent management change, Buggy joins the ranks of competitors looking to offer faster services while maintaining this existing business, and the acquisition of Ninja is one of them, chief executive Nicole Verkindt said in an interview. The terms of the contract are not disclosed.

While these services have grown in popularity in other markets such as major US and European cities, many of these players, including Gopuff, Getir, Jokr, and Gorillas, have yet to launch in Canada. Large grocery stores here offer e-commerce, but typically require customers to book pickup or delivery slots hours or sometimes a day in advance. (Some partner with third-party services like Cornershop and Instacart to provide faster options.)

Meanwhile, several companies are vying for Canadian customers who want faster orders, like Tiggy, Montreal’s GoodFood meal kit delivery service, Ninja and now Buggy.

“It’s still very early days in Canada,” Verkindt said. “I think we’re going to see more consolidation from smaller players, because this is a capital-intensive business.”

These services typically operate by building “dark stores” – storefront-type locations not open to the public, which function as mini-warehouses – that deliver to customers within a fairly restricted radius. By stocking their own inventory rather than shopping at other retailers’ stores, margins are not as high. Restaurant players such as DoorDash and SkipTheDishes have built dark stores in Canada to expand their grocery offerings.

Demand for grocery e-commerce has increased during the COVID-19 pandemic, but in an inflationary environment shoppers may cut back on these services if they are perceived to be too expensive.

There are signs that things are holding up for now. The level of online grocery orders has remained constant over the past few months, according to regular surveys of about 1,500 Canadians that Dalhousie University’s Agri-Food Analytics Lab conducted with research firm Angus Reid. . About 21% of those surveyed at the start of June said they ordered groceries online – half for delivery and the rest for click-and-collect pickup, which was similar to the number who said the same in the March, April and May surveys, and down only slightly from the 23% who said they had done so in February.

But there is still significant uncertainty about the profitability of expedited delivery services, as many offer zero or extremely low delivery charges. Buggy plans to charge a $2.99 ​​delivery fee for its service. As they grew rapidly, similar companies in the United States went out of business, while Gopuff and Getir recently laid off hundreds of workers.

“The big key is that we’re going to do this responsibly,” Ms. Verkindt said. “I’m actually very happy with our timing, that it wasn’t a year ago when the whole tech environment was different and investors were kind of pushing for growth at all costs.”

Prior to the acquisition, Ninja operated a dark store in Waterloo and two others in Toronto, but prior to the deal the company stopped taking orders and laid off staff. Buggy has now acquired Ninja’s assets, although it will not reopen those locations.

Instead, Buggy plans to open its first location in Toronto’s Leslieville neighborhood next month, followed by two additional locations in August and September. The company has raised $6.7 million to date to fuel its expansion, including a $4.6 million round closed in May with a number of private investors. entrepreneur and The dragon’s lair star Michele Romanow is one of them.

Buggy has now acquired Ninja’s assets and will advertise to the company’s customers – the top 10% were ordering from Ninja more than once a week. Buggy will also adopt Ninja’s model of employing its own e-bike drivers for deliveries within a five-kilometre radius. It plans to rehire Ninja staff who have been made redundant, Ms Verkindt said. Existing site workers who act as Buggy drivers could also complete some orders, she said.

“As soon as Amazon started promising next day delivery with Prime, so many people changed their behavior, myself included. Now there are all these consumers who have new expectations for products that they can receive at low prices – not hugely inflated – in 15, 20, 30 minutes,” Ms. Verkindt said. “I think the next day is going to seem archaic at some point, which is kind of a crazy thought.”

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