01/28/2022
Enterprise
Why Lightspeed doubled-down on Zapp to get your daily essentials delivered in minutes
Zapp has quietly emerged as a quick-commerce leader in Europe’s most consequential markets such as the UK and the Netherlands. Lightspeed has been supporting Zapp since its pre-launch (heck, pre-deck) days, leading or co-leading every funding round since Seed in late 2020, and we thought today’s $200M Series B announcement is a perfect opportunity to share for the first time some context on our thesis.
Opportunity is big, very big. Convenience shopping is a $300BN+ market in Europe and until recently, was 100% offline. When we at Lightspeed first started to look at this area a couple of years ago, we could not believe the problem hadn’t been solved in Europe by the likes of Amazon, Ocado, Deliveroo and Wolt. While people were doing weekly grocery shopping on those services, very few actually did convenience shopping online. The main trade off was delivery speed vs price: either you get what you want slowly within days or expensively within hours, and in no case you get it within minutes. Limited selection, minimum order quantities (try to order Coke Zero on Amazon, minimum is 8 cans), and inferior customer experience were additional barriers.
Compelling vision. When we first met Zapp’s founders and serial entrepreneurs Navid and Joe, they immediately convinced us that Zapp had the answer to this $300B problem. The idea to take the time-tested corner store model, bring it into the 21st century, and build a much loved international brand with Zapp was compelling. By making it on-demand, expanding the product range from hundreds to thousands, and obsessing about its customers, Zapp is singularly focused on delivering a “wow” experience. Zapp accomplishes this while keeping its prices on par with traditional convenience retail. Importantly, Zapp does not aim to replace your weekly grocery basket (when was the last time you really needed an avocado in minutes?). Yes you can get Avocados on Zapp, but where it excels is those moments when you crave for that special bottle of Barolo, a Haagen Dazs treat, need a pack of Pampers (real urgency!) or one of the other 2,000 items available on the app.
Challenger brand that resonates. In addition, Zapp is deliberate about its brand values, which as it happens is what today’s modern consumer identifies with. Zapp is sustainable with 100% of its fleet electric. It is an equal opportunity company with an unusually diverse representation on its management and broader team. Zapp is a fair employer with all riders working as full employees. And it is fun and trustworthy with convenience focused selection and 24/7 service. Zapp has now become a verb amongst families and friends. “Just Zapp it” when you crave for something or run out of stuff (for fun, try to use any of the competing offerings as a verb, doesn’t quite roll off the tongue, does it).
Economics that work. Any concept as breakthrough and large as this attracts competition. The category became red-hot in 2021, several competitors emerged, some have since folded, others were “acquired”, yet others raised $ billions in funding or entered Europe from their home countries. Meanwhile, Zapp has executed its strategy of concentrating capital and winning in consequential markets it selects to operate in, which added to its convenience goods focus, produces a unique blend of hyper growth and profitability across its mature stores. Profitability wasn’t exactly a conversation starter in the venture world for the last 5–10 years, but as we stand here in January 2022, all of a sudden the topic is back en vogue. We are convinced that Zapp has the opportunity to build a much loved international brand as well as an incredibly large and profitable business.
Zapp exemplifies how at Lightspeed we back outlier founders with generational impact insights on how to add a technology overlay on an inherently superior consumer experience. We are thrilled to continue working with Joe, Navid and the whole team at Zapp to see their bold vision come to fruition.
And we are excited to keep Zapping!
