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Watch out Uber and Just Eat, Delivery Hero has its sights on the lucrative German market

MarketWatch logo MarketWatch 5/12/2021 Lina Saigol
a person standing in front of a store: Delivery Hero plans to re-enter its home market of Germany in June, taking on rivals Uber and Just Eat © Max Threlfall Delivery Hero plans to re-enter its home market of Germany in June, taking on rivals Uber and Just Eat

Delivery Hero on Wednesday announced plans to re-enter its fiercely competitive home market of Germany next month, two years after it sold its operations in the country to Dutch rival Just Eat

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Berlin-headquartered Delivery Hero will initially start in June with a “soft” launch in Berlin of its Foodpanda brand, which promises to deliver groceries and other convenience items in as little as seven minutes, the company said in a statement.

That will follow with an official launch in more German cities, offering restaurant-food delivery and “quick commerce,” which Delivery Hero will provide through Dmart — its own network of small warehouses and local shops.

Niklas Östberg, chief executive and co-founder of Delivery Hero, said the company was aiming to “shape the German delivery industry for good,” together with its full delivery ecosystem — riders, restaurants, local shops and customers.

Read: Why DoorDash and Uber Eats Delivery Is Costing You More

The move will increase pressure on Amsterdam-based Just Eat which has dominated the German market since it bought Delivery Hero’s local operations in 2018 to focus on expanding in Asia, Europe, the Middle East and the Americas.

Meanwhile, Uber Technologies in April announced plans to expand its Uber Eats delivery service in the country, following a similar move by smaller Finnish rival Wolt.

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At the same time, Germany is seeing a boom in ultrafast grocery-delivery startups, such as Berlin-headquartered Gorillas and Flink, which aim to deliver in 10 minutes. Istanbul-based Getir, which became Turkey’s most valuable startup in March after being valued at $2.6 billion in its third fundraising round, is also planning to start deliveries in the German capital in a few months.

Analysts at Jefferies said that Just Eat’s lack of wider delivery options had left it exposed to competition, even though it has spoken of small trials in grocery recently. “There is now evidence to suggest those small trials must now be accelerated,” they wrote in a research note to clients on Wednesday.

Shares in Delivery Hero dropped more than 3% in early morning trading in Frankfurt in Wednesday, while Just Eat stock fell as much as 3.7%, the lowest level since March.

Read: Delivery Hero issues guidance after strong results

Just Eat Chief Executive Jitse Groen responded to the news on Twitter saying the company would “defeat” Delivery Hero in Germany, as it had in the Netherlands, the U.K. and Poland. “Competition makes us stronger,” he wrote.

Just Eat is on track to complete its $7.3 billion acquisition of Chicago-based company Grubhub in the first half of this year, in a deal that will create one of the world’s largest delivery companies.

a person preparing food in a kitchen © Max Threlfall

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