The coronavirus epidemic has played into the hands of the Israeli online supermarket startup Quik. The company is moving up its business plan by two years and has secured a 50 million shekel ($13.6 million) investment, TheMarker has learned.
As Prime Minister Benjamin Netanyahu orders increasingly strict directives on staying home and many hesitate to head to their local supermarket, Quik has become the startup of the moment. It operates what it says is Israel’s only online grocery, picking up the goods customers order from some 30 partner stores around the country.
“The company is on steroids. It’s crazy. In the last two weeks, 30,000 people have registered on our site – 10 times the regular rate of sign-ups. There’s an increase in the hundreds of percent in orders. The company’s annual sales rate had passed 100 million shekels before [the epidemic] and it’s at 200 million right now,” CEO Aviram Ganot told TheMarker.
The round, which values Quik at 200 million shekels, was funded by its existing investors, who include Central Bottling Company (the Israeli Coca-Cola franchise); the drugstore chain Super-Pharm; and Union Tech Venture, the investment arm of businessman George Horesh.
Quik was formed three years ago as BringBring and was relaunched under its current name in January 2019. The three investors in the current round each hold a 20% in the startup, with the rest of the shares controlled by founders Ofir Steinberg, Alon Zamir, Haniel Elmekies, Shay Bejerano, Yosef Gabbay and Avi Yaakov. It employs 350 people.
“Even though no small part of our growth is due to the coronavirus, even beforehand we weren’t able to meet demand for the service we provide. From January 2019 through January 2020, our revenues grew more than 700% and now, with the coronavirus, the numbers are nuts. Even in ordinary times, the public wants to do their supermarket shopping online – there’s more demand than supply,” said Ganot. “I can do a few thousand orders a day and if I could do 20,000 there would be customers for it.”
Quik has online competition, most notably from Shufersal, Israel’s biggest food retailer, and the discount supermarket chain Rami Levy, said Ganot. But the other chains are far behind. “From their perspective, it’s a money-losing business that ... is stuck at revenues of 20 million to 40 milion shekels a year,” he said.
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For Quik, the focus is on growing the business.
“It’s a segment that requires a lot of investment in technology, operations, expansion, marketing and customer service. We’re building the company now,” said Ganot. “In a little while, for example, we’ll start using electric scooters with crates sized. Recruiting online customers is something that costs a lot of money. Our operation today is at breakeven, but if you take into account the big investments, then it isn’t.The company still isn’t profitable.”
Ganot predicted that Quik would turn profitable in the next year. For now, it has doubled the number of staff assembling grocery orders and for delivery has hired people in the tourism and apparel sectors who have been put on unpaid leave because of the coronavirus. Quik plans a telephone service center and to add more partner supermarkets, Ganot said.
Are employees anxious about picking up groceries in crowded supermarkets?
“It’s no easy matter for people to do work like this, so we’ve given them incentives. If most have been making 31 shekels an hour plus four more if they meet targets, today the base salary is 35 shekels an hour,” he said. “This is a group of mostly young people whose parents are worried about them.
“Everyone talks about medical teams, but our employees are at the front no less. They’re around supermarket customers all day,” said Ganot. “While they have gloves, everyone else is at home and they're in the supermarkets.”