Rapid delivery service unicorn Gorillas is to restructure its UK operations shortly after pledging to invest in the market and a US$1bn funding round last October.
It is mulling plans to shutter four warehouses outside London, Bloomberg reported, citing sources and a Gorilla spokesman.
The Berlin-based company previously let go of approximately 300 staff in mid-May and confirmed earlier this week that its global chief people officer Deena Fox and vice president of human resources Linda van Velzen were leaving.
Gorillas promises to make groceries available for delivery at customers' doors within minutes and is among a growing crop of rapid-delivery companies such as Instacart Inc and Uber Technologies Inc (NYSE:UBER), as well as other start-ups such as Getir and Flink SE.
Bloomberg reported that Gorillas had halved the number of staff across its offices and planned to sack warehouse staff and jettison services in certain markets.
The nascent company was valued at $3bn in its last funding, making it one of the biggest unicorns in history to announce such widespread layoffs.
When it made the last round of job cuts earlier this year, it said it would invest in the UK and US markets alongside other European markets, after buying French delivery company Frichti in March.
Gig economy faltering
A Mastercard study forecast in 2019 that the Gig economy, with workers employed on short-term contracts with unspecified hours, was worth $204bn in 2018 and would hit $455bn by 2023, but the promise of a flexible and inexpensive workforce has not yet paid off amid backlashes from employees and pandemic-related financing struggles.
Chief executive Kagan Sumer launched Gorillas shortly after the height of the Covid-19 pandemic in May 2020, when homebound customers sought fast home deliveries.
Since then, retailers have been hit by record inflation together with price rises and a return to hybrid forms of working.
Despite Gorillas’ huge funding round last year, gig firms have recently faced a drought in financing as delivery staff have sought greater employee rights.
Last February, Uber was defeated in the Supreme Court after workers defended their employment rights, shortly followed by similar suits launched by Addison Lee and Amazon drivers, threatening the cost-effectiveness of the gig labour model where previously staff were self-employed so not entitled to paid holidays and other benefits.
Gorillas has said previously that all its staff are contractually employed with regular working hours on a full or part-time contract, with health insurance, sick pay and a career path.
Dealbook says that European grocery delivery outfits have raised $248mln this year, down from $4.5bn in 2021.
Sumer said it is “facing a very strong headwind” in a letter to employees,
Gorillas has reportedly struggled to store food waste at its warehouses, its promo codes for craft beer were widely reused and it has also faced stock issues.
Despite the job losses, Gorillas unveiled a new own brand of craft beer, oat milk and recyclable coffee pods this month.