Italian grocery delivery service Supermercato24 picks up €13M Series B

Supermercato24, an Italian same-day grocery delivery service, has raised €13 million in Series B funding. Leading the round is FII Tech Growth, with participation from new investor Endeavor Catalyst, and current investors 360 Capital Partners, and Innogest.

Similar to Instacart in the U.S. and claiming to the leader in Italy, Supermercato24 lets customers order from local supermarkets for delivery. The startup uses gig economy-styled personal shoppers who go into the store and ‘pick’ the products ordered and then deliver them same-day, or for an added cost within an hour.

The company charges a delivery fee to consumers, but also generates revenue from fees charged to partnering merchants, and, notably, through advertising. Supermercato24 says it has more than 15 partnerships with merchants, and has more than 50 consumer packaged goods customers (CPGs) advertising on its platform.

“Our customers represent that increasing share of the population that would love to spend their time differently rather than doing grocery shopping,” says Supermercato24 CEO Federico Sargenti, who was previously an Amazon Executive and launched the Amazon FMCG Business in Italy and Spain.

“Going to the store, pushing a cart through the alleys, queuing up, checking out and lifting heavy grocery shopping bags from the store’s register all the way up to your apartment can take lots of energy and up to 3 hours every week. Plenty of people would prefer to do all of that in a few minutes”.

Specifically, Sargenti says that Supermercato24’s customers span “hip youngsters to elderly people, single professionals to parents and working couples,” and that more than 65 percent of customers are women. “Customers have high expectations on their groceries, because they are used to choose from a wide product range at supermarkets, with competitive prices and qualitative fresh products; plus, they expect a comfortable, convenient and same-day delivery. And that’s what we offer them,” he adds.

The company’s grocery ordering and delivery service is active in more than 23 Italian cities, and Supermercato24 says a number of cities are already profitable at contribution margin level. That said, Sargenti concedes it is still early days in terms of the switch from offline grocery shopping to online. He also says that Southern Europe has been historically limited by a lack of supply and that the way to address this is a collaboration between traditional grocery retailers and tech companies like Supermercato24, a model that he insists can scale in both big and small cities.

The Italian grocery market is particularly fragmented, too, with the top 5 retailers owning less than 40 percent of the national grocery market, apparently. This arguably makes it more ripe for a marketplace rather than traditional e-grocery delivery model. One challenge is that the majority of people in Italy don’t live in large cities or other high population density areas of the country. It is Supermercato24’s ability to scale in low density areas — or so it claims — that gives it an edge.

Meanwhile, I’m told the new funding will be used to improve operations and product both for customers and for merchants, as well as to expand the service to new markets. “In Europe, Supermercato24 is already the biggest on-demand e-grocery marketplace in terms of revenues and it’s already in discussion with current and prospect retailers to expand the service across Europe to successfully replicate Instacart’s case,” says the company, unashamedly.