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A UK grocery start-up founded just eight months ago has already been snapped up by a bigger U.S. rival

Unveiling of a UK grocery start-up by a larger US competitor.

August 13, 2021: -On Thursday, American grocery delivery start-up Gopuff agreed to buy Dija, a British competitor founded eight months ago.

Gopuff said the move would help it expand into Europe by establishing a more significant presence in the U.K. and entering France and Spain.

The company acquired Fancy, a similar began based in Britain, just three months ago.

Founded by former employees of U.K. food delivery firm Deliveroo, Dija is a crop of start-ups that promised to ship groceries to people’s doors in a matter of minutes.

These companies have increased over the last year, aided by billions of dollars in venture capital. Dija has produced $20 million in seed money from Index Ventures, Blossom Capital, and Creandum.

Other competitors including Getir, a Turkish company valued at $7.5 billion, German firms Gorillas and Flink, and British start-ups Zapp and Weezy.

Grocery delivery start-ups have flourished in the Covid-19 pandemic, as people took to online platforms to order their essentials instead of the stores. Several European food delivery firms, including Delivery Hero and Deliveroo, have made significant investments in grocery shopping.

Dija and the rivals use what’s known as “dark stores,” small warehouses where couriers are collected and delivered items ordered by customers. The companies buy products wholesale and sell them through an app, often at a premium to supermarket prices.

Industry experts have questioned the sustainability of the upstarts’ business models. The market crowded and required heaps of cash to gain scale.

“The amount of money being against this opportunity is grossly disproportionate to the opportunity of size,” Luke Jensen, CEO of Ocado Solutions, a unit of U.K. grocery tech pioneer Ocado, told CNBC.

“I suspect there will inevitably be a lot of consolidation among these players,” he added.

It looks like the industry is beginning to consolidate. Get recently acquired a competitor in southern Europe known as BLOK. And Flink reportedly attracted takeover interest from Amazon and Gopuff.

Gopuff’s acquisition of Dija is expected to complete in 30 days, the U.S. company said. The financial terms were not disclosed. It’s a rapid exit for a venture-backed start-up.

The deal is expected to give Gopuff a larger reach in Europe, operating about 40 dark stores and employing 200 staff.

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