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Russian tech giant Yandex pulls out e-grocery in Paris, exploring UK exit

Yandex' Yango Deli
Image credits: Yango Deli

The Russian internet company Yandex is reviewing its strategic priorities outside Russia, having set plans to wind down Yango Deli operations in France. The decision to do so is a result of poor performance.

Yango Deli is gradually suspending its ultra-fast grocery delivery operations in Paris,” a Yango Deli spokesperson commented regarding the news. “This was a pilot project with a small number of dark stores, and it has underperformed our internal targets.”

The spokesperson also commented that the subsidiary’s London unit was the subject of interest from other parties.

Grocery delivery; Returns undelivered

The news isn’t as surprising, considering discussions about suspending the Paris business started back in early February.

While food and grocery delivery companies are increasingly being funded by investors in recent years, profitability and success haven’t been guaranteed for most of these companies. The proliferation of these companies triggered a sharp response from existing industry leaders like Deliveroo and Uber Eats, with offers and extra remuneration for their partners.

Moreover, the ever-increasing competition has consequently led to industry consolidation, intending to reduce competitors. TFN covered Turkey’s Getir’s acquisition of UK-based grocery delivery startup Weezy for an undisclosed sum last year. America’s GoPuff acquired British delivery platforms Dija and Fancy last year and is now reportedly targeting European rivals as the segment’s penetration increases.

A better health report for London

Despite its failure in Paris, Yango Deli achieved solid results in London, including lots of repeat customers, a good shopping frequency and robust spending per customer.

Customer retention in London is 40%, about 1.5 times higher than the market average, according to Yango Deli’s estimates, a crucial metric in the competitive field of ultrafast groceries. Order frequency remained high, with the average active user making 4.2 orders per month, around twice the market mean.

“The ultrafast delivery market in London is highly competitive and we see a considerable amount of interest in our business there, including from peers,” a company spokesperson said. “However, we can’t provide any further details on this at the moment.”

The outlook for Yango Deli

It’s recently been an uncertain period for Yango Deli, owing to its affiliation with the Kremlin-linked tech titan Yandex. Yango Deli UK is under the UK company Deli International Limited and continues to operate locally.

The company operates ‘Dark kitchens’ that can house up to 2500 SKUs of groceries and supermarket staples including alcohol. On top of these, the company operates ‘Dark kitchens’ which produce hot food, adding to the customer offering. These dark kitchens presently account for around 13% of Yango Deli’s monthly gross merchandise value (GMV) in London.

Yango’s parent Yandex

Yandex, founded in Russia in 2007 owns one of the world’s most popular search engines. Neither Yandex (YNDX) nor any of its subsidiaries have been targeted by US, UK or EU sanctions, which have impaired Russia’s ability to effectively participate in global financial systems and supply chains.

Its former Deputy CEO, Tigran Khudaverdyan, resigned after the EU imposed individual sanctions on him, a matter Yandex reacted to as surprising. The EU still further criticised Yandex for warning Russian users of unreliable information on the internet while looking for news about Ukraine on its search engine.

Yandex has flagged that it’s lacking funds to cover a potential convertible bond redemption owing to the trading suspension of its NASDAQ-listed shares. Earlier in March, a data leak exposed personal user data on its food delivery app, causing public concern.

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