HelloFresh can no longer keep up in Germany. Demand has exploded to such an extent that the mealbox provider is bribing customers to cancel their weekly order: those who cancel will receive ten euros.
Thank you for cancelling
Regular customers of HelloFresh in Germany received an unusual offer at the beginning of this week: if they cancel their order, the meal box supplier deposits ten euros into their account as a thank-you gift. By doing so, the company, which saw demand double by 2020, wants to convince Germans to still put together their own festive menu.
"With your help, we will ensure that our capacity does not reach its limits at the turn of the year and that we can continue to offer our service satisfactorily in the future," the company e-mailed on Monday, according to the German Handelsblatt. The offer was only valid until midnight.
Competition by gorillas
Hellofresh falls prey to its own success. The share price has more than tripled this year and the company is also expected to close 2020 profitably for the first time, but the supply chain apparently cannot keep up. According to HelloFresh, the problem lies with its suppliers, who are producing less due to the holiday season. In addition, the courier cannot currently guarantee fixed delivery times.
The question is whether customers will have a great deal of understanding for the problems, especially during the holidays or if they have only just switched to HelloFresh. After all, more and more competitors are coming onto the market, bringing the convenience of home delivery to consumers. Gorillas, for example, is an important new challenger: the start-up has already made quite a name for itself in Berlin and Hamburg delivering home groceries within ten minutes, and even launched in Amsterdam last week.
Growth needed for profit
In 2021 HelloFresh predicts growth of 20-25%; well below the doubling in the first nine months of this year, but much better than analysts would expect. They fear a downturn as soon as the coronavirus effect subsides.
However, this year it became clear that HelloFresh needs growth in order to make a profit. Last year, the German company still recorded a gross loss of more than 38 million euros, compared to a positive result of 273 million euros in 2020. In order to sustain growth, HelloFresh is taking over the producer of ready-made meals Factor75 in the US.