Appetito, the Egyptian platform that delivers groceries and household goods to customers at 11 dark stores across three cities in the North African country, is acquiring Lamma, an identical startup with operations in the Maghreb regions of Tunisia. and Morocco.

The deal is expected to close by the end of the third quarter of 2022.

Appetito did not reveal the size of the deal in his statement, nor did CEO Shehab Mokhtar when asked about it by email. But sources familiar with the matter said the size of the deal was between $10 million and $15 million. Mokhtar declined to comment on the speculated price.

“We have been very profitable with a strong unit economy from day one. The fact that we were able to do so much with so little is great proof,” Mokhtar replied when asked how Appetito financed the acquisition, having raised just $2.5 million. “Additionally, we will soon close an eight-digit cycle to drive our expansion even further.”

The acquired company, Lamma, launched in Tunisia as a ride-sharing service two years ago. It has transformed into a fast commerce platform delivering groceries, personal care and fashion items to users in Tunisia and Morocco (launched this year) in less than 45 minutes. Lamma was founded by CEO Yassir El Ismaili El Idrissi, ex-GM of Careem, Hamza Guesmi and Koussi Aymen – and is backed by Orange Ventures.

The Lamma team, its three dark stores and a distribution center will be integrated into Appetito as the two teams “explore many synergies”. El Idrissi will join Appetito as director of expansion and growth.

Appetito said the deal made it the biggest q-commerce player in Africa. Its claim is based on the number of markets it currently operates in: Egypt, Morocco and Tunisia. “No other q-commerce player in Africa operates in such large markets,” Mokhtar told TechCrunch.

The company said it plans to become the biggest q-commerce player in frontier and emerging markets. Similar startups such as Rabbit have operations in Egypt and Saudi Arabia, while older players like Breadfast, although operating only in Egypt, operate over 50 dark stores.

Since the pandemic hit, q-commerce platforms have been the focus of a lot of venture capital – and money – as consumer habits have changed and people have made their groceries online in hopes of getting them within minutes as promised by these platforms.

But as the number of platforms offering delivery of groceries and household items in less than 20 minutes grew, it became clear that most would not survive with their low margins and questionable unit economics. A consolidation began at the end of last year. Big players like Getir, Flink, Gorillas, and Gopuff have since acquired smaller platforms like Weezy, Cajoo, Frichti, and Dija.

Appetito’s acquisition of Lamma is a first in the African market, albeit among smaller players. They operate similar models, including delivery times ranging from 45 minutes to two hours; Appetito also allows daily or weekly scheduled deliveries. This timing pattern differs from the “under 20 minutes” pitch of Breadfast and Rabbit.

The company’s focus on quality and affordability over speed and convenience is one of the reasons Mokhtar is confident in the company’s continued growth – Appetito claims to make margins double digits – despite downsizing and shutdowns facing q-commerce platforms around the world. Getir, Zapp and Gorillas, for example, have downsized, while Australia’s Send has closed.

The fragmented retail market in Africa creates a strong business case for q-commerce models like Appetito, the CEO said. “We’re not only aiming to deliver convenience, but we’re also tackling huge inefficiencies in the supply chain and delivering real value to our customers as well as our suppliers,” he said. added.

Egypt, with a population of over 100 million, has a retail FMCG market size of around $50 billion and is highly fragmented and inefficient. The same can be said for other African countries, hence why Appetito is looking to expand into these markets in the coming quarters.