How he beat the competition
Courier delivery services in Spain hadn’t changed much before 2014. However, after an influx of tech startups trying to add various layers of innovation to messaging services, provided users and those responsible for delivering the products with basic tools to make life easier.
Enter Glovo: a Barcelona-based startup has been presented to the world!
Interesting facts about this all-in-one delivery app: competitors, acquisition, financing
- When it was created, the concept of Glovo was very similar to the world famous one Postmates application.
- Glovo, shortly after its launch in 2015, was present in 178 cities on the other side 23 countries. This is the highest level a delivery startup can imagine!
- Today, the app has managed to be labeled as the largest on-demand full-service delivery platform that allows customers to order anything – restaurant meals, groceries, flowers – from over 1000 participating companies and have it delivered in less than an hour.
- Glovo aims to transform the way users get what they need, making on-demand delivery and service easily accessible.
- This gives new meaning to the hyperlocal delivery model.
- As Glovo’s ‘deliver anything’ model continues to be its flagship service, the company has also started to experiment with CloudKitchens and grocery store Dark shops.
- Glovo had been part of Connector’s accelerator bundle and had raised 140,000 € business angels in 2015.
- The startup was so successful that Bloomberg said (in 2017) it might be worth it 650 million euros ($ 730 million)
- The company’s turnover then went from 18 million euros (20 million dollars) in 2017 at 81 million euros (91 million dollars) in 2019.
Glovo’s immediate competitors
- Uber Eats is Glovo’s biggest competitor. The first was founded in 2014 and its headquarters are in San Francisco, California.
According to reports, Uber Eats generates 833% of Glovo’s income.
- Wolt was founded in 2014 by Slush CEO Miki Kuusi and is headquartered in Helsinki, Finland. High wolt $ 30 million in financing, according to Bloomberg in 2018. Currently the app is working in 18 countries and more 60 cities and more 6000 partner restaurateurs, 12,000 messaging partners, and 3 million Registered users.
- Deliveroo was founded by Will Shu in 2013 in London, England. It operates in over two hundred locations in UK, Netherlands, France, Belgium, Ireland, Spain, Italy, Australia, Singapore, Hong Kong, UAE and Kuwait . Deliveroo acquired 2 organizations, Cultivate being the most recent. The app collected a total of $ 1.7 billion in financing on 11 Sleeves. Their last funding was raised in January 2021 from a Series H round.
Glovo companies acquired since 2016
History of Glovo’s funding
Glovo was founded in 2014, and since then he has participated in 7 rounds funding. Glovo raised $ 1.0 billion in total. The last funding of the application by Luxor Capital Group dates from March 2021 for a total of $ 528.0M
New information and updates:
- Glovo will acquire several Delivery heroes group companies in a series of separate acquisitions, with a total value of 170 million euros.
- Glovo recently announced that it has also entered into a deal to acquire Ehrana, a local delivery company in Slovenia, for an undisclosed amount.
- Frog, the global electric mobility solutions company based in Austin, Texas, has announced its exclusive partnership with Glovo.
Glovo’s business model: how does it generate income?
Glovo mainly generates revenue by charging its partners fees generally 22-30% the total value of the food or product delivered. The exact charges are agreed between Glovo and each company, and a portion of these charges is paid to Glovo couriers based on the distance they travel on delivery.
These depend on the location, distance and speed with which the customer wishes to receive their order.
Average delivery costs in Europe are around € 1.90.
These stores are essentially distribution centers that Glovo operates in collaboration with grocery chains and are not open to the public.
They are staffed with employees who select, purchase and deliver customers’ grocery orders 24/7. This gives Glovo full control over the products available to its customers.
Mini-supermarkets are a relatively new concept and are only offered in Madrid, Barcelona and a few other countries.
Glovo hopes to expand its prompt delivery service using the efficiency of a McDonald’s drive-thru as inspiration. Preparers are trained to select an entire sales order before the courier arrives to pick it up.
Glovo targets everyday household items for generate income in a relatively underserved segment. This includes items such as bread, milk, cereals, and water.
Glovo collaborates with local restaurants that have reached maximum capacity in their kitchens. These restaurants rent out one of the seven dark kitchens scattered across Europe, allowing them to increase their productivity and sell more food. Glovo intends to have more control over the food delivery process and bill accordingly.
Learn from this startup: how to beat the competition in large markets
Founder and CEO Oscar Pierre entered the game without knowing he would win! Here’s what he had to say about his startup
“We… have found our gap,” Oscar told a Spanish online magazine Viaempressa
Glovo was not the first delivery app on the market! It made the market more difficult. We have found our gap; we are the only platform in Europe that has provided the user with anything in the city, and I think that has become the key; the offer was wide. It didn’t scare us that the competitors were big; being small was actually a competitive advantage because it meant we could react to these monsters quickly. They were very powerful, but they moved slowly.
A clear example is their partnership with McDonald’s, for which they had to compete with Uber Eats and Deliveroo. Glovo got it because they were the fastest to come up with a model that McDonald’s needed. It was technologically and logistically specific.
Getting the timing right was crucial
Entering a crowded market is easy, but being successful becomes the most difficult game startups often face. Pierre, however, said it was crucial to have the right timing.
Glovo did not engage in a country where they already had two dominant players (which is the case in Mexico, Colombia and the UK).
The startup was successful in Spain mainly because it brought big brands like McDonald’s and KFC to its app, resulting in “massive growth”. Before that, competitors like Deliveroo refused to meet the demands of large companies. It was an opportunity that Glovo clung to.
We literally built whatever they wanted
Building a startup never comes without a fight
He launched at 118 funds before its current progression.
For our Series B, we launched at 118 funds, and all of them said “no”. We were on the verge of bankruptcy, maybe in a month. All of our competitors were huge. Two years ago, there was no way to convince investors that we would really be in direct competition with Uber Eats or Deliveroo. There was very little conviction about food delivery at the time.
Glovo raised $ 30 million in a Series B round of funding led by Japanese tech giant Rakuten in 2017.
One day Rakuten came out of nowhere and decided to invest in us
They never had to look back! Two more rounds of funding then followed, led by Spotify’s first investor, Lakestar, in April 2019. This took the startup’s total funding from $ 170 million to $ 340 million.
Become obsessed with profit
Oscar mentions that the most important factor that has guaranteed the continued growth of the startup is its quest to remain profitable. In 2016, the startup earned 1.1 million euros net of profits, which represented the commissions of their partners and stores as well as what the user paid for the service, which allowed to multiply the growth tenfold. In 2017, a startup just two years and two months old recorded millions of orders.
Only those who focus on profitability get funding. We made sure not only that we were growing, but also that cities weren’t in negative numbers for many months. We know that there are cities that only need six months to post losses and others, 12 months, because it all depends on the size; but we know that sooner or later we will get good numbers. In Spain we had seen more than 10 proposals similar to ours and most of them failed. When the margins are small, you have to take care of it, otherwise it won’t work.
Too many cooks spoil the sauce
The urge for startups to fund themselves almost always comes at a price – a sudden disappearance of investors, suggests Pierre.
Delivery is a complicated business. Between 2010 and 2012, there was overfunding in Barcelona. Since he was new, he grew up quickly because he had a certain value. Many projects were funded which started to close in 2014 and lasted for a few more years. That’s when we started looking for funding. Investors saw that the sector was trendy, but also had problems. And what happens when a sector is overfunded? Investors are disappearing!