Spain-based food delivery start-up Glovo, whose app connects customers to independent couriers, has been expanding rapidly around the world. It has launched in 17 countries in one year, and now offers 20 minute grocery deliveries, challenging the likes of Amazon and Mercadona in Spain.
An introduction to Glovo
Glovo's CEO, Oscar Pierre, spoke about the company at a recent event. It operates a logistics marketplace platform with hundreds of stores in each city it operates it. It charges commission, accounting for 70% to 75% of the business. Its aim is to build a super app, connecting people to the city.
In 2017 Glovo operated in France, Italy and Spain. Now, as of October 2018 it operates in 20 countries; having launched in 17 countries in one year. This international expansion is facilitated by a school of launchers who are trained in Barcelona for two to three months.
Its growth strategy strategically targets countries where online penetration is still low. It aims to win the online food delivery race in every market that it enters, hence why it doesn’t enter competitive markets where companies like Deliveroo or Uber eats dominate. It has seen exponential growth in Western Europe and Latin America and will focus on Eastern Europe and Africa in 2019, where its sees great potential.
Migration from offline to online
Pierre said that the online food delivery industry is expected to grow four times in the next seven years (from 2018 to 2025). Most of this growth will come from the migration from offline to online, fed by consumers cooking less and their demand for convenience.
Pierre categorises companies in the food delivery space as Gen1 or Gen2, Glovo being a Gen2 player. Gen1 companies were first movers in the market, offering a marketplace model, relying on restaurants with existing logistics capabilities e.g. Grubhub or Just Eat. These companies created the habit of online food ordering. Gen2 players like Glovo or Deliveroo are market disruptors with a marketplace and logistics platform. They achieve higher consistency in service and track in real-time. Gen2 players are winning market share from Gen1 players. In its original markets, Spain and Italy, Glovo said that it is leading the Gen2 race.
Glovo has recently launched its first project in convenience groceries in Madrid. It has its own dark store, and is able to offer 20 minute deliveries. After this pilot in Madrid, the company plans to open more supermarkets and extend the service to Barcelona and other cities internationally. Spain is the company’s most profitable market and accounts for one third of total revenues. Glovo expects to close 2018 with €80M, 370% more than 2017 Europa Press reports. In France, it offers 30 minutes grocery deliveries though a partnership with Franprix. Glovo has also launched a business-to-business (B2B) solution, Glovo Business.
Consumer trends as well as growth in the food delivery space highlight the importance of the online channel. Grocery retailers should be agile and digitally minded as they compete with start-ups like Glovo.
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