Food delivery startups have experienced a huge boom in the last few months. They were already very popular but the COVID pandemic restrictions led to the fast growth of these startups. Many food delivery startups are working globally but this article will unveil the business model of a fast-growing food delivery startup- Glovo, which gained huge demand in just 5 years. This article will share the company’s basic know-how and provide answers to “How does Glovo work?” and “How does Glovo make money?”.
Glovo, a Spanish start-up company, was founded by Oscar Pierre and Sacha Michaud in 2015. The company offers on-demand delivery services in 21 countries with 59K active couriers, 7.4M active customers, and approx. 1.9K (as per the data of the official website) employees. Its application meets the day to day needs of its consumers in a fast and affordable way. As per the latest news update of 10 Feb 2021, Glovo has appointed its new Chief Technology Offices, Narek Verdian. The company aims to enhance its marketing strategy with the help of technology which indicates its immense concern of strengthening the platform to provide a better experience to its customers.
Let’s understand the Glovo Business Model in detail and get our answers to, “How does Glovo work” and “How does Glovo make money?”.
Glovo Business Model
Glovo offers innovative on-demand services to buy, pick up or receive any product in not more than sixty minutes. The delivery of the orders placed by the customers is done by independent couriers. These independent couriers are given a special name- “Glovers”. As earlier mentioned, Glovo meets the daily needs of its customer in a fast and affordable way through different product categories such as restaurants, snacks, pharmacy products, gifts, markets, etc. After placing the order, the customer can easily track the delivery in real-time through the geolocation system embedded in the software.
The app also works as a courier by offering the services of delivering items or any other document of the customer to their desired locations.
Glovo follows the concept of the shared economy, therefore, this platform provides benefits to all its partners involved. Here are the three partners involved in the business:
- Physical Shops
By joining Glovo’s partner network, shops (physical shops) can extend their network to reach new clients and enhance sales.
- E-commerce businesses
E-commerce businesses can join Glovo’s network to capitalize on its (Glovo’s) express delivery services. They can enhance their sales by facilitating their delivery of products through Glovo.
- Service Partners
Glovo has created various new employment opportunities for people looking for part-time or freelance jobs. Even the employed ones can go for it if they want to earn extra outside their traditional jobs. This freelancing opportunity allows the employees to choose their agreeable time without any time limit restriction.
These were the few insights into the “Glovo Business Model”. Keep reading to get in-depth information about the working and revenue model of the company and get your answers to “How does Glovo work?” and “How does Glovo make money?”.
Who are Glovo’s investors?
Since the time of its launch (in 2015), Glovo has successfully raised $634.5M of the total funding amount with four acquisitions and a total of 27 investors (as per the reports of crunchbase). Not only did the company receive investment from various popular investors such as Idinvest Partners, Korelya Capital, Drake Enterprise, The Drake Group, and much more, but also received huge investments from various lead investors such as Mubadala Capital, Lakestar, Stoneweg, etc.
Stoneweg and Korelya Capital are the most recent investors of Glovo. It’s been a month since the company received an investment of €100 million from the Swiss-based real estate firm, Stoneweg.
How does Glovo work?
Glovo is an on-demand delivery app that allows its user to order a wide variety of products and have them delivered at their doorway. The list of products is not just limited to the ones displayed on the app but varies as per the demands of the user. Customers can request a variety of products even if it’s not present in the order list of the app. In that case, the order will be picked up from the desired location and also delivered at any desired place from any store in less than an hour.
Since the customer is the most important stakeholder of any successful business model, Glovo tries to give an easy and friendly experience to its customer. Here are the few steps that explain “How does Glovo work?” or “How to place an order through Glovo app/website?”
Firstly, the customer has to download the Glovo app from the play store/ Appstore or one can visit the official website of Glovo.
The user is required to create an account on the Glovo app. So, for this step, users are required to register on their Glovo mobile app or the website via their email IDs, name, and password.
- Manage payment
Now, the user must go to the “manage payment methods” section on the mobile app and add his/her preferred debit/ credit card for the payment.
- Set Address
After managing payment methods, the user will be required to back to the main page of the app and add his/her preferred delivery address.
- Add to Cart
Buy the desired items from any of the partner restaurants or stores through the app.
- Order accepted
After placing the order, the user will have to follow some more additional steps and once it is done, a courier will accept the order and deliver it within an average period of 28 mins.
The order will be delivered in minutes and if the customer wants to track the option then he/she can track and follow the delivery in real-time through an additional feature of the Glovo app.
After receiving the delivery, the customer must leave a rating of the experience and send feedback.
Who is Glovo’s biggest competition?
If we look at some of the top players that were founded in Europe in the span of the last 10 years, then, Glovo, Deliveroo, and Delivery Hero are at the peak. There are many other start-ups also that might exceed them in the long run but at present, they are gaining huge popularity. With millions of customers, thousands of business partners, 30 thousand + employees, combined with billions of investments, these three startups have gained unicorn status and there’s nothing to stop them from growing now. Below is a detailed table to showcase a basic comparison between the three.
|Company name||Glovo||Deliveroo||Delivery Hero|
|Date of found||2015||2012||2011|
|Average no. of employees||3805||5800||27,071|
|No. of investors||27||28||18|
|N. of lead investors||5||11||8|
|Total funding amount||$634.5 Million||$1.7 Billion||$6.6 Billion|
|No. of the current team members||11||27||23|
How does Glovo make Money?
Moving to the question – “How does Glovo make money?”. Glovo makes money by charging fees from the partner restaurants or shops. This fee ranges from 22-30% (as per the reports of 2019) of the value of food that is being delivered to the customer. So, the partners will give a portion of their income to Glovo on delivery orders.
Out of this earning, a certain portion is given to the courier partners also depending on the distance they cover. This is exactly what most other gig platforms are doing by working on the concept of the sharing economy.
Glovo’s potential collaborators
To answer the question- “How does Glovo make money?”, one must look into the internal analysis of the company. The excellent collaborators of Glovo are the prime key to its rapid success. Here are few important collaborators of the company:
- Key Investors
Glovo has the support of several key investors that form the backbone of the company. As already discussed, Glovo has successfully raised a total funding amount of $634.5M till now which has allowed Glovo to expand itself to 21 countries worldwide.
- Well qualified employees
The company comprises a huge talent pool. For example, the co-founder of the company, Shasha Michaud, is a well-known expert in digital business startups. Not only this, many such employees contribute to the success of the company.
- Large-scale business network
Glovo is working with large-scale business partners. These partners include physical shops, restaurants, e-commerce businesses, and service partners. They help the company to meet any demand of the customer in a fast and effective way.
- Expert marketing team
Glovo has an expert marketing team. Also, as per the recent update, the company has appointed its new Chief Technology Officer to focus more on enhancing its marketing strategies by capitalizing on technology.
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