William Shu, Co-founder and CEO of Deliveroo, a London-based food delivery app operating in 10 global markets, stated that adding health and beauty, in addition to grocery delivery, would allow the company to build a local community of businesses and leverage existing networks. Speaking to YourStory during his visit to Deliveroo’s India Development Centre in Hyderabad last month, Shu mentioned that the company is considering this move after noticing that 20-30% of all orders contain non-food items like soap or shaving cream. Shu clarified that the strategy is not diversification but building a hyperlocal delivery network.
According to Shu, Deliveroo began its journey with the aim of building a local community business. However, customers showed more interest in restaurant food delivery services. Deliveroo later added a grocery vertical, and non-food item demand continued to increase. Shu stated that while Deliveroo is unlikely to find itself without room for growth in the food delivery market, the company is experimenting with other verticals to see what works best for its business.
Deliveroo’s focus is on neighborhoods with the greatest profit pool potential, with plans to win them over neighborhood by neighborhood before moving on to others. In September 2021, Deliveroo launched its HOP service to offer grocery deliveries under ten minutes, throwing its hat in the quick commerce ring. According to the company’s earnings call in March, Deliveroo reported adjusted core earnings of 6.6 million pounds in the second half of FY 2022, compared to a loss of 84.6 million pounds in the year-ago period. The company projects that it will make between 20 million pounds and 50 million pounds in core earnings for FY 2023.
JM Financial’s recent research note states that, in India, Swiggy and Zomato have made incremental investments in the quick commerce space instead of food delivery due to a higher Total Addressable Market (TAM) for the former. Although Deliveroo has no plans to start operations in India, the company plans to increase its Indian IDC employees from 140 to 200 by the end of 2023, according to Sashi S, Vice President of Engineering at Deliveroo and Country Head for India. Deliveroo started its operations in Hyderabad in February 2021.
Sashi further explained that Deliveroo is trying to understand the market dynamics in India regarding remote versus hybrid work. The company is taking initial bets on college hiring and plans to first experience it in India before cascading it to their global teams in the US. The India team works on multiple problem statements with the London-based team to enhance customer experience, navigation for grocery experience, personalized menus for target customers, targeted promotions, advertising technology, and showcasing new products.
As reported in the YourStory article, Deliveroo plans to evaluate health and beauty apart from grocery delivery to its repertoire of services. The company’s strategy is focused on building a hyperlocal delivery network instead of diversification. With a slowdown in food delivery orders due to inflationary pressures, investing in add-on businesses can help companies in the space maintain steady growth. Deliveroo’s HOP service was launched in September 2021, offering grocery deliveries in under ten minutes. With projected core earnings between 20 million pounds and 50 million pounds for FY 2023, Deliveroo aims to win over neighborhoods with the greatest profit pool potential before moving on to others. The company is experimenting with other verticals to see what works best for its business.