In The Struggling Sector Of Quick Commerce, Glovo Might Have Found The Winning Formula


07/12/2023
In The Struggling Sector Of Quick Commerce, Glovo Might Have Found The Winning Formula

The quick commerce sector has seen a decline in valuations and uncertainties surrounding profitability for startups focused primarily on 30-minute or less grocery deliveries. However, Spanish-based last-mile delivery startup Glovo is charting a different course. With its diversified business model and a focus on becoming a delivery partner for grocery retailers, Glovo believes it can achieve profitability in a sector where it has proven elusive for many competitors. So, what sets Glovo apart from the rest of the pack?

A Multi-Category Approach to Quick Commerce:

Glovo positions itself as more than just a food and grocery delivery platform. It strives to be a one-stop-shop, connecting customers with local businesses and offering hyper-convenience regardless of the products being delivered. Daniel Alonso Moreno, Glovo’s VP of Q-commerce, explains, “The way to grow has been by expanding beyond grocery. Once we had the user base, we could deliver anything, with the only limit depending on a city’s retailers and offerings.” This diversification allows Glovo to cater to a wider range of consumer needs while mitigating acquisition costs, a significant pain point in the quick commerce industry.

By expanding into new categories beyond grocery, Glovo can generate revenue from higher-value product categories and take a percentage of the basket value. Additionally, the cost of acquiring customers for these new categories is significantly lower since users have already downloaded the app and are using it for food delivery. Moreno emphasizes that Glovo’s focus on hyper-convenience means the company truly delivers anything that can be delivered. The company also offers scheduled deliveries, addressing all types of customer needs, whether urgent or not.

Driving Revenue through Diverse Streams:

Glovo’s partnership with leading grocery retailer Carrefour in 2019 marked a significant milestone. This collaboration allowed Glovo to grow in the e-grocery space while helping Carrefour enhance its e-commerce capabilities. Through this model, customers can view their local grocery store’s assortment and order via Glovo for quick delivery. Glovo couriers pick up orders from designated local grocery stores, solving part of the complex last-mile delivery challenges for retailers. Building partnerships with large grocers remains a top priority for Glovo, as it aims to further expand scalability by signing additional leading Spanish retailers.

Recently, Glovo launched Glovo Ads, a platform aimed at helping retailers on the app increase their visibility, expand their audience, and boost sales through quick commerce channels. The platform offers various advertising tools, such as in-app banners, sponsored searches, and branded sections, providing a new revenue stream for the company. Rodrigo Alier, Global Director of Glovo Ads, stated, “Through Glovo Ads, we provide a diverse range of tools to support these businesses in their growth and bring them closer to their customers.”

The Path to Profitability:

Glovo’s early diversification strategy and B2B delivery services have positioned it favorably compared to competitors. Becoming a delivery partner for grocery retailers is a central objective for the company, as it seeks to achieve profitability in the near future. While Glovo has already made significant progress by improving profitability by €250 million year-on-year, the signing of more grocery partners will play a critical role in reaching its financial goals.

To achieve profitable growth, diversification both in terms of product categories and logistics is key. Offering a wide assortment of products and flexible delivery timings, such as same-day and next-day delivery, makes economic sense and may be the path to reinventing quick commerce in the long run.

Glovo’s differentiated strategy in the quick commerce landscape sets it apart from competitors. Its multi-category approach, coupled with partnerships with grocery retailers, positions the company for success and potential profitability. By expanding beyond groceries and offering a diverse range of services, Glovo captures more consumer needs and occasions while mitigating acquisition costs. The launch of Glovo Ads as an additional revenue stream further strengthens the company’s position in the market.

As Glovo continues to prioritize grocery partnerships and diversification, it strives to achieve financial stability and profitability. Its early success in improving profitability and the sustained demand post-COVID indicate that Glovo’s approach resonates with consumers. With a focus on hyper-convenience and a diverse range of revenue streams, Glovo is paving the way for the future of quick commerce.

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