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Blog » Business Punch » Glovo Business Model: How Does Glovo Work And Make Money?
In the last few months, the food delivery business has grown so much. The industry has generated high revenue recently. Due to the outbreak of Covid-19 and the restrictions enforced, the popularity of on demand delivery businesses increased even more.
There are many food delivery apps in the online marketplace hence, we will discuss the Glovo business model in this blog. Glovo is an on demand courier delivery platform based in Barcelona. From delivering a key to sending flowers, users can avail all kinds of delivery services through Glovo.
The aim behind developing this on demand delivery platform was that the Glovo team could help their client’s in doing their tasks and running their errands. In this blog, you will understand the Glovo business model and its monetization strategies.
Glovo has seen so much growth in only 5 years. Currently, it is rooting in 23 countries and is operating in approximately 900 cities and it has over 20,000 partners and around 50,000 drivers who deliver orders on bikes and motorbikes. Glovo has become the go-to app for ordering and sending everything from food to diapers, prescriptions, flowers, and other necessities in nations like Spain, Portugal, and Italy.
Let me tell you a few quick facts about Glovo –
Legal Name: Glaufraf 23
Headquarter: Barcelona, Spain
Founders: Sacha Michaud, Oscar Pierre, Miguel Vicente and Gerard Olive
Area Served: 24 countries globally
The number of employees: 10,000
Last funding type: Series F
Active Customers: 4.3M
Number of stores and local restaurants: 99,000
The number of active couriers: 65,000
Oscar Pierre, the founder and CEO of Glovo, did not really know the market and entered the game without knowing the game. If you are a business owner, here are some things you can learn from the Glovo business model.
Glovo, then, found its gap. It was the only platform that offered the users to get anything delivered at their doorstep. Subsequently, the offer was broad and that is what became the strength of Glovo. It partnered with McDonald’s with the aim to compete against Deliveroo and UberEats. In order to grow your business in the already-established market, you need to have a USP that makes your business stand out, just like Glovo business model.
Getting into a crowded market is difficult but if the time is right, things can turn out as planned. Pierre believed that the time he launched Glovo was crucial. Huge brands like McDonald’s and KFC came onto this platform because Glovo was able to meet their demand for on demand delivery. Hence, things turned out to be good for Glovo.
Pierre made a pitch to 118 investors before the project reached its current stage. In 2017, Glovo raised $30 million in a Series B fundraising round headed by Rakuten, a Japanese internet behemoth. They didn’t have to glance back! In April 2019, two more investment rounds were announced, led by Lakestar, an early Spotify investor. The startup’s overall capital now stands at $340 million, up from $170 million previously.
If you want your business to grow in the market, the most important factor that can lead to success is the quest to remain profitable. In 2016, Glovo made a profit of 1.1 million net euros, which included commissions from partners and shops, as well as what the customer paid for the service, implying a tenfold increase. In 2017, this startup that was just two years and two months old received millions of orders.
According to Pierre, the desire for companies to get funding nearly always comes at a cost – the unexpected withdrawal of investors. Keep your investors in check always!
As you all know, today, online shopping is the new normal. If we need anything, we look for a service provider online. Customers take advantage of the Glovo business model to shop for their requirements online and get them delivered within an hour.
Glovo uses a variety of product categories to meet the needs of customers in an affordable and timely manner, including presents, snacks, pharmaceutical supplies, marketplaces and restaurants therefore, after a consumer places an order, they may track the delivery process in real-time with the help of the software’s inbuilt geolocation capability.
The Glovo app also serves as a courier service, conveying things purchased by different consumers as well as other documents to their destination. Now the main question that comes up is, is Glovo profitable? Well, the Glovo team follows a shared economy philosophy. Hence, the Glovo business model is profitable to its stakeholders.
The Glovo business model is 3-tiered:
Users who place orders on Glovo and request delivery services are the customers. These customers also pay a delivery fee to the businesses in partnership with Glovo to get their products delivered.
Glovo allows businesses to register on the platform to boost their order volume and consumer base.
Independent courier contractors working for Glovo deliver the orders. Delivery providers can also operate as freelancers on the marketplace and earn a reasonable living.
Glovo offers a very straightforward and user-friendly experience to its customers. Its clientele is a very important stakeholder for the successful Glovo business model.
Glovo makes use of very smart monetization strategies to earn high revenue. The on demand delivery platform earns money via delivery fees, subscription fees, commissions and offering Q-commerce services. The partners of Glovo contribute to the profits of the company. Glovo business model is basically standing on constant fundraising, client happiness and courier delivery. The main aim for this was to compete against the local competitors and as a result, they are the market leaders in whichever market they operate.
To develop your own on demand delivery app, click here!
The key point here is scaling. The more partners, the more the orders will be fulfilled. This simply gets Glovo a satisfied clientele. Let’s have a look at the monetization strategies Glovo uses:
When customers place an order with the partners of Glovo, it gets a commission in percentage. This commission fluctuates depending on the product, but for the most part, it is around 35%. The partnership agreement between Glovo and the partner determines the specific fee they charge.
In addition to the commission paid by the partners, Glovo charges specific delivery fees. Hence, this shipping fee is used to cover courier costs. The shipping fees vary depending on the distance, location, and projected delivery time. However, the consumer’s distance from the restaurant and the market determines the cost of delivery.
Glovo introduced its membership club – Glovo Prime in 2018. It costs approximately $5 per month and the members of this club receive many benefits. The delivery expenses are eliminated after a particular amount of money is on the order. The subscription pushes customers to make additional purchases in order to repay their monthly costs.
As part of its diversification strategy, Glovo has begun selling its supermarket items. Consequently, this occurred mostly as a result of the company opening its own fulfilment centres. Pickers assist with product selection in tiny warehouses that can hold thousands of items. They have employees who pick up, buy, and deliver groceries to customers throughout the day.
Moreover, Glovo works simultaneously with local restaurants when they reach their capacity. These restaurants can hire any of the seven dark kitchens located throughout Europe to boost their food sales and production. Glovo is planning to gain more control over the delivery process and charge it appropriately.
The Spain-based on demand courier delivery platform, Glovo is all set to expand its business. It is working in areas like pharmacy, jewellery, clothes, etc. Customers pay a delivery cost, and the company receives a commission from the partners. It pays couriers a percentage of their commission based on how far they have to go to deliver the package.
And Glovo rents out space to eateries in need of additional space. Well, if you are planning to launch your own on demand courier delivery platform like Glovo, we are the right partner to drive digitization to your business. Contact us!
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Lively and spirited. You may call me a tech-geek. I like to explore latest advancements in the technical areas and develop case studies. Being a computer science graduate, I like to traverse through the technical platforms as well. You can find me understanding or playing with the latest technology.
Tags: App like glovo, Glovo business model, glovo revenue model, how does glovo make money, how glovo works, on demand delivery app, what is glovo
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