Glovo Business Model: How Does Glovo Work And Make Money?

Glovo Business Model: How Does Glovo Work And Make Money?

4839 Views | 6 min | Published On: January 23, 2022 Last Updated: March 23, 2022
glovo business model - insights and stats

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 Facts and Stats: Funding and Major Milestones

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

Founded: 2015

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

Glovo’s Inspiring Success Story

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. 

Find Your USP

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. 

Find The Right Time

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.

Get Good Funding

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.

Make Profits Your Obsession

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.

Look Before You Leap

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!

Glovo Business Model: How Does Glovo Work?

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. 

glovo business model

The Glovo business model is 3-tiered:

Glovo’s Value Proposition for Customers

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. 

  • Customers can order anything from the Glovo site by exploring the products available.
  • The company guarantees delivery in under 29 minutes.
  • Customers can place orders at any time because the platform is operating 24/7
  • Also, customers may receive anything they want at their location without having to wait in line, thanks to this efficient platform.

Glovo’s Value Proposition for Stores & Restaurants

Glovo allows businesses to register on the platform to boost their order volume and consumer base.

  • Store owners use this platform to market their goods and services.
  • Glovo offers professional providers for order fulfillment, so they can have things delivered to clients without worrying about delivery providers.
  • Store owners may now better serve their consumers by expanding their delivery services without having to worry about geographical constraints.

Glovo’s Value Proposition for Delivery Service Providers

Independent courier contractors working for Glovo deliver the orders. Delivery providers can also operate as freelancers on the marketplace and earn a reasonable living. 

  • Allows for more flexible working hours because delivery providers can go offline at any time.
  • They are entitled to a share of the cash generated by their delivery services, as well as a tip from satisfied consumers.
  • To complete the order, delivery providers might employ their preferred means of conveyance.

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.

Let’s see how Glovo works:

glovo business model : how does glovo work
  • Visit The Platform: Customers must first download the Glovo app from the App Store or Google Play Store. Alternatively, they can place their orders through the Glovo website too.
  • Login & Registration: Glovo allows its users to register on the platform by updating their full name, email address and password. After registration, they can order easily.
  • Payment Method: The app is integrated with a standard payment gateway that allows its users to pay using cards or any online payment method.
  • Delivery Address: Next, the user will be asked to update their shipping address on the main screen.
  • Adding Items To Cart: The Glovo app allows its users to purchase the items they like from partnered restaurants and businesses hassle-free.
  • Order Delivery: The app is integrated with excellent GPS functionality for the users to track their orders in real-time. The order reaches the customer’s location within a few minutes.
  • Rating & Reviews: After the ordering and delivery process is over, the user is asked to rate the services provided.

Glovo Revenue Model: How Does It Make Money?

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:

glovo business model : how does it earn money?

Commissions

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.

Shipping Fees

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.

Subscription Fees

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.

Q-commerce Revenue

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.

Usage Of Dark Kitchens

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.

Wrapping Up

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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