Former Corporate Strategy at Glovo
Paul-Louis was part of the Glovo, the Spanish restaurant and convenience delivery company, Strategy team from February 2019 to December 2020. He had experience working within restaurants and convenience delivery and was heavily involved in rolling our new dark stores for the company in Europe and Latam. Paul is now a VC at Draper Esprit. Read moreView Profile Page
Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.
Paul, can you give us a quick introduction to when you first joined Glovo and your role and responsibilities?
I was working in strategy consulting in London and showing Glovo to a launch strategy team there, around February 2019 and I stayed there until December 2020. I worked with the strategy team, which was a consulting team, working on a wide range of projects for the company, which means that we had a unique 360 view of everything that was going on in Glovo, across different verticals, different geographies and different departments. The projects that were being worked on were things like competitive intelligence, exporting to new countries, commissioning strategy, scaling the product team and the engineering team and processing product requests. I was looking at the company top line; it 3x or 5x’d, depending on if you look at it like for like. Right now, Glovo is operating across 20 or so markets, in food delivery and other categories.
Were they only doing food and restaurant delivery when you joined?
Glovo was a copycat of Postmates. The story is, Oscar the founder was in the US, saw Postmates and thought that it was a great way to replicate this business model where you put in touch people who don’t have time and have the need of a product, with people who have the time to actually do this work for you. Today, the motto of Glovo’s vision is, deliver anything in the city, 30 minutes or less. From the start, it really encapsulated a multi-category angle.
It started with delivering anything. Actually, there was a very simple text box, on a web page where you could type what you wanted. You could say, I need a drink or, I need you to go and pick up my clothes, I need you to buy an iPhone, then they would fulfil that order. What happens is, you quickly realize that people eat three times per day, 21 times per week. That’s why everyone went to food, because that’s how you get frequency and retention.
At the start, the business was multi-category and then, very quickly, it went to food, as its main thing. But they still had some other categories that were quite big, such as the courier category which is basically picking up something at point A and dropping it at point B, which was pretty big at that time. You also had a grocery category which was really big which was a mix of marketplace, partnering with supermarkets, such as Carrefour and Aldi, or even local shops and dark stores. You also had a ‘quero’ category; Quero means, ‘I want something’ in Spanish which is, literally, we’ll get you anything. You pay an €8 fee and we’ll get you anything.
You also had a small retail category with partnerships which would deliver flowers, chocolates or balloons for Valentine’s Day and things like that. It was less frequent but helped to make the app a bit more unique.
Was that grocery on-demand as opposed to scheduled delivery grocery like Ocado type services?
Everything is on-demand. Everything comes from 10 minutes to an hour, maximum.
If there were so many categories, what was the focus at Glovo, during your time there?
Glovo was launched in 2015; pretty late in the food delivery world. Deliveroo started in 2013; Uber started in 2014. When Glovo was growing and raising 10 million, Deliveroo was raising 200, so it’s always going to be David against Goliath. Because you had this lack of funding, the key to winning the market was delivery. The focus was always around the key being food delivery. Food delivery was both Gen 2, which was most of the orders and logistics, and Gen 1 which was the marketplace model which we were using in some cities.
Today, it is starting to switch. Today, Glovo is bigger, it is more established, with more penetration, so you can really push your users towards new categories and they have been doing this very successfully.
Why do they want to push them towards convenience or new categories?
If you push them, you get more frequency and more frequency comes with more retention. Today, real estate or your phone is expensive. If you have Uber Eats and Deliveroo and you are comparing everyone for food delivery, then you might go to a competitor. If actually, you say, hey, I’m ordering groceries twice a week or I used Glovo to drop my keys or to deliver packages, you stay with them. You can see those who have more than one category have much better retention, so that’s the first reason.
I also think it’s very easy. There is no CAC; you have already acquired the user. You push them towards other orders, to a positive gross margin, just by increasing their activity. Also, the other order curves are very different. You order food delivery on a Friday night, but when you are going to use the courier or grocery service, it’s going to be a different order curve. It helps with the orders during the day, to utilize to the maximum, when food delivery is a bit quieter.
Lastly, it’s a great way to differentiate yourself as compared to your competitors. When you want to acquire customers, you can tell a different story and tell them, that’s why you should download my app. You still have some users that come in via another category and then expand to other categories and go to food delivery, as well.
How do you look at the Gen 1 business models, such as the Just Eat Takeaway pure marketplaces? They have slowly moved into logistics. Do you think they should be moving into convenience?
I think it’s a mixed bag. On one hand, most of the Gen 1s don’t really have an infrastructure, which is why they can’t really move. Yes, Just Eat is moving towards Gen 2 but, technically, these guys don’t really have a logistics network. That is why, for them, adding a new category is quite complex, especially when you are talking about retailers or grocers where none of them have their own fleet of couriers so there is no point trying to make a partnership. That is the main thing that is stopping them from doing it.
Some of them, like Just Eat Takeaway, are moving to Scoober. I think the question here is, if you have a Gen 2, should you do it? I think there is another advantage, that we discussed before but, at the same time, you have better retention, but it’s not really direct competition. The direct competition is pretty small. It may be competitive in a market with multiple players, but if you are the only player in the market, people that want to order flowers or people order that want to order groceries have a lot of options. Where I think there is a risk is if you get into 10-minute convenience delivery, I think it can start to eat into your market. That is just ordering a low-cost pizza, at €10 from the really bad pizza man next to you. If I can get one in 10 minutes, instead of 30 minutes, for €3, I am paying less and it comes faster. But I don’t think it’s that massive a part of the market.