Glovo 1.0. Launching a New Business Model in the Ultra-Competitive Last-Mile Delivery Landscape
In the context of the digital revolution and the mass use of smart devices connected to the Internet, consumer habits have changed radically. Now a large proportion of the population shops from home, and consumers can compare and choose products from a wider variety of options and sellers. So competition is fierce. Local businesses, such as restaurants, no longer compete with only the business next door but also with other businesses located elsewhere in the city or even in another city or country. With the increase in competition and the implicit rise in the variety on offer (both food and other products), consumers have become more demanding as they have more to choose from. At the same time, new communication channels and social media have established a new relationship between buyers and sellers. Vendors can reach their customers directly and create new and improved customer-satisfaction and persuasion strategies. This case study analyzes Glovo's first business model and describes the evolution of the on-demand delivery company from its beginnings up to the late summer of 2016, when a change in model seemed to be needed. The case looks at the different aspects of Glovo's first business model, aimed at the continuous acquisition of new users to continue growing through innovative marketing techniques. In addition, the case compares Glovo's value proposition and business model with those of the competition at that time, when most of its competitors offered only food-delivery services. In the late summer of 2016, almost two years after it had been founded, Glovo was at a crossroads. Already established in Barcelona, Madrid and Valencia and having started to operate recently in Milan and Paris, Glovo's growth prospects were doubtful. Nevertheless, as the company had just closed a financing round, its leadership team still had the time and money to rethink its business model and improve the situation.