Spanish delivery app service goes the final kilometre

Glovo’s mission, says its founder, Oscar Pierre, is to help small urban stores fight back against giant online retailers.

By taking the legwork out of city shopping, he aims to enhance the attractiveness of buying locally while making life easier for his customers. But is Glovo a last-kilometre delivery company or a retailer?

Mr Pierre prefers to describe his 19-month old company as an “urban marketplace”. Its slogan is: “Anything you want. Delivered in minutes.”

Residents of six Spanish cities can place an order for the item they want on Glovo’s app. Its nearest courier will go to the closest store that has it available, buy it using a Glovo bank card and deliver it to the customer. In Barcelona, where the business began, the average delivery time for this service was 40 minutes, says Mr Pierre.

Its service has proved popular with two main types of customer. The first is young people who often do not own a car and send out as a group for an item, sharing the cost between them. The other core users are time-starved working people with children.

One typical user, says Mr Pierre, is the parent who sends for a present when a child says that he or she has been invited to an imminent birthday party. The delivery charge for this premium service is typically €6-€7 per order.

As the business grew, Glovo gained insights into those using its 24-hour, seven-day-a-week service. After two months, a typical user placed 2.5 orders a month; after six months, the frequency rose to 3.5 orders. As the number of users and frequency rose, Glovo was able to reduce delivery charges. The company negotiated discounts with selected stores and used part of the savings to subsidise deliveries.

Bespoke services — shopping, laundry collection and person-to-person deliveries — account for 30 per cent of orders. But the bulk of products delivered are now ordered via the app and supplied by Glovo’s retail partners.

These fall into five main categories: prepared food, over-the-counter pharmacy products, electronics, flowers and groceries. The average delivery charge for these has fallen to €3.5, or 12 per cent of typical order value. Lower delivery charges have helped the company secure 60,000 regular users, and the total number of orders placed is now approaching half a million.

Mr Pierre, who is 23, had the idea while studying to be an aerospace engineer in the US, where he saw neighbourhood stores closing as online retailers promised faster delivery. After two years he returned to live with his parents in Barcelona, where he grew up.

“I found that there is a very good ecosystem for start-ups here,” he says. That included affordable premises, expert professional services, including lawyers specialising in start-ups, and diverse financing options.

Glovo secured €100,000 of funding from angel investors in April 2015, followed by a further €1.5m from local funds and professional investors last autumn. After three investment rounds it has raised €5.5m and employs 70 people of 15 different nationalities.

Of these, 50 are in an unassuming building in a somewhat rundown area of central Barcelona. The others are more scattered. After extending its service to Madrid, Glovo launched in central Paris and Milan. This was followed in October by services in Zaragoza, Seville, Málaga and Valladolid.

Mr Pierre plans to develop new services in Barcelona and roll them out elsewhere. Modifying its app to match the local market is relatively simple but signing up partner stores and delivery staff requires a local presence. Glovo has more than 300 couriers in Barcelona, most working part time. Even so, meeting the promise to deliver in minutes can be difficult.

Mr Pierre remains enthusiastic, however, especially about the merits of starting a business in Barcelona.

“We have all the ingredients to make Barcelona the top start-up hub in Europe,” he says. These include “good weather, amazing food, and a low cost of living” in addition to a well-developed support system, he adds.