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How Does Glovo Make Money? A Close Look at the Glovo Business Model

By Abhishek Goel 24th December 2021

The food delivery companies have exploded in popularity in the last few months. Due to the restrictions enforced by the Covid pandemic, this popularity increased even further. Although many food delivery companies are operating around the world, we will take a closer look at the Glovo business model here. We will examine how a food delivery startup has grown dramatically in less than 5 years. So, how does Glovo make money? The company earns money via commission on orders, subscription fees, delivery fees, and profits from their Q-commerce services.

glovo business model

About Glovo business

Sacha Michaud and Oscar Pierre co-founded the Glovo business in 2015. The company has grown into a huge business that gives on-demand delivery services by using more than 1.9 million employees in 21 countries. Glovo operates from Barcelona, Spain and it provides food and shopping delivery solutions. Its clientele can buy a range of items such as alcohol, food, prescriptions, and groceries from Glovo. The customers can acquire their daily requirements by using their cost-effective and timely services.

Glovo works in collaboration with couriers that are independent contractors for fulfilling the orders. The platform requires these couriers to own their vehicles. They could be as an automobile or a bike. They will also need a mobile phone for receiving orders. These independent contractors need to be 18 years or older. More than 57,000 such couriers are working for this platform at the moment. There is a monthly membership club in Glovo for the more loyal customers that gives them a range of additional benefits and discounted delivery alternatives.

You may access the platform either via its site or by using one of its apps that are available for both iOS and Android users. In the future, Glovo plans to leverage the available technology for the optimization of its marketing approach. It shows their commitment to developing the platform to provide a top-quality customer experience.

Glovo business model

The Glovo business model allows the customers to buy, pick up, and receive their products online and have them delivered within sixty minutes. Freelance couriers are used for delivering these orders. Glovo caters to the customer’s requirements affordably and fast by using a range of product categories such as snacks, gifts, pharmacy supplies, restaurants, and marketplaces. After the customer has placed an order, the use of the embedded geolocation feature in the software permits them to track the delivery process in real-time. The Glovo app also works as a courier service transporting the items bought by various customers or other documents to their expected location. 

So, is Glovo profitable? The Glovo management team follows the philosophy of a shared economy. It means that the business model is profitable for all the stakeholders. The business partners of Glovo include,

  • Ecommerce companies: Glovo provides an express package to various businesses by using its network. The service is available for e-commerce companies that are willing to join hands with Glovo. As a result of this, Glovo raises the sales for these companies by providing top-quality Glovo delivery for their products.
  • Physical stores: The partner network of Glovo permits businesses such as physical shops to extend their outreach to improve sales.
  • Service partners: You can find several new job opportunities being available with Glovo for people looking to get freelance or part-time work with the organization. Employees can use these opportunities to generate some additional income besides the normal employment. Apart from this, the employees have the freedom to work at their own pace. This is possible as this is a freelancing opportunity.
glovo business model

How does Glovo work?

Glovo takes pride in the fact that it gives a straightforward and friendly experience to the users. Your clientele is the most crucial stakeholder for all successful business models. Here are some steps that will help you in understanding the way Glovo works. Let’s find out how to place an order with Glovo?

1. Visit the Glovo website or download their app: The prospective customers have to download the company app from App/Google Play Store. Alternatively, they can visit the Glovo site for placing their orders.

2. Register with Glovo: Glovo needs its users to create an account with them in the beginning. Consumers are required to complete this step by logging onto the app or their site. They will have to use their email address, password, and full name.

3. Add the payment alternative: After this, the user will have to visit the “Manage Payment methods” section to add her or his credit/debit card details for making the payment.

4. Add the delivery address: Now, the user will be prompted to give her or his shipping address on the main screen of the Glovo app by following the payment method configuration.

5. Add all your items to the cart: In the next step, the Glovo app allows buyers to buy the items they need from their partner businesses and restaurants.

6. Order acceptance: Next, the users are required to complete a few additional steps after the placement of their order. After this is completed, the selected items are accepted for delivery and they are delivered in less than half an hour by using couriers.

7. Delivery of the order: The buyers can track their order in real-time by utilizing an additional feature provided by the Glovo app. The customer order gets delivered in minutes.

8. Rate and review: Now, the client is asked to rate the service and comment on the overall experience. This is after receiving the package.

glovo business model

How does Glovo make money?

Glovo makes money via subscription fees, delivery fees, commission on orders, and providing Q-commerce services. According to the sources reporting in 2019, the delivery charges for Glovo are between 20 to 30% of the food value. As a result, Glovo partners will be contributing a share of their revenues to Glovo. for fighting the local competition, the Glovo business model is based on continuous capital raising, courier supply, and client satisfaction. As a result, they are market leaders in the places where they operate.

Scaling is important here. The more couriers and partners they have, the simpler it becomes simpler to fulfill the orders, thereby satisfying the clientele. People that move to cities are more likely to use well-established services, rather than trying out the newer ones. Let’s take a closer look at all the Glovo revenue sources.

1. Getting commission on orders: Glovo gets a commission in percentage on the fulfilling partners when the users have placed orders with them. This commission varies for different products but it is close to 35% for most of them. The exact fee they charge depends on the agreement between the partner and Glovo. For example, bigger chains such as McDonald’s are likely to pay lesser because they have better negotiation leverage and they run lower-margin enterprises.

2. Shipping fees: Glovo charges certain delivery fees together with the commission paid by the partners. Therefore, this shipping charge is used for covering the courier costs. The consumer has to pay the shipping charges for having their product delivered. These delivery fees vary depending on distance, location, and the speed at which the delivery is expected. But the delivery costs are decided by the distance of the consumer from the restaurant and the market.

3. Subscription fees: In 2018, the Glovo Prime membership club was introduced. It was called Glovo Prime. The subscribers to this club receive many benefits with their subscriptions. It costs around $5 every month for premium subscriptions. Initially, the delivery costs will get waived after the order has reached a certain limit. The consumers will also get a range of discounts. The subscription encourages the consumers to make extra purchases for recouping their monthly expenditure.

4. Q-commerce revenue: Glovo has started selling its supermarket items as a way of diversification. This happened mainly due to the organization opening various fulfillment centers of its own. Pickers help out in the selection of products at small warehouses that can hold thousands of articles. There is no public access to these places. They employ people that pick up, buy, and deliver the grocery items to their consumers throughout the day. Glovo maintains full control over the commodities available to their customers.

5. Use of dark kitchens: Glovo also works in conjunction with local restaurants when they reach capacity. These restaurants can rent the services of any one of the seven dark kitchens placed in Europe raising their food sales and production. Glovo is looking to get better control over the delivery procedure and charge it suitably.

Takeaway

Glovo is a Spain-based on-demand courier company. It is known for delivering restaurant food however, it also works in other areas such as jewelry, pharmacy items, and clothes. The company charges a delivery fee to its consumers and gets a commission from the partners. It pays the couriers a percentage of their commission depending on the distance they had to travel for delivery. Glovo also provides rental space to restaurants looking for more space. There is another great platform available out there. It is Jungleworks. You can use it for streamlining your delivery process.

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