How Does Glovo Make Money? The Glovo Business Model In A Nutshell

Glovo is a Spanish on-demand courier service that purchases and delivers products ordered through a mobile app. Founded in 2015 by Oscar Pierre and Sacha Michaud as a way to “uberize” local services. Glovo makes money via delivery fees, mini-supermarkets (fulfillment centers that Glovo operates in partnership with grocery store chains), and dark kitchens (enabling restaurants to increase their capacity).

Origin Story

Glovo is a Spanish on-demand courier service that purchases and delivers products ordered through a mobile app.

The company was founded in 2015 by Oscar Pierre and Sacha Michaud, primary in response to the uberization of local services.

It is perhaps most well-known for its food delivery service, but the company has a mission to develop an urban lifestyle product.

This encompasses the delivery of pharmacy goods, groceries, jewelry, flowers, courier parcels, and desserts among other options.

Indeed, Glovo markets itself as able to deliver anything. It will for example buy a customer a size 10 dress from Zara and deliver it to their doorstep.

Such is Glovo’s success that it has expanded globally with operations focused on Europe, Africa, and South America.

Securing the funding that enabled the company to attain a significant market share in the very competitive delivery industry.

Glovo’s Value Proposition:

  • Convenience: Glovo provides a convenient and efficient way for customers to order and receive a wide range of products, from food to groceries, pharmacy items, and more, all through a single mobile app.
  • Versatility: The platform offers versatility in delivery options, allowing users to order from restaurants, local stores, supermarkets, and even dark kitchens. This versatility caters to a broad spectrum of customer needs.
  • Urban Lifestyle Enhancement: Glovo aims to enhance the urban lifestyle by offering a diverse selection of goods and services that can be delivered directly to customers’ doorsteps, simplifying daily tasks and saving time.
  • Global Reach: Glovo’s global presence across Europe, Africa, and South America makes it accessible to customers in multiple regions, providing an international solution for on-demand deliveries.

Customer Segments:

  • Consumers: Individuals and households seeking convenient and quick delivery of various products, including meals, groceries, pharmacy items, electronics, and more.
  • Restaurants: Restaurants looking to expand their delivery services and reach a broader customer base through Glovo’s platform.
  • Local Stores: Retail businesses, including grocery stores, electronics shops, and pharmacies, partnering with Glovo to offer delivery services to their customers.
  • Couriers: Independent couriers or delivery drivers who collaborate with Glovo to earn income by fulfilling delivery orders.

Distribution Strategy:

  • Mobile App: Glovo’s mobile application serves as the primary distribution channel, allowing users to browse products, place orders, and track deliveries. It also provides a platform for partner businesses to manage orders and for couriers to accept and complete delivery assignments.
  • Website: Glovo’s website complements its mobile app by offering users an alternative platform for accessing the service and placing orders.

Marketing Strategy:

  • User Acquisition: Glovo invests in user acquisition strategies, including digital advertising, social media marketing, and search engine optimization (SEO), to attract new customers to its platform.
  • Partnership Marketing: The company collaborates with restaurants, local stores, and supermarket chains to encourage them to join its platform, expanding the range of products available for delivery.
  • Promotions and Discounts: Glovo runs promotional campaigns and offers discounts to incentivize users to place orders and engage with the platform regularly.
  • Geographic Expansion: To grow its market reach, Glovo strategically enters new cities and regions, expanding its presence and user base.
  • User Engagement: Glovo engages with its users through email marketing, personalized recommendations, and push notifications to keep them informed about promotions, new features, and order updates.

Glovo revenue generation

Glovo drives revenue by charging its partners a fee. This fee is typically 22-30% of the total value of the food or product being delivered. The exact fee is agreed upon between Glovo and each business.

A portion of this fee is given to Glovo couriers based on the distance they cover while delivering.

Delivery fee

The user also pays a delivery fee to ensure their order reaches them. Deliveries fees are dependent on location, distance, and how quickly the customer wants to receive their order.

An average delivery fee in Europe is around 1.90€.

SuperGlovo mini-supermarkets

SuperGlovo supermarkets are essentially fulfillment centers that Glovo operates in collaboration with grocery store chains.

These stores are not open to the public. Instead, they are staffed with employees who pick, purchase, and deliver customer grocery orders 24/7. This gives Glovo total control over the goods that are available to its customers.

These stores are still a relatively new concept and as such, are only offered in Madrid and Barcelona. However, the company hopes to expand its rapid delivery service by using the efficiency of a McDonald’s drive-through as inspiration. Pickers are being trained to select an entire customer order before the courier arrives to collect it.

Glovo is also targeting every day, household items to drive revenue in a relatively underserved segment. This includes items such as bread, milk, cereal, and water.

Dark kitchens

Glovo also works with local restaurants that have reached peak capacity in their kitchens. These restaurants can rent one of seven dark kitchens scattered across Europe, allowing them to increase productivity and sell more food.

Again, the intent here is for Glovo to control more of the food delivery process and charge accordingly.

Key takeaways

  • Glovo is a Spanish on-demand courier service. Although most well-known for delivering restaurant food, the company will deliver almost anything including clothes, pharmacy goods, and jewelry.
  • Glovo charges its customers a delivery fee and also takes a 22-30% commission from each participating business. The company gives a portion of this commission to the courier, depending on the distance covered.
  • Glovo is also in the process of creating supermarket fulfillment stores. These stores are attended by pickers who collect orders for common household purchases and deliver them 24/7. The company also makes money by offering kitchen space to restaurants that require extra space.

Read Next: Last-Mile Problem, Amazon Business Model, Grubhub Business Model, Uber Business Model, Uber Eats Business Model, How Does Postmates Make Money, How Does OpenTable Make Money.

Connected Last-Mile Delivery Business Models

Deliveroo Business Model

Deliveroo is a British online food delivery company founded by Greg Orlowski and Will Shu in 2013. Shu developed the platform in response to a lack of high-quality food delivery in London. Deliveroo makes money by collecting 25-45% of every order it facilitates. It also charges delivery fees and onboarding fees for restaurants that wish to be featured on the platform. Deliveroo for Business is a service designed for corporate clients needing to order food in bulk. The company also charges a higher commission to businesses that utilize a network of digital kitchens to process orders.

DoorDash Business Model

DoorDash is a platform business model that enables restaurants to set up at-no-cost delivery operations. At the same time, customers get their food at home, and dashers (delivery people) earn some extra money. DoorDash makes money by markup prices through delivery fees, memberships, and advertising for restaurants on the marketplace.

Glovo Business Model

Glovo is a Spanish on-demand courier service that purchases and delivers products ordered through a mobile app. Founded in 2015 by Oscar Pierre and Sacha Michaud as a way to “uberize” local services. Glovo makes money via delivery fees, mini-supermarkets (fulfillment centers that Glovo operates in partnership with grocery store chains), and dark kitchens (enabling restaurants to increase their capacity).

GrubHub Business Model

Grubhub is an online and mobile platform for restaurant pick-up and delivery orders. In 2018 the company connected 95,000 takeout restaurants in over 1,700 U.S. cities and London. The Grubhub portfolio of brands like Seamless, LevelUp, Eat24, AllMenus, MenuPages, and Tapingo. The company makes money primarily by charging restaurants a pre-order commission, and it generates revenues when diners place an order on its platform. Also, it charges restaurants that use Grubhub delivery services when diners pay for them. 

Lyft Business Model

Lyft is a transportation-as-a-service marketplace allowing riders to find a driver for a ride. Lyft has also expanded with a multimodal platform that gives more options like bike-sharing or electric scooters. Lyft primarily makes money by collecting fees from drivers that complete rides on the platform.

OpenTable Business Model

OpenTable is an American online restaurant reservation system founded by Chuck Templeton. During the late 90s, it provided one of the first automated, real-time reservation systems. The company was acquired by Booking Holding back in 2014 for $2.6 billion. Today OpenTable makes money via subscription plans, referral fees, and in-dining with its first restaurant, as an experiment in Miami, Florida.

Postmates Business Model

Postmates is a food delivery service built as a last-mile delivery service platform connecting locals with shops. Postmates makes money by collecting fees (commission, delivery, service, cart, and cancellation fees). It also makes money via its subscription service (called Unlimted – $9.99/month or $99.99 annually), giving free delivery on orders of more than $12.

Uber Eats Business Model

Uber Eats is a three-sided marketplace connecting a driver, a restaurant owner, and a customer with Uber Eats platform at the center. The three-sided marketplace moves around three players: Restaurants pay commission on the orders to Uber Eats; Customers pay small delivery charges and, at times, cancellation fees; Drivers earn through making reliable deliveries on time.

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