Glovo, the app that allows others to do your errands for you, was born from the concerns of a Catalan entrepreneur who, far from settling into the job offered by Airbus (yes, Óscar Pierre is an engineer), decided to take the leap and follow in the footsteps from startups like Airbnb and Uber. When they were beginning to reap success in the United States, Pierre decided to bet on this same business model, the collaborative economy, but with a new approach: save time.
- The beginning
- Evolution to Quick Commerce: ultrafast shipping
- Delivery Hero buys Glovo
- Glovo launches Glovo Fashion
- Glovers and sanctions
If someone else can do it for me, why waste my time? Under this premise, Óscar Pierre, a 25-year-old from Barcelona, launched into the world of entrepreneurship and launched an innovative idea, Glovo, an app in which you can ask for anything you need, since there is always a glover willing to bring it to you in a matter of minutes. minutes. Whether it’s food, shopping or a gift. Glovo is there for you to use your time in something more interesting than running tedious errands.
And it seems that Oscar Pierre’s idea did convince investors, including Sacha Michaud, co-founder of Glovo App, who initially decided to invest more than 100,000 euros in this idea. And so, in March 2015, Glovo was officially born.
History of Glovo: funding rounds
First with nine employees, which in 2019 exceeded 1,000, the engineers hired by Pierre were implementing improvements in the application to gain flexibility and speed, because Glovo is based on saving time, and over the years they have been gaining popularity among investors , who bet on Pierre’s idea.
Thus, the history of Glovo has been adding different rounds of financing over the years, among which we highlight the one in August 2016 when it obtained a new round of financing for 5 million euros, which it decided to invest in continuing to promote the app. in the cities where it was already established, such as Barcelona, Madrid, Valencia, Paris and Milan.
In 2018, it obtained investments of up to 115 million euros, which it used to consolidate its international expansion and which would raise the app’s valuation to 300 million euros.
As Óscar Pierre explained at the time: “We are very happy with this new injection of liquidity that will allow us to continue growing rapidly. My main priority is to invest in increasing our tech team to continue optimizing the platform and offer the best service in the sector to the three main axes: delivery drivers, users and establishments and thus become their reference delivery app”.
For 2019, Glovo made its big leap, after closing two rounds worth 150 million euros each, one in April and the other in December, which made its valuation exceed 1,000 million dollars and therefore accompanied Cabify in its Spanish unicorn condition.
Finally in 2021, the Spanish unicorn managed to raise the highest funding round in history in the Spanish digital sector. The same, for an estimated €450 million, will serve as the basis to promote its Quick Commerce model with which it plans to compete with the internet giant, Amazon.
The new generation of online stores called Quick Commerce or Q-Commerce are established as a source to improve the customer experience with ultra-fast deliveries, and Glovo could not be left out.
Its Q-Commerce division started in 2020. It is based on B2B logistics that includes its network of dark stores that plans to be expanded massively. These spaces serve as logistics centers close to the client, a space where stock third-party products and allow ultra-fast delivery times of less than 30 minutes. The aim of the quick commerce team is to improve the experience of those who buy groceries online.
Currently Glovo already works with retail brands such as Unilever, Nestlé and L’Oreal, as well as supermarkets such as Dia, Alcampo and Carrefour. By the end of 2021, the company hoped to have at least 100 dark stores in operation and include alliances with El Corte Inglés, Douglas and Clarel, among others.
Glovo does not enter the 20s on the right foot
The truth is that 2020, a separate sentence, will not be remembered as a great year in the history of Glovo. Between 2018 and 2020, it faced an intense expansion, especially in Latin America, its first destination being Chile at the hands of Cabify through a “joint venture” in November 2017, and subsequently increased its network of glovers to Peru, Argentina and Brazil. As for Europe, In fact, in 2019 it entered the Polish market and acquired Pizza Portal for 35 million euros, as well as investing in a second technology center in Warsaw. They even tried to associate with Aliexpress, and they did. However, it did not turned out as a great move, because they are not partners anymore.
In 2020, the company announced the sale of its business in Latam to a giant in the food delivery sector, Delivery Hero, in an operation valued at 230 million euros and which covers the Latin American markets in which it had a presence: Argentina , Peru, Ecuador, Panama, Costa Rica, Honduras, Guatemala and the Dominican Republic. After the closing of this operation, Glovo assured that it would focus on its European and Asian markets, after also leaving Turkey, Egypt, Uruguay and Puerto Rico at the beginning of the year. The basic idea: improve the profitability of the company. Finally Glovo left the Latin American market in throughout 2021.
Speaking of Spain, Glovo currently has 4,000 employees; 18,000 glovers and more than 39,000 partners.
Glovo decides to boost its markets with greater profitability and its ultra-fast delivery service
After leaving Latin America in March 2021, Glovo decided to consolidate its business in the markets that represent greater profitability for the company. In this case we are talking about central and eastern Europe with countries such as: Romania, Bulgaria, Croatia, Bosnia and Herzegovina, Montenegro and Serbia. For this, the Spanish unicorn agreed with Delivery Hero, to whom it sold its business in Latin America, the purchase of several of its European subsidiaries for an estimated 170 million euros.
On the other hand, its Quick Commerce model also showed considerable growth, so the company decided to boost it even more with the purchase of Lola Market, which closed one year after its adquisition, and Mercadão. The objective was for these companies with a wide presence in Spain and Portugal to allow Glovo to reach a greater volume of transactions with the intention of exceeding 1,000 million by 2022. Thus giving more importance to this business division, which already accounted for over 10% of its income.
In January 2022, the company signed an agreement for the acquisition of 100% of Socialfood S.r.l., a food delivery platform founded in 2013 in Palermo, Italy, and which has more than 300 associated restaurants.
This operation is part of Glovo’s business expansion strategy to consolidate its presence in the South of Italy -especially in Palermo and Catania, the birthplace of Socialfood-, where delivery is registering significant growth, either due to the great variety of gastronomic offer, as well as the growing demand for multi-category orders. It became the leading delivery platform in Sicily.
Minutes before the chimes that began 2022, the co-founder and CEO of Delivery Hero, Niklas Östberg posted on his Twitter account that “Glovo would join forces with Delivery Hero.” This meant that the German Delivery Hero, which already owned around 44% of the Spanish Glovo, after various participations in its latest investment rounds, had reached an agreement to expand its stake to more than 80%.
The agreement was made through an exchange of shares, that is, the shareholders of Glovo would become shareholders of Delivery Hero.
Glovo formalizes its sale to Delivery Hero for a lower value than expected
A little over half a year later, at the beginning of July, the closing of the sale through share exchange was finally announced, through which Delivery Hero became the owner of 94% of Glovo, although the framework in which it was carried out has drastically changed. Glovo’s valuation fell by 65% in relation to when the purchase agreement was carried out, going from 2,300 million euros to less than 800 million euros.
Glovo closes 2022 with losses
Forecasts for 2022 were not encouraging. Glovo’s gross losses for that year reached €304 million (Ebitda) which aproximately are $327,65 million. Even so, Delivery Hero had revenues of 8,577 million euros, of which 490 million euros came from the Spanish company, representing 5.7% of the group.
The company still has situations to face, especially those related to its labor model, especially with the situation of glovers, despite the fact that in 2021 it already tried to address this problem. In Spain it has almost 30 open investigations by the Inspectorate, although it is not the only country, it also has them in Italy, Portugal, Brazil or Croatia. Likewise, this situation led to delay the final closing of the purchase, becoming effective in July 2022.
The investment bank HSBC, one of the profiles that had shown most interest in the development of the purchase, assured that “it always seemed that the purchase was somewhat doubtful, but it looks more and more like a rescue“. And with the revelation of these new data, he added: “the deal continues to baffle us“.
Following its initial goal of expanding into new categories beyond food, Glovo has just announced the launch of Glovo Fashion. A division of the company that, after having partnered with 40 brands, will specialize in deliveries related to the fashion sector at home in 30 minutes.
With the launch of Glovo Fashion, the company gives a boost to its commitment to Quick Commerce, a department launched in 2020, which sought to promote partnerships with retail chains, distribution, food and local businesses in order to give a much broader offer to its customers, including supermarket products, electronics, toys, beauty, fashion, etc. This division is based on the idea of using its network of dark stores as logistics centers close to the customer and allowing deliveries in less than 30 minutes.
At the moment it is available in Madrid and Barcelona, working with brands such as Etam, Sveti Stefan, Pompeii, or Silbon.
Glovo’s success cannot be understood without its glovers, the delivery men who in less than half an hour (in most cases) satisfy the users’ messages. Glovers usually travel by bike or motorbike and are autonomous who decide when to work, whether or not to accept an order and in return they receive a fixed amount for each delivery they make.
But they are also the weakest link in their value chain… and the one that has given you the most headaches.
For years, different glovers have sued the company for the relationship model that binds them to it: while Glovo understands that the distributors are autonomous, several of them, as well as union organizations and some political parties affirm that the glovers are a clear case of “false self-employment”: a relationship that favors the company by not assuming the labor costs of having them on staff and puts the delivery drivers in a situation of weakness when it comes to facing contingencies such as accidents, illnesses, etc.
This judicialization of relations with riders has led to multiple sentences to date, in various Spanish courts, with diverse results for the company. Glovo regretted on several occasions that Spain was the only country in which these types of cases are being prosecuted instead of betting on a specific regulation, which is necessary for this new sector that has shown a great economic impact, as has happened in France or the United Kingdom, where laws are being adopted in relation to this new type of work model.
Finally, the long-awaited decision of the Supreme Court, the body in charge of establishing jurisprudence, came in September 2020, ruling against the interests of the company. The plenary of the fourth room, ruling on the particular case of a delivery man from Madrid, maintains that Glovo is not a “mere intermediary” in the contracting of services between businesses and delivery men and that, as maintained by associations of delivery men and unions, glovers are false freelancers.
Glovo decides to commit to its glovers to comply with new legislation and avoid new sanctions.
To avoid future sanctions after the entry into force of the so-called Rider Law, the company decided to launch “The Couriers Pledge”, a commitment to work with delivery drivers. This solution was born as a response to the approval in 2021 of the new law for riders, and proposes a considerable improvement in working conditions and social benefits for delivery drivers.
In this way, with this new commitment Glovo has proposed a hybrid delivery person, in which they maintain their autonomy while receiving different benefits and an improvement in their working conditions. Thus, The Couriers Pledge proposes: fairer earnings, 360° safety, proactive management and better care for the community of riders.
However, it was not enough because Glovo was sanctioned by the Labor Inspectorate with a fine of 79M€ for not complying with the Rider Law. The Labor Inspectorate fined the delivery company in 2022 for carrying out labor fraud by refusing to put 10,614 workers on the payroll, 8,331 in Barcelona and 2,283 in Valencia. This comes just over a year after the Rider Law came into force with the aim of ensuring that delivery companies did not fall prey to “false self-employment”.
From the Inspectorate have stressed that, contrary to what they want to make believe, “Glovo is not an intermediary between deliverers and businesses, but it is an agent that provides delivery services. This is why these more than ten thousand workers should be on the payroll.”
The fine would have been distributed as follows: in Barcelona Glovo received a fine of 39 million for keeping workers in a situation of false self-employment and, in addition, must pay 24 million in Social Security contributions, in relation to which they should have contributed. In Valencia, for its part, the fine amounts to 10.7 million, added to the 5 million in contributions.
In addition, in January 2023, the Labor Inspectorate has imposed on Glovo a total of 57 million euros in new penalties for employment of false self-employed and irregular work of foreign persons. At the beginning of 2023, the total fines accumulated by Glovo reach €205.5 million, ($220 million)
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