Tech news Glovo bags two grocery picking and delivery startups

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More startup trading in the food delivery sector: Glovo, a Spanish on-demand delivery company that operates a network primarily for urban convenience shopping, announced the acquisitions of two local ‘Instacart’-style grocery picking and delivery businesses, Mercadao and Lola Market in Madrid.

Terms of the acquisitions aren’t being disclosed.

2015-founded Lola Market had raised around EUR3M, per Crunchbase. It is not known how much Portugal’s Mercadao, which was established in 2018, had raised over its shorter tenure.

Glovo raised a meaty $528M series F back in April, but then quickly spent $208M on three food delivery brands from rival Delivery Hero, in Central and Eastern Europe.

The Spanish on-demand delivery platform faces challenges on its home turf. Here, the government has implemented a labor reform that targets delivery workers in the gig economy.

The reform, which was agreed earlier in the year, was implemented last month. It recognizes delivery platform riders as employees or at least on paper.

Glovo reacted by imposing a new model of self-employment on the vast majority riders of its platform. It only hires around a fifth. The scene is set for legal challenges in its homeland.

At the European Union level lawmakers are also looking at how to improve platform worker conditions — which could include pan-EU legislation with wider implications for regional players such as Glovo’s business models.

The ongoing regulatory issues over the classification of employment and algorithmic management for workers in gig economies may provide some context for Glovo’s growing interest in grocery shopping in Europe. Glovo has been developing a network dark stores in order to power its ‘Q-commerce’, which it calls “quick urban convenience shopping”.

Glovo recently announced its international expansion in Africa. It has stated that it will double down on investment over the next 12 month.

However, the difficulty of achieving profitability for food delivery on-demand seems to be a significant piece of the puzzle that is driving consolidation.

Glovo adds players to the grocery and retail outlet picking delivery spaces. This allows Glovo to expand its reach and can encourage shoppers to spend more. It can also cross-sell customers on planned purchases, such as the weekly grocery shop. Glovo can also sell what it calls “emergency necessities” and “fast-action convenience” due to the limited inventory in its dark city centers.

Both Mercadao and Lola Market’s brands will be preserved, according to Glovo. Mercadao CEO Goncalo Soares Da Costa will also manage them independently.

It claims that the acquisitions will strengthen its position in Europe’s “key markets”. The company also stated that it will offer grocery picking and delivery in all its markets, with an initial expansion for Poland and Italy.

It also stated today that its Q-Commerce division was “on track” for exceeding EUR 300M in annual gross transaction value (GTV). The company said that it expects this to increase to more than three times by the end 2022,, and that it is aiming to exceed a run rate above EUR1BN.

Commenting on the latest acquisitions, Oscar Pierre (CEO and co-founder) of Glovo said: “We see tremendous potential in on-demand grocery marketplace and both companies in their respective markets are strong players, and further strengthen our Q -Commerce offering.

With Lola Market, Mercadao, and other local players, we can strengthen our partnerships with retailers and offer big-basket purchase options to our customers, and provide a more comprehensive service. These acquisitions represent a significant step forward for us, as we’re now able to cover all of the main purchasing considerations for groceries customers, making Glovo a one-stop-shop for e-groceries.”

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