More startup swapping in food delivery: Glovo, a Spanish on-demand delivery company that operates a network primarily for urban convenience shopping, has announced the acquisitions of two local “Instacart”-style grocery picking and delivery businesses, Mercadao from Portugal and Lola Market in Madrid.
Terms of the acquisitions aren’t being disclosed.
2015-founded Lola Market had raised around EUR3 million, per Crunchbase. It’s not clear how much Portugal’s Mercadao — which was founded in 2018 — had raised over its shorter run.
The Spanish on-demand delivery service platform faces challenges on its home turf. In this instance, the government has implemented a labor reform that targets delivery workers in the gig economy.
Glovo reacted by imposing a new model of self-employment on the vast majority riders on its platform. It hired only about a fifth. The scene is set for legal challenges in its homeland.
At the European Union level lawmakers are looking at how to improve platform workers conditions — and could also come up with pan-EU legislation which has greater implications for regional players such as Glovo’s business models.
Ongoing regulatory challenges over employment classification and algorithmic management of workers in the gig economy may offer some context for Glovo’s expanding interest in grocery purchasing in Europe, where it has been building out a network of dark stores to power what it calls “Q-Commerce” (aka, quick urban convenience shopping).
As well as for its recently announced international expansion in Africa, where it has said it will be doubling down investment over the next 12 months.
However, the difficulty of achieving profitability for food delivery on-demand seems to be a significant piece of the puzzle that is driving consolidation.
By adding players to the grocery and retail outlet picking delivery spaces, Glovo can expand its coverage of shoppers’ requirements and can nudge them to spend more. It can also cross-sell customers on planned purchases (such the weekly grocery shop) and what it calls “emergency necessities” and “fast and convenient” because it has a smaller 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 expand its market reach by adding grocery picking and delivery, with an initial expansion in Poland and Italy.
Also today it said its Q-Commerce division is “on track” to reach an annual Gross Transaction Value (GTV) of more than EUR300 million this year — adding that it expects that to more than triple by the end of 2022, projecting it will surpass a run rate of EUR1 billion.
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 Q-Commerce offering.
With Lola Market, Mercadao, and other companies on board, we are able to build stronger partnerships with retailers and offer big-basket purchase options for 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.”