In recent years, many new companies have come forward in the food delivery industry. The primary services that these companies offer are similar. However, they also provide customers with various other perks and benefits that help them make money. Companies like Uber Eats, Grubhub, DoorDash, etc., all offer these services.
However, some of these companies do not offer services outside the US.
A company that is well-known for its food delivery services in Europe and parts of the Middle East is Deliveroo. Deliveroo is an online food delivery company from the UK. The company, founded by Will Shu and Greg Orlowski in London, England, has been active in over 800 locations. Its primary markets include the United Kingdom, France, Ireland, Spain, Italy, Australia, the Netherlands, Hong Kong, Singapore, UAE, and Kuwait.
Deliveroo has attracted many customers worldwide and generated significant revenues over the years. Despite that, the company is yet to report any profits from its operations. The company started as an online food delivery company. However, it has also expanded its business in the industry. This expansion comes in the form of Deliveroo Editions, which focuses on growing a network of ghost kitchens.
Deliveroo has its own app on mobile platforms through which customers can order food. It also allows users to access the features through the web. The company employs delivery personnel that takes care of delivering the food. These delivery employees can also join the platform. The company requires them to have a bike or bicycle they can use to make deliveries. Deliveroo also has a subscription service that allows users to order food without any charges.
Deliveroo has expanded its business throughout the years through various investments. The company has also received many awards for its services. Recently, the company went public on the London Stock Exchange. In 2020, Deliveroo reported around 2,300 employees. Similarly, the company had reported around 30,000 couriers that deliver food to customers in 2016.
How does Deliveroo Work?
Deliveroo works similar to other food delivery platforms. The company has an app that allows users to deliver food online. Once users place their orders, the company rings up the restaurant. After the food is ready, a courier picks up the delivery and brings it to the customer. This process has remained the same for all similar companies. However, Deliveroo has refined it several times during its existence.
Deliveroo also works with restaurants. The company deals with various restaurants to allow them to make orders for customers easily. Since Deliveroo provides these restaurants with business, it also charges them a commission for each order. However, that part does not concern the users as these charges don’t get added to their order.
Deliveroo also employs thousands of couriers that are responsible for delivering food. These couriers receive a commission for each delivery they make. Deliveroo uses a similar approach to Uber when it comes to employing these individuals. The company does not hire these couriers full-time. Neither does it provide them with delivery vehicles. Couriers work as contracts and use their own bikes to make deliveries.
Lastly, Deliveroo also deals with customers. These are the platform’s users that place orders and get their food delivered to them. These users don’t do a lot in the process. Their contribution includes using the Deliveroo app and ordering food. Similarly, they are the primary source of income for the company. Deliveroo charges users a specific fee each time they order food.
What is Deliveroo Business Model?
Like many food delivery companies, Deliveroo also follows a similar approach to business. The company uses an e-commerce business model, more specifically, a C2C business model. Through this model, the company only provides a platform for restaurants and users to connect online. Deliveroo plays a passive role while also making money from the process.
However, Deliveroo doesn’t truly take a passive approach. The company still involves itself in the process. Like most e-commerce businesses, Deliveroo also uses a more complicated business model. Most traditional C2C business models involve two consumers. However, Deliveroo’s business model also includes a third. In this case, these are the couriers that deliver the food to customers.
Deliveroo combines the aggregate business model with the marketplace and logistics business model. Through this, the company makes itself a different model. On top of that, the company also uses technology to its advantage. By doing so, it creates an all-new on-demand business model. Deliveroo also employs a dual partnership model to partner with restaurants and couriers.
Similarly, Deliveroo also utilizes another business model in its operations. As mentioned, the company offers a subscription service that allows users to order unlimited times without any charges. Therefore, Deliveroo also uses a subscription-based business model. However, this part of its business model does not generate the highest income.
Overall, Deliveroo uses a complex business model that combines various other models. Most other online food delivery companies use a similar approach to business. Deliveroo does not introduce any unique features to it. However, the company has refined the process to its liking to increase its revenues. Shortly put, Deliveroo has a multi-layered business model.
How does Deliveroo Make Money?
Deliveroo operates in 12 countries and over 800 cities as of 2020. The company also partners with over 140,000 restaurants in these locations. In 2020, the company increased its users by 1.1 million, with a total of 7.1 million users. Out of these, 6 million users are in the United Kingdom. These are all factors that contribute to Deliveroo making money.
Deliveroo generated revenues of £1.1 billion in 2020, according to Financial Times. This revenue increased by £329 million over the £771 million the company made in 2019. The increase amounted to 42.67%. The company has constantly grown its revenues ever since its inception. Despite that, however, Deliveroo has not had a single profitable year.
Deliveroo remained a private company for the majority of its lifetime. Therefore, the company has not disclosed much information about how much money it generates. However, there are two primary sources of revenue that the company makes. These include commissions from its partners and the Deliveroo Plus subscription service.
Commission
Deliveroo charges its users a flat £2.5 fee per order. However, this fee does not apply to users that have the subscription service, as mentioned above. Similarly, the company also charges its partners, the restaurants, a commission. This commission depends on the total value of the order placed by the user.
Deliveroo charges restaurants a commission of 10%-55% per order. The rates for each restaurant will vary based on their location and agreement with the company. For some restaurants, this amount will be higher if they have more than one on-demand delivery partner. Deliveroo also charges restaurants for promotions and partner perks. These revenues can also add significantly to the overall money made by the company.
Deliveroo Plus
Deliveroo also has a subscription service, as mentioned above. The company provides unlimited delivery to users without any delivery fee. The company charges £7.99 per month for one user. It allows them to skip delivery charges on orders of £10 or above. For groups, the rate is £3.49 per month. However, it only includes free delivery for orders of £25 or above.
Deliveroo also provides Plus customers with special discounts that are not available to other customers. These users also get 24/7 customer service. In the UK, this plan may go up to £11.49 per month.
Others
There are several other sources of income for Deliveroo apart from the above two as well. For example, the company offers businesses the option to order in bulk for their employees. However, the details for these are undisclosed. Similarly, Deliveroo has Deliveroo Editions, which is a digital kitchen. However, the details for these are also unknown.
Conclusion
Deliveroo is an online food delivery platform. The company provides similar services to most other food delivery platforms. However, it is more active in the UK, Europe, and the Middle East. Deliveroo’s business model involves a combination of many other successful models. The company makes money from various sources, as listed above.
