Deliveroo SWOT analysis

SWOT Analysis of Deliveroo

SWOT analysis is a critical tool for determining a brand’s strengths, weaknesses, opportunities, and threats. It gives brands the courage needed to advance in the market and take advantage of opportunities, take on threats and work around their weaknesses by leveraging on their strengths because the brand will be working based on insights of the brand and the marketplace. Many brands fail to make progress out of working blindly without have insights into both the brand and its market.

Deliveroo is a British online food delivery service with its headquarters in London.  Through its website and partnership with various restaurants, customers are able to place their orders and Deliveroo makes a doorstep delivery of the various orders. The company differentiates itself through the delivery of high-quality food from the favorite restaurant within the locality to people’s offices, and homes in under 20 minutes. The company is able to make revenues from charging a commission on every delivery from the restaurants. The brand procures contractual drivers to make the deliveries, these drivers operate on an on-demand basis.

As of 2021, the brand had over 110,000 drivers working for it. The brand has its presence in over 200 cities all over the United Kingdom. It also operates in the Netherlands, France, Spain, Belgium, Italy, Ireland, Singapore, United Arab Emirates, Kuwait, and Hong Kong. It has differentiated itself by focusing on high-quality foods for delivery. Deliveroo also has a subsidiary known as Deliveroo Editions. This is a network of ghost kitchens that are located offsite the restaurants and only prepare delivery meals.

Deliveroo – At a Glance

NameDeliveroo
Websitedeliveroo.co.uk
FoundersWill Shu, Greg Orlowski
Chief Executive Officer (C.E.O.)Will Shu
HeadquartersLondon, United Kingdom
Type of CorporationPrivate
Year Founded2013
Revenues (2019)$592 million (2020)
Key Products/ServicesEnterprise software, web development
Key CompetitorsTestComplete, Perfecto, Applause.Kobiton, Ranorex Studio, LambdaTest, pCloudy

Strength of Deliveroo

Strong product

Deliveroo is a food delivery company that seeks to make quality food more readily accessible. This service has become highly in demand given the paradigm shift in the general operations of individuals, businesses, and governments. Many people are now working from home.

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Additionally, many households have become extremely busy to get enough time to prepare a proper meal. This change of trend creates a heightened demand for ready food that is delivered at the doorstep. Deliveroo seeks to deliver top-quality food to customers and at the same time, reduce the waiting time for delivery to 20 minutes. This two have highly differentiated Deliveroo’s product and set it apart from its competition. This has become a huge strength for the brand.

Strong partnership network

The brand has a well-developed network of more than 140,000 restaurants and grocery partners, and more than 100,000 riders in Singapore as well as overseas. This partnership seeks to mutually benefit each side. For instance, the restaurants through this partnership are able to benefit from a well strong marketing mechanism that brings in more revenues and achieves more customer reach and retention.

Deliveroo guarantees businesses of all sizes business support, tools, and savings to ensure these partners are able to grow their brands. This is a critical factor in strengthening partnerships and overall, it ensures top quality and growth of all partners working with Deliveroo.

Pioneer in ghost kitchen

Deliveroo is one of the pioneers in the ghost kitchen business with its subsidiary Deliveroo editions. This model is unique since it only deals with food meant for delivery. It, therefore, requires less costs for setup but helps to achieve reduced waiting time. Given waiting time is a critical factor in differentiating food delivery services, it has become a major strength for the brand.

Market share

Deliveroo holds the third position in the UK market for food delivery. Being the third in the industry positions the brand for more market recognition and brand awareness. This could provide leverage for gaining more market share in the UK market in the foreseeable future. 

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Weaknesses of Deliveroo

Continuous losses

Deliveroo is yet to post any profits on its financial statements. The company has been reported to record losses on every single order it makes. This can be worrying to investors and partners alike as they may be worry about the brand failing to meet its financial obligations both in the long term and in the long run. This could impact negatively the brand’s image, investment prospects, and expansion strategies.

In-efficiencies in handling the pandemic

COVID’s advent was never premeditated by any business. And just like many other businesses all over the globe, Deliveroo struggled to handle the pandemic. The brand ended up cutting approximately 15% of its jobs. While this lightened the company financial burned, a more efficient and innovative strategy would have helped the brand achieve more growth given the industry was experiencing a huge growth of more than 120%. The brand needs to continuously review its talent pool to ensure efficiency, more strategic preparations so as to make the most of the available opportunities.

Gaps in human resource management

The brand has faced concerns regarding its policies on fair pay and the treatment of its workers. This could easily attract negative publicity, harm the goodwill in partnership networks, and hamper investor support.

Opportunities of Deliveroo

Strong growth opportunities

Deliveroo’s market share grew by 7% in 2020 while the whole food delivery market grew by 128%. This goes to show that there is more room for the growth of the brand. The brand could consider strategies that would enable it to achieve more growth; this could include more innovation, expansion of networks to ensure greater reach.

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Surge in Demand for Deliveroo’s product

Deliveroo has differentiated itself greatly to achieve a signature service and product offering in the market. This is likely to give it a greater competitive edge in the areas it has already established its operations and give it more leverage for expansion in other markets.

Grocery delivery market

Deliveroo has made an entry already into the grocery delivery market. Given this market is highly similar to food delivery, the brand is great potential for growth in this niche. This will particularly serve households and individuals who are keen on preparing their own food but do not have time to go for grocery shopping.

Threats of Deliveroo

Strong competition

The food delivery market has very stiff competition. Unfortunately, the market has very low switching costs which means a very high likelihood of customers switching to the most efficient service provider. Deliveroo needs to tighten its belt with regards to offering nothing less than the best customer experience and be innovative about it.

Underwhelming IPO for the brand

The underwhelming IPO for Deliveroo could seriously harm investor confidence and deem the brand’s prospects for achieving its desired investment funding.

Drivers and employees

The brand so far has hired drivers on a contractual basis depending on the availability of work. There has been debate ongoing about the classification of these drivers as employees of the brand. If this debate is affirmed, the brand would have to incur more costs in benefits of the employees including insurance. This would end up eating more into the brand’s profitability that is already wanting.

Conclusion

Deliveroo has great prospects in the market. The brand needs to put in more strategies to ensure more growth beyond the 7% growth it experienced in 2020. The brand needs to continuously work on top-notch service, innovation, and technology to differentiate itself in the market that is packed with competition.

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