Entrepreneurship

Glovo 1.0

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In the context of the digital revolution and the mass use of smart devices connected to the Internet, consumer habits have changed radically. Now a large proportion of the population shops from home, and consumers can compare and choose products from a wider variety of options and sellers. So competition is fierce. Local businesses, such as restaurants, no longer compete with only the business next door but also with other businesses located elsewhere in the city or even in another city or country. With the increase in competition and the implicit rise in the variety on offer (both food and other products), consumers have become more demanding as they have more to choose from. At the same time, new communication channels and social media have established a new relationship between buyers and sellers. Vendors can reach their customers directly and create new and improved customer-satisfaction and persuasion strategies. This case study analyzes Glovo's first business model and describes the evolution of the on-demand delivery company from its beginnings up to the late summer of 2016, when a change in model seemed to be needed. The case looks at the different aspects of Glovo's first business model, aimed at the continuous acquisition of new users to continue growing through innovative marketing techniques. In addition, the case compares Glovo's value proposition and business model with those of the competition at that time, when most of its competitors offered only food-delivery services. In the late summer of 2016, almost two years after it had been founded, Glovo was at a crossroads. Already established in Barcelona, Madrid and Valencia and having started to operate recently in Milan and Paris, Glovo's growth prospects were doubtful. Nevertheless, as the company had just closed a financing round, its leadership team still had the time and money to rethink its business model and improve the situation.
Bibliographic citation: Ricart i Costa, Joan Enric; Tapia Pagès, Albert; Carenzo, Mathieu, "Glovo 1.0: Launching a New Business Model in the Ultra-Competitive Last-Mile Delivery Landscape", IESE, SM-1683-E, 09/2019
Date: 01/09/2019
Author(s): Ricart i Costa, Joan Enric; Tapia Pagès, Albert; Carenzo, Mathieu
Document type: Case
Editor(s): Cátedra Carl Schroeder de Dirección Estratégica
Department: Strategic Management
Sector: Direct sale, catalogue sale, Internet Store chains
Languages: English
Year of the events: 2015-2016
Geographic area: Spain

Learning objective This set of two case studies is designed to be used in courses on strategic management and business model innovation, as well as entrepreneurship courses. The two cases might be of special interest for MBA students and senior executives. The cases may also be useful for managers, especially those from companies involved in a transformation process sparked by the digital economy. The cases are very effective for students willing to analyze the growing process of a start-up trying to offer a competitive value proposition in a crowded market.