Deliveroo Aims To Be First Choice For ‘Spontaneous’ Groceries

As food delivery services around the world look to move further into the grocery space, London-based multinational food delivery company Deliveroo is aiming to be its customers’ go-to choice for last-minute purchases.

“More than half of people don’t want to pre-plan food in advance, and before we launched ODG [on-demand grocery] the options available typically — the fastest were next day,” CEO Will Shu told analysts on an earnings call Wednesday (Aug 11). “So we do think this represents just a completely different use case, a completely different set of consumers, and so on demand grocery is uniquely positioned to fulfill this … more spontaneous consumer demand.”

During the first half of 2021, ODG grew to make up 7 percent of the company’s total gross transaction volume (GTV), up from 6 percent in the second half of 2020 and 5 percent in the first, and the number of partner sites grew to 9,000 internationally. Additionally, the company’s grocery presence in the United Kingdom and Ireland grew 50 percent to 1,800 sites. The company views grocery both as an attractive category in and of itself and as a valuable acquisition tool for all of Deliveroo’s offerings.

“We’re very, very encouraged with how grocery’s going, both from a potential profitability standpoint but I would say the consumer value proposition has expanded pretty tremendously in the first half,” Shu said.

The demand is there — PYMNTS data finds that 57 percent of U.S. shoppers now order groceries online, including more than two-thirds of Gen Z shoppers and bridge millennials and 63 percent of millennials. Plus, 46 percent of consumers across age groups are buying more groceries online than they were before the pandemic.

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Deliveroo is far from the online food delivery company looking to seize on this demand. Around the world, the space is growing more crowded, and many of the world’s leading food delivery companies have announced major moves in the last few months alone. Uber shared last week that it has recently doubled its grocery delivery capabilities. Last month, India-based restaurant delivery service Zomato announced its intentions to return to grocery delivery. In June, DoorDash announced its partnership with major U.S. grocer Albertsons to offer one-hour grocery delivery from almost 2,000 stores. In May, Just Eat Takeaway.com announced that it was launching grocery delivery in the competitive German market.

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Many of the markets in which Deliveroo operates are not seeing the dramatic rise in new COVID-19 cases currently being experienced in the United States. In fact, in some countries, cases are flat or even falling. Others, however, are seeing an uptick, and Shu noted that Australia and Singapore have returned to lockdown, which has increased gross profit in those areas.

As the company stated in its earnings release, “With the widespread adoption of COVID vaccines, we consider it unlikely that there will be wholescale country lockdowns, however the business has demonstrated that it is able to adapt to a remote model and management is confident that the business would revert to the successful operating model that has been in effect during periods of lockdown.”