Glovo Acquires Grocery Delivery Startups: Expanding Food Services

Glovo Expands Grocery Delivery with Acquisitions of Lola Market and Mercadão

Significant developments are unfolding within the food delivery sector as Spain’s Glovo, an on-demand delivery service utilizing a network of dark stores for convenient urban shopping, intensifies its focus on scheduled grocery shopping.

The company has announced the acquisition of two regional grocery picking and delivery startups modeled after Instacart: Madrid’s Lola Market and Portugal’s Mercadão.

Acquisition Details

The financial terms of these acquisitions have not been publicly revealed.

Lola Market, established in 2015, had secured approximately €3 million in funding, according to Crunchbase data.

The funding raised by Mercadão, founded in 2018, over its operational period remains undisclosed.

Glovo’s Recent Investments

Glovo previously raised a substantial $528 million in a Series F funding round in April.

Subsequently, the company allocated $208 million to acquire three food delivery brands from competitor Delivery Hero in Central and Eastern Europe.

Regulatory Challenges in Spain

Glovo is currently navigating challenges to its operational model in its home country, Spain.

The Spanish government has implemented labor reforms targeting delivery workers within the gig economy.

These reforms, enacted earlier this year and taking effect last month, legally recognize delivery riders as employees, at least nominally.

In response, Glovo introduced a new self-employment model for the majority of its riders, directly employing only around 20%.

This shift is anticipated to lead to legal disputes within the Spanish market.

EU-Level Scrutiny

At the European Union level, legislators are also examining ways to enhance working conditions for platform workers.

Potential pan-EU legislation could significantly impact the business models of companies like Glovo.

Strategic Shift Towards Grocery

The ongoing regulatory hurdles concerning worker classification and algorithmic management within the gig economy may be influencing Glovo’s increased interest in grocery procurement across Europe.

The company is actively expanding its network of dark stores to support its “Q-Commerce” initiative – quick urban convenience shopping.

Furthermore, Glovo has announced increased investment in Africa over the next year.

Profitability and Consolidation

The difficulty of achieving profitability in the pure on-demand food delivery sector is also likely contributing to this trend of consolidation.

By incorporating companies specializing in supermarket and retail outlet delivery, Glovo broadens its service offerings to meet a wider range of consumer needs.

This allows the company to encourage increased spending through cross-selling of planned purchases, like weekly groceries, alongside “emergency essentials” and “fast action convenience” items available from its dark stores.

Brand Retention and Expansion Plans

Glovo intends to maintain the distinct brand identities of both Lola Market and Mercadão.

Both companies will continue to operate independently, under the leadership of Gonçalo Soares da Costa, CEO of Mercadão.

Glovo anticipates that these acquisitions will strengthen its competitive standing in Europe, particularly in “key markets.”

The company plans to extend grocery picking and delivery services across its entire market presence, beginning with Poland and Italy.

Q-Commerce Growth Projections

Glovo reports that its Q-Commerce division is on course to achieve an annual Gross Transaction Value (GTV) exceeding €300 million this year.

The company projects this figure to more than triple by the end of 2022, surpassing a run rate of €1 billion.

Executive Commentary

Oscar Pierre, CEO and co-founder of Glovo, stated: “We see huge potential in the on-demand groceries marketplace and both companies are strong local players in their respective markets, and further strengthen our Q-Commerce offering.”

He further added, “With Lola Market and Mercadão on board, we can build stronger partnerships with retailers, offer our users big-basket purchases and provide a more complete 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.”