Deliveroo Announced today Considering withdrawal from the Spanish market, citing a long investment path with limited market share and “very uncertain long-term potential benefits”.
The UK-based on-demand company Published in early 2021..this is Stocks initially fell, Expresses broader concerns about both the value of on-demand companies and the technical concerns of listing on London.However, Deliveroo’s stock has since recovered and its Second quarter financial report We were able to raise our forecast for total order volume growth from 30% to 40% to 50% to 60%.
Given rising expectations for growth and a growing reputation in the public market, you may be surprised to be willing to leave one of the 12 markets Deliveroo currently operates. In the case of Spain, Deliveroo seems to be concerned that changes in local labor law will make businesses in unspeakable countries more expensive given its modest market share.
I remember it Spain adopted the law May – Law generally agreed in March — Request a courier to hire an on-demand company. This is the kind of arrangement that food delivery and ride hailing on-demand companies have been fighting for a long time.Many on-demand companies are unprofitable Without it If you hire a courier, doing so can increase their costs. This change in labor law in any market is also a concern for start-ups and public companies that rely on freelance deliverers, as the economy can deteriorate.
Analyze the Deliveroo statement to get a better understanding of your company’s perspective. The introductory paragraph is as follows:
Deliveroo announced today that it is proposing to discuss the termination of its business in Spain. Deliveroo currently operates in 12 markets around the world, and most of our total transaction value (GTV) is in the market where Deliveroo occupies the top or second market position. Is from.
Translation: We will probably leave Spain. Most of our order volume comes from the markets in which we are in a leading position (the company competes with Uber Eats, Glovo and Just Eat in various markets). We are not in a leading position in Spain.
Spain accounted for less than 2% of Deliveroo’s GTV in the first half of 2021. We have disproportionate levels of investment with very uncertain long-term potential benefits that could impact our economic viability in order to achieve and maintain our top market position in Spain. I decided that I needed it. Of the company market.
Translation: Spain is a very small market for Deliveroo. It is very costly to gain a lot of market share in Spain and the company is uncertain about the long-term profitability of its Spanish business. This is where labor problems arise. Investing to gain market share in a country where business profitability is low is difficult to clarify.
When According to El PaísThe decision by Deliveroo was made because it missed the deadline for worker reclassification. That may have contributed to the timing of the announcement.
From this point on, Deliveroo spends three paragraphs explaining how to support workers when they leave the Spanish market. It ends as follows.
This proposal does not affect the previously communicated year-round guidance on the Group’s annual GTV growth and gross margin.
Over the years, on-demand companies will impose more costs on the plate in the form of hiring courier companies, or simply paying them more, making certain markets uneconomical and I have insisted that I will drive them away. Here, Deliveroo can follow the exit basically for free, given the low order volume compared to the other 11 markets.
https://techcrunch.com/2021/07/30/deliveroo-could-leave-spanish-market-ahead-of-on-demand-labor-reclassification/ Deliveroo May Leave Spanish Market Prior to On-Demand Labor Reclassification – TechCrunch