Technology

Know when to hold and when to fold’em: Glovo CEO talks about expansion hits and mistakes

Glovo, Spain’s on-demand delivery platform, is not unaware of entering and exiting new markets.From fresh Raised 450 million euros During april, Glovo today Delivery hero brands in Central and Eastern Europe To a total value of 170 million euros. They also recently purchased the Ehrana delivery platform in Slovenia.

“Focusing on markets where we have clear opportunities to lead and build sustainable businesses has always been at the heart of our long-term strategy,” Glovo co-founder and CEO Oscar Pierre said in a statement today. I am. “Central and Eastern Europe are a very important part of that plan.”

Glovo sold its entire Latin American business to Delivery Hero in September 2020 for a transaction worth € 230 million.The company is currently preparing on a large scale Boosting that “dark store” warehouse Last-minute grocery delivery in Europe Focuses on markets in Central and Eastern Europe.

Pierre talked with Tech.eu earlier this week about the hits and mistakes of the Spanish unicorn expansion. He talked about the importance of knowing when to reduce losses and escape. New Crossing Borders Hub..

>> >> Read again: “Better than perfect”: Micromobility scale-up TIER talks about its journey of expansion

Founded in 2015, Glovo is currently based in 22 countries. From an expansion strategy perspective, Pierre says they are focusing on the markets where they can be the number one player.

“We basically believe that being a winner in most market industries is very important,” says Pierre. “I don’t think the winner will take over all the business, but I think being a distant second player only kills most of the important KPIs. The number one brand always gets cheaper customers and Keep cheaper customers and keep many other KPIs. “

He says they learned this lesson in a difficult way because they were always so ambitious. After cracking Spain and Italy, they began to launch internationally quickly.

“In some cases, we were right, but we went there very quickly to disrupt the market and gain leadership position,” says Pierre. “And in some others, we were wrong. We gave the wrong rating. The biggest was Brazil.”

Goodbye Brazil-when market entry fails

Brazilian local player iFood has been in operation for 15 years and Glovo saw it as a winning competitor. But just three months later, Pierre said he realized that the iFood brand was so powerful that he couldn’t beat it without investing “literally hundreds of millions of dollars a year.” So Globo made a harsh call to close the market.

“I think it’s the competitive advantage of Glovo today, the fact that we’ve learned the difficult ways to make these tough calls,” he says. “In the last three years we have expanded significantly and many markets are doing very well, but we also learned to shut down very quickly. We sold many markets because we didn’t have them. Or shut down. A clear path to number one. “

Glovo not only left Brazil in 2019, but since then Drawn from turkey (Home of the delivery giant Getir) and Egypt in January 2020.

How does Glovo evaluate whether it will enter the market and at what point it cannot stay? Pierre says it was a question that he got better at answering as they matured, and with the exception of Brazil, there was always a correlation between market expansion and available funding at any given time.

“In the case of Brazil, it was super fast. Within three months, we said,’We were wrong. We did the wrong analysis,'” he says. “I think what a typical startup does is keep believing and investing. Sell to investors, sell to the board, sell to employees that Brazil is the right decision, and push for that. I want to keep doing it. I have a small chance. “

“We saw all the fights and the fights we have, and at some point it became like this. If you need to keep winning in Spain, Italy, Ukraine and Poland, for example, to LatAm You can’t invest. There is no budget for LatAm. “

He says they are currently taking a more systematic approach to expansion, including results that need to be confirmed in the third, sixth and twelfth months to assess success, in the country. Set a specific checkpoint at startup.

According to Pierre, Glovo’s keen focus on the Central and Eastern European markets is partly due to the fact that these locations are “a little less competitive” but offer truly healthy user frequency and retention. .. The same is true for the recently launched Ghana and Uganda.

“I think we Western Europeans tend to underestimate these Tier 2 markets and always prioritize France, the UK, etc. This is also what investors value most, right? “He says.

He described the markets in Eastern Europe and Africa as “extremely exciting.” “I think we need to keep convincing ourselves, the board and investors that it’s the right time. It may seem a bit too early for sub-Saharan Africa, but 10 It will be a huge market in a year. Bet in the future. “

Dark Disruptor-Participate in Q Commerce Games

One of the winners of the coronavirus pandemic is Q-commerce. This is an ultra-fast grocery delivery that can deliver goods to the door in minutes. To achieve this speed, businesses have set up their own warehouses, called “dark stores,” with the most sought-after products that can be delivered to people by courier within minutes.

According to Pierre, Globo will increase the number of dark stores from 10 to 150 to allow 10 minutes of delivery. This means a large investment in new technology. New technology hubs in Kiev, Madrid and Warsaw.

“One of the biggest mistakes we made was that the technology was very slow,” says Pierre. “We are a low-margin, complex platform and much needs to happen in 20-30 minutes. The more we expand, the more diverse our partner stores, users and countries are. Notice, and the city is huge. ”

He describes the Dark Store, which started two years ago, as “one of the most exciting things we’ve launched … in terms of customer feedback, customer retention, and frequency …”. “”

“We are changing what hasn’t changed for years. It’s people going to supermarkets to buy everyday things. It feels magical, but the magical part is not a service. Courier It’s very easy to deliver groceries in 10 minutes when you’re waiting. The real magic is to make a profit to make the economy work. All you need to do is invest a lot in technology. “

Tips for Pierre’s international expansion

1)

The ability to make difficult decisions and think very quickly is the basis of success. Even if that means withdrawing from the market, startups need to focus on where they can have a competitive advantage.

2) Closing the country brings valuable lessons. “We burned millions of people in Brazil, but it was worth learning,” he says. “I learned about brands as well as UX, technology and app looks.”

3) “Culture is important in every office.” Glovo trains Barcelona-based market launchers not only on how the global market works, but also on the company’s identity. “All of them are role models of our values, which is very important.”

Four) It’s easier to train people and send them to launch new markets than to hire them from afar. “Sending a completely reliable launcher and how long it stays there is great not only for speed and operation, but also for culture.”



https://tech.eu/features/39101/know-when-to-hold-em-know-when-to-fold-em-glovo-ceo-talks-about-their-expansion-hits-and-misses/ Know when to hold and when to fold’em: Glovo CEO talks about expansion hits and mistakes

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