Deliveroo is the UK’s food delivery service online company. It attracts orders from its own website and partnership programs with various hotels and restaurants, and the company delivers the products at the doorsteps of customers. However, the company’s headquarter is in London, England.
The platform allows customers to order their favorite quality food from their chosen restaurant that is within the drive of 20 minutes from their home, office, or locality. That’s how the company differentiates itself from the competitors and it earns an extra commission for every delivery service. Usually, the company hires the drivers on contract depending on the customer orders.
According to an estimate, approximately 110,000 drivers were working for the company by the end of 2021. The company is offering the delivery service in more than 200 cities across the UK. However, the brand is offering services in other countries like Hong Kong, Kuwait, United Arab Emirates, Singapore, Ireland, Italy, Belgium, Spain, France, and the Netherlands. The subsidiary brand of the company goes by the name of Deliveroo Edition.
Today, we’ll discuss the Deliveroo swot analysis. It would analyze the strengths, weaknesses, opportunities, and threats of the food delivery service providing company. Here’s the Deliveroo swot analysis as follows;
Strengths of Deliveroo
Statistics of Deliveroo
Deliveroo performed excellent growth in the fourth quarter of 2021. Some of the statistical figures are as follows;
- The annual increment of GTV (gross transactions values) was roundabout 70%
- 4th quarter annual increment in 2021 was around 36% and 11% compared to the 3rd quarter
- Market share of the company kept on increasing in the 4th quarter of 2021
- Yearly GTV growth increased by 71% to 72% in 2021, and its coverage rate of UK’s population was 77% and it was 53% in 2020
- The international GTV of the company increased by 36% in the 4th quarter of 2021
In the category of food delivery service, Deliveroo ranks at the 3rd position in the UK’s market. Having the third-highest market share position in the British market offers the company a lot of advantages in terms of brand awareness and market recognition. The brand could leverage its position to amplify its market share in the long term.
The subsidiary brand Deliveroo edition runs the ghost kitchen business, and the company is a pioneer in this business model. It’s the best food delivery business model because it focuses only on such food items that are for delivery. However, the setup cost is low and it allows you to deliver the products on time without wasting any more time. When you control over the customer waiting, then it becomes your major strength and differentiates you from the competitors.
Deliveroo has established a very large network by partnering up with over 140,000 grocery stores and restaurants. The company has hired over 100,000 riders in Singapore’s market. The brand’s partnership program is mutually beneficial for both of them. For instance, the partnership program allows hotels and restaurants to enjoy the benefit of marketing and promotion through delivery services. They can retain their customers and earn more profit and revenue due to this program.
Deliveroo makes sure that it has the tools to support all types of businesses of various sizes and categories to promote their brands through its partnership program. Most importantly, it plays a significant role in strengthening the partnership by maintaining the growth and quality of all the partners.
Deliveroo makes sure that quality food is available and accessible to all types of customers. The growth of the online food delivery business has increased significantly due to the changing paradigm in the government, business, and individual operations. A lot of people have started working from home.
People are so much busy with their work and lives that they don’t have time to cook a meal for themselves at home. The changing socio-economic trends have amplified the growth of food delivery services. The focus of Deliveroo is to provide the top quality food to the customers at their doorsteps. Home delivery service and quality food are two elements that differentiate Deliveroo from its competitors.
Weaknesses of Deliveroo
Many business critics have raised serious concerns about Deliveroo’s poor treatment of its workers and employees and unfair wages. Such news jeopardizes the company’s reputation, goodwill, attracts bad publicity, and pushes away potential investors and partners.
Inefficiency in Pandemic
Businesses and companies never predicted the adverse impact of worldwide pandemics and lockdown. Delivered faced a lot of challenges to deal with the crisis of pandemics. In fact, the company has to cut down its workforce by approximately 15%, and it has helped the company to deal with the financial issues.
The company should have followed the more efficient and innovative strategy because the brand has had a growth of more than 120%. Therefore, the food delivery company should carefully analyze its workforce in order to maintain efficiency.
If we study Deliveroo’s financial statements and reports, then the company hasn’t made any profit. In fact, the company keeps on track of losses on every single order. The failure to meet financial obligations is a worrisome condition of the company to the investors and company’s partners both in the short and long term. However, it is negatively impacting the company in terms of expansion strategies, investment prospects, and brand image.
Opportunities for Deliveroo
Deliveroo has launched a new service of home delivery service for groceries. The delivery of food and groceries are similar to each other by narrowing down to the niche, and they amplify the growth scope. It would encourage customers to prepare the homemade meal, but they don’t have to do groceries.
The demand for Deliveroo Products
Whether its product offers or service signature, Deliveroo has differentiated its offers to a great extent from the competitors. It offers the food delivery brand a great competitive edge over competitors in terms of efficient operations that allow the company to expand into other markets.
Market Growth Opportunity
The market share of Deliveroo has increased from 7% to 128% in 2020 during the pandemic crisis. It shows the growth potential room in the food delivery service business. Therefore, the company should develop such strategies that would allow the brand further growth. They could be in terms of customer reach, market expansion, and innovation.
Threats to Deliveroo
Employees & Drivers
As I said earlier that Deliveroo hires drivers and riders on contracts depending on the market demand and the total number of orders. There has been a great discussion that the company should classify its riders as the permanent employees of the company. If it happens, then it would be very costly to the food delivery brand, and the company has to allocate a lot of finances for benefits and insurance. In other words, it would further lower the company’s profitability.
The limited IPO is decreasing the company’s prospects in various ways like difficulty to raise funds for future projects and jeopardizing the trust and confidence of investors. Therefore, it becomes highly difficult for the food delivery service brand to maintain its profitability and market share.
The competition in the food delivery service business has become stiff in recent years. The service switching rate is much higher in the delivery business. The customers would immediately hire the other delivery service provider. Therefore, Deliveroo has to work on strict deadlines and be innovative with its service offers to maintain its market position and market share.
After a careful study of Deliveroo swot analysis; we’ve realized that the company has a great growth scope in the delivery service business. The growth in recent years has affirmed the company’s position on the right track. The innovation in technology would further help the company to beat the competition and increase its profitability.