Glovo 1.0 - Teaching Note: Launching a New Business Model in the Ultra-Competitive Last-Mile Delivery Landscape

In the context of the digital revolution and the mass use of Internet-connected smart devices, consumer habits have radically changed. Now, a large portion of the population is shopping from home, and customers can choose and compare products from a wider variety of options and sellers. Therefore, competition is fierce. Local businesses (e.g., restaurants) no longer only compete with the business next door, but also with other shops and restaurants located in any other part of the city or even in another country. Following the increase in competition and the implicit rise of what is available (both gastronomic and other products), customers have become more demanding: now, there is more to choose from. At the same time, new communication channels and social media established a new relationship between buyer and seller. Vendors can reach their customers directly, creating new and improved customer satisfaction… and persuasion strategies. This case study analyzes Glovo's first business model and describes the evolution of the company from its beginnings to late summer 2016, when a change seemed necessary. The case study reviews the different items in Glovo's first business model, aimed at the continuous acquisition of new users to continue growing through innovative marketing techniques. In addition, the case study compares Glovo's value proposition and business model with those of the competition at the time, most of which only offer food delivery services. In the late summer of 2016, almost two years after it had been founded, Glovo was at a crossroads. Already established in Barcelona, Madrid and Valencia and having started to operate recently in Milan and Paris, Glovo's growth prospects were doubtful. Nevertheless, as the company had just closed a financing round, its leadership team still had the time and money to rethink its business model and improve the situation.