How Does Deliveroo Work: Deliveroo Business Model and Revenue Model Revealed

Deliveroo Stats and Facts: Funding and Major Milestones

Operating in more than 800 cities and approximately 12 countries, Glovo has acquired nearly 140K restaurants. It is one of the most popular food delivery applications globally, with more than 7.1 billion users. The company generated £1.2 billion in 2020, growing at a CAGR of 54% per year. Let’s look at some more facts about Deliveroo:

• Founders: Will Shu and Greg Orlowski
• Launched in: 2013
• Headquarters: United Kingdom
• The Number of App Users: 7.1 billion
• Industry: Online food ordering, food delivery
• Company Valuation: £1.2 billion
• Total Funding Amount: $1.7 billion in over eight rounds

The success of Deliveroo has inspired a lot of business owners around the globe. Many of them plan to follow the Deliveroo business model to launch their platform in the market. Let’s look at the success timeline of Deliveroo:

Deliveroo Success Story:

Deliveroo was launched by two American entrepreneurs – William Shu and Greg Orlowski in 2013. The company was started with the motive to solve the lagging delivery problems. At that time, platforms like JustEat and Delivery were the Delivery Service Aggregators. This means they just offered the options; the restaurant was responsible for the delivery.

Unfortunately, many businesses lacked (and continue to lack) the labor necessary to deliver food to their clients. Deliveroo came to the rescue, handling the delivery process by employing contract workers to complete the packages on their behalf.

After 12 months of ideation and hard work, they realized that their idea was strong and they just needed a strong means to earn money. This is when they secured the first round of investment of $4.5 million in Series A funding. After that, they just could not stop succeeding in every step. 

It is never too late to begin a new endeavor. You may have had an idea years ago that you never got around to launching, or you may have been told it was a horrible concept, or you simply lacked the necessary tools, tactics, information, and support.

How Deliveroo Works: Deliveroo Business Model Canvas

The Deliveroo business model works on a dual partnership model which includes an aggregator business model and a logistics model. This business has partnered with various restaurants in different countries and manages their delivery services. Deliveroo’s workflow can be described as:

• Customers sign up on the Deliveroo application, set up their locality, and search for nearby restaurants.
• The order is chosen from the restaurant and placed after making payment from the method of choice.
• Restaurants accept the order places and start preparing the food.
• As soon as an order is placed by the customer, a delivery agent is also assigned who picks up the food from the restaurant to the customer’s location.

What is Deliveroo Business Model?

Deliveroo is available on both iOS and Android. Customers can order from nearby restaurants and get it delivered directly to their doorstep from the application or website. They combined the aggregator strategy with the marketplace and logistics concept to create a new hyperlocal on-demand business model. Changing past business models in which ordering partners like Just Eat and delivery partners like Onfleet functioned separately.

The Deliveroo business model looks like this:

Deliveroo Revenue Model: How Does Deliveroo Make Money?

Deliveroo uses brilliant monetization strategies as the source of earning money. Low margins and great operational complexity have long plagued the food delivery industry, making it extremely difficult to make a profit.

As a result, Deliveroo’s business model changed over time, and after reaching the requisite scale, the company added numerous revenue streams. Let’s take a look at each one separately.

1. Order Commission

Any business established in the online marketplace takes a commission fee on every order dispatched. Deliveroo charges approximately 25% – 30% commission on every sale made. The percentage set also depends on the agreement signed between the two parties.

On top of this, customers pay a delivery fee that depends on the distance of travel and other factors. This delivery fee is also used to pay the drivers as potential tips and a variable bonus.

2. Deliveroo Plus

The best way to earn money as a business is by introducing subscription plans to your platform. Deliveroo Plus is a kind of subscription plan that unlocks various features and benefits for its users. Some of these features are:

• Free delivery
• Special discounts and offers
• 24×7 customer services
• Free trial for 7 days

3. Deliveroo for Business

This works in a way that takes orders from organizations in bulk for their employees. Deliveroo allows businesses to set budgets for their teams and monitor the bills. Employees will be able to order from the same restaurant partners as before. Deliveroo will then receive a percentage of such sales, with the remainder going to the eatery.

4. Deliveroo Editions

After partnering with so many restaurants, Deliveroo gathered a lot of insights on what works and what doesn’t. The business was inspired to launch its digital kitchens as Editions. Users can order from a variety of cuisines, such as Pizza, Burgers, Sushi, Indian, and so on, at the eateries. Deliveroo either owns and operates these restaurants or partners with other restaurants to prepare the meals in their kitchens.

3 Lessons You Should Learn from Deliveroo’s Success

Now that you have gathered the knowledge of the Deliveroo business model and revenue model, the question is, how will you succeed in the competitive market? Don’t worry. We have brought three lessons that you can learn from the success of Deliveroo.

1.Market Analysis is Important

The first and the most crucial step to do anything is analysis. To launch your food delivery app with the Deliveroo business model, you must correctly analyze the market. Find answers to questions like the most famous food in your locality, who are your competitors, and many more. The research will help you find what others cannot offer to their consumers and how your solution can help.

2.Attract Users

Launch a minimum viable product (MVP) that will help you determine how the market is reacting to your alternative to Deliveroo. Feedback from the users can be considered for improvement if needed. You can also collaborate with local restaurants to deliver their food for this.

3.Keep Your Delivery Agents Happy

The partnership program should be tempting for the delivery agents. You must appreciate their hard work by offering hikes, rewards, and other things. This strategy will help in keeping your couriers content and their loyalty to your business.

Wrapping Up

The food delivery market is growing at such a pace. It can be a challenging task to build a food delivery app like Deliveroo from scratch. Partnering with the right mobile app development company that offers the best and the most affordable services can be a blessing in disguise!

Apptunix has developed over 800 food delivery applications with the Deliveroo business model and we can do the same for your business too! Connect with our project managers today!