The Top Strategies That Helped Deliveroo with 72% Revenue Leap

The UK-based food delivery app Deliveroo showed a staggering 72% growth in 2018, five years after its inception. According to a recent report, the company has generated £2 billion in revenue with over 7.1 million active users on the platform.

So, what made Deliveroo one of the biggest eCommerce startups in the UK? The key growth drivers include their ability to adapt to newer market needs, market expansion and service diversification.

The heavy investments in technology and innovation have also helped the company reach revenue heights. Owing to their sustainable, steady and assured growth, they have become one of the finest case studies in the eCommerce niche.

Their success strategies, growth roadmap and even how they have met users' needs are worth understanding if you want to develop a successful product. This article will explore Deliveroo’s business, its roadmap to 72% growth and the key drivers. By the end, you will have an understanding of what it takes to create and maintain a successful product.

An Overview of the Business

The Deliveroo story is a huge hit in the eCommerce niche. When Will Shu and Greg Orlowski observed quality food delivery options in the UK market, they conceptualized Deliveroo. They wanted to ensure that customers get high-quality restaurant meals in the convenience of their homes.

They began operations in Chelsea, London, with the mission of reaching every local restaurant and customer's doorstep. This thought inspired several investors, which helped them receive a lot of funding from 2013 to 2021. They raised the most in 2017 ($385 million) and 2019 ($575 million). The 2019 round was led by Amazon. At the end of all the funding rounds, the company had raised a total of $1.5 billion.

They spent the secured fund on expanding operations, marketing aggressively and rapid growth of the company. Each fund raised by the company helped them fulfill the specific goal that would lead them towards maximum revenue generation.

While working on establishing funding for their growth, they also worked on establishing a strong position in the market. currently, the company has established its presence in over 200 cities and 12 countries, including UK, France, Australia and Singapore.

They used technology (advanced features), premium partnerships, diverse services and subscription methods to gain a unique position.

The most important factors that contributed to their growth were customer-centric solutions and unique experiences.

A Detailed PESTEL Analysis

This analysis offers insights into the factors that influence the strategic decisions made by the company during food delivery app development. It will also help you identify the details you must understand before expanding operations or preparing the marketing strategy.

This will also guide you towards identifying the technology and advancements needed to enhance your software solution.

#1. Political Factors

Brexit was an important factor that they needed to consider, especially if they wanted to expand into other European markets. This impacted the regulations and labour mobility. Moreover, the company had to understand the policies regarding gig workers as they would impact their legal aspects.

Additionally, they had to ensure they were fulfilling the food safety standards and labour laws for the countries where they established their presence. These factors led to the creation of a strong regulatory and legal framework for the company.

#2. Economic Factors

Economic factors have a great control on the spending made by the users. In case of recession, the user will spend less on non-essentials. Moreover, the currency exchange rates could impact the profits.

The other factor that contributed to the strategy was the disposable income available to the customers. Only if that was high would there be a demand for premium food delivery services.

#3. Social Factors

The increase in urbanization led to more people looking for convenience and comfort. Moreover, consumers were slowly shifting towards online ordering. This helped Deliveroo create a comfortable space with diverse food offerings.

Moreover, with several users looking for healthy menu options, Deliveroo also focussed on partnering with high-end health-focused restaurants.

#4. Technological Factors

Technological advancements, changes in consumer behavior and current trends can impact the mobile application. The company ensures continuous improvement to enhance the features and make it more user-centric.

Moreover, they use data analytics to build customer insights that help with targeted marketing and optimized deliveries. Lastly, they adopted AI to streamline logistics and enhance delivery time.

#5. Environmental Factors

More businesses are striving to achieve sustainability. Deliveroo also ranks among them. They started using eco-friendly packaging and environment-friendly business practices. Moreover, they attempted to reduce the carbon footprint and as a result, they promoted using bicycles and electric vehicles.

Additionally, they focused on managing waste and adopting recycling to be more environment-focused.

#6. Legal Factors

They took into consideration the legal disputes and regulations concerning gig economy workers, which could impact their labour expenses. They also introduced data privacy laws, such as GDPR and other region-specific ones to enhance reliability and trust.

Business Model of Deliveroo

The Deliveroo business model has helped them generate a good amount of revenue. They have adopted diverse streams that has allowed them to bring in various customers and accommodate to their preferences.

#1. Commissions on Orders

The partner restaurants had to pay a 20-35% commission each time they received an order through the platform. This helped Deliveroo extend excellent customer service and provide a customer base for the restaurants.

#2. Delivery Fee

The customers had to spend a certain amount on delivery fees as part of the convenience charges. This fee was largely dependent on the order size and market. This helped the company cover its logistics and rider compensation costs.

#3. Subscription Model

They also added a subscription model known as Deliveroo Plus, which allowed customers to get unlimited free deliveries in a month. They had to pay a specific amount as part of this pricing plan. It helped increase the frequency of orders and build a steady revenue stream for the company.

#4. Advertising and Promotions

They have used in-app advertisements and promotions to help them generate good revenue. Featured listings, promotional campaigns and premium ad placements are few of the promotion types.

#5. Grocery Delivery

The company has expanded its operations to enter the grocery delivery market as well. They partnered with supermarkets and convenience stores to ensure fast delivery. This also helped them earn commissions on grocery deliveries.

#6. Corporate Partnerships

The business partners with delivery services and catering providers to help corporate clients. Using the B2B service, they have added yet another client base and revenue stream.

Key Drivers of Revenue Growth

We have seen how diligently Deliveroo has worked on creating the strategy that helped them grow. Several factors contributed to the revenue growth.

#1. Market Expansion

While the company adopted an aggressive market expansion strategy, it was also backed by data and insights. They studied the new markets and formed strategic partnerships that would help them gain reach and visibility.

After establishing their presence in the UK, they expanded to countries like Australia, France, Hong Kong and Singapore. Each country gave them an opportunity to enter different markets and cater to diverse needs and cultures.

The first step towards expansion for the company was partnerships that they formed with local restaurants and international chains in each country. They used high-profile partnerships to improve their presence and increase acquisitions.

Using data analytics, they defined the menus and deals that would attract the audience in the particular country. They based their entire expansion on personalization and cultural fit.

Again, the countries they chose weren’t random. Each expansion was a well thought process, where they considered factors like urbanization, dining trends and penetration of the Internet. They have also used local preferences and cultural aspects to gain acceptance.

The company stood out amongst the competition by continuously identifying the new markets and aligning with their needs.

#2. Technological Innovation

The company understood the importance of engaging users with their food delivery app development to drive more revenue. That’s why they focussed on technological innovation to improve the user interface. They also considered adding features that would improve the operational efficiency and enhance the experience.

They implemented the features, such as menu descriptions, product recommendations and intuitive navigation to make it easier for the users to find the food and place orders.

The users could track their orders in real time, and know when they will receive it. this increased transparency, which fostered trust and reliability.

They also used data analytics to optimize operations and make the customers satisfied. Using insights backed by data, they offered recommendations to the users, which allowed them to enjoy the food they loved. This increased the frequency of orders on the platform.

Additionally, AI implementation allowed them to optimize the routes and reduce the total delivery time. it also improved resource allocation, which helped them during peak demand. As a result, they could be responsive and prompt with their services.

They also used predictive analytics to improve partnerships and forecast the demand for specific items. This helped them manage the logistics, supply chain and delivery.

#3. Diverse Services

One of the reasons the company managed to grow its revenue by 72% in just five years was the diversification of services. They went beyond traditional restaurant deliveries, tapping into grocery deliveries and subscription solutions. This was a strategic diversification that was done keeping in mind the user’s requirements and changing mindsets.

They partnered with supermarkets and local convenience stores to enable fast grocery delivery. This helped them increase the order frequency, tap into newer customer segments and work on retention.

They also identified a subscription service that can help them ensure regular orders and increase the frequency. The Deliveroo Plus allowed them to build a strong customer base, as they offered them free unlimited deliveries for the entire month for a specific amount.

This repeat revenue allowed them to have a regular cash inflow. They also expanded their services into virtual brands and ghost kitchens. This helped them add to the food variety available on the application.

Each of these diversifications allowed them to strengthen their position in the market and enjoy customer loyalty.

#4. Marketing and Promotions

Marketing is key to growth and profits. They leveraged targeted marketing campaigns and social media channels to maximize their reach. It also helped improve the relevance for the customers, which improved the loyal customer base.

They used platforms like Facebook, Twitter and TikTok to create appealing content and promotional videos. They used these channels to showcase their partnerships with popular restaurants.

They used personalized emails and push notifications to keep their users updated about the relevant deals and discounts. This helped them maximize repeat orders for the business. using social media, they were able to improve the average order value and attract users.

Their marketing strategies also increased sales and order frequency. It also helped them boost the credibility of the brand and customer’s trust in their services.

#5. Operational Efficiency

Deliveroo prioritized operational efficiency, which is why they were able to maximize their revenue growth in less time. They optimized the logistics and supply chain which helped improve their service delivery time and speed.

How did they manage this? The company used advanced algorithms and Machine Learning solutions to allocate the resources. This was done keeping the factors like real-time demand and traffic conditions in mind.

They were able to enhance the customer satisfaction rate owing to this. Moreover, they could efficiently plan the routes and minimize fuel costs. This helped them stay at the helm of their operations.

Deliveroo also invested a lot of its funding in technology and innovation that helped improve communication and coordination between riders and restaurants. Moreover, the technology allowed them to anticipate the demand hours and stay ready to match the supply.

They also encouraged their riders to use electric bikes and scooters, which helped them reduce the overheads and environmental impact. At the same time, ghost kitchens allowed them to increase food options without adding the overheads.

Financial Performance

Deliveroo is the first company that managed to generate 72% revenue growth in just five years after inception. The numerous funding and strategic advancements helped the company establish its prominence.

In the recent report shared by the company, they gained £726 million in gross profits. Here’s a peek into their key financial highlights for 2023.

#1. Detailed Revenue Growth Analysis

The year-on-year revenue growth showcases how the company attained success with its expansion strategies. They simply expanded the markets, understood the newer needs and increased the service offerings. With these simple steps, they were able to increase the average order value.

They also introduced newer revenue streams that helped them grow in the local and international markets.

Deliveroo Plus and commission-based partnerships have helped them gain maximum conversions and revenue for the business. apart from that, they also used ghost kitchens and virtual brands to reduce overhead while improving the revenue.

#2. Profits and Future Outlook

The company showcased excellent revenue growth along with consistent profits over the years. They have also taken eco-friendly approaches to reduce overheads and improve cost efficiency.

They used e-bikes to help riders manage the deliveries. They also strategically invested in infrastructure and technology to boost the efficiency of the company.

The future growth for the company looks optimistic owing to its defined investments in technology and market expansion. Moreover, they have been strategically placing their logistics while strengthening the partnerships. This has helped them scale their operations effortlessly. Moreover, it has also helped them increase their profits.

#3. Competitive Strategy

Deliveroo maximized its retention by focusing on differentiation. They also ensured they adapted to the changing market needs and stood out from the competition. Let’s look at how they managed to achieve all this.

#4. The Differentiation Strategy

From the start, the company worked on devising its unique selling proposition. It was clear they wanted exclusive and premium collaborations along with diverse menu items on their platform.

Partnerships with the right restaurants were their first strategy to win against the competition. Secondly, the company focussed on fast deliveries and advanced logistics. This helped them build real-time tracking and transparency into the system.

They kept evolving with time and introduced ghost kitchens that helped them diversify their value proposition. Secondly, they embraced competitive pricing strategies that helped them attract the right type of customers.

They also used promotional effects like discounts and loyalty programs to build a strong customer base and improve retention.

They also used technology to gain an edge. they partnered with mobile app development services in the UK to establish their prominence in the market.

#5. Response to Competition

Deliveroo swiftly adapts to the market changes. This was especially seen during the Pandemic when they expanded into grocery and essential item deliveries. This has helped them capture newer markets and acquire customers easily.

It has also helped them stay relevant and ensure maximum retention. They have also used technology, such as data analytics, to improve their abilities. Using technology, they have also improved the app features and optimized the delivery routes.

Along with strong partnerships and creative infrastructure arrangements, Deliveroo has ensured it is one step ahead of the competition.

Conclusion

The key factors that influenced the 72% growth in revenue in just five years could be attributed to their unique value proposition, continuous growth efforts and investments in technology. However, the sustainable and steady growth is attributed to their prowess in visualizing the future, predicting the demand and prioritizing operational efficiency.

They have constantly worked on strategies that helped them improve experiences, enhance the supply chain and reduce the overheads. From service diversification to enhancing menu abilities, they have constantly worked keeping in mind the customer’s needs.

Their strategies were defined such that they could extend it to services beyond food delivery. Today, while they are managing grocery delivery and establishing partnerships in newer regions, they work with the same understanding.

The crucial and turning point for the company proved to be investments in technology and expansion. From adding newer technologies to enhancing features, they have continuously improved their mobile app.

If you are planning to develop a business like Deliveroo and grow sustainably, you must invest in a robust mobile application. Expert App Devs can offer their expertise in this aspect. We can take your app from zero to one and further by using our industry knowledge and experience.

Hire mobile app developers in UK from Expert App Devs to go from idea to deployment and marketing to build a strong presence in your niche.

Frequently Asked Questions

#1. How Much Does Cost to Build an App like Deliveroo?

The cost of developing an application like Deliveroo is anywhere between $30k and $100k. the total cost depends on the complexity, features and other factors in the application.

#2. How does Deliveroo Make Money?

Deliveroo uses multiple business models to generate money. They have used the commission model to charge the partner restaurants. Delivery charges help them gain money from the customers placing orders.

Deliveroo plus allows them to access a steady income stream, while advertisements help them make money by promoting partner restaurants.

#3. Besides Market Expansion, What Other Strategies did Deliveroo use to Grow?

Deliveroo used strategic partnerships, technology innovation and diversification of services to growth their business.

#4. Can Deliveroo Strategies be Applied to Other Businesses?

Yes, these strategies are pretty relevant to other businesses as well. Operational efficiency is a way to identify the overheads and reduce their costs effectively. Similarly, they can use technology to help them advance and gain an edge over the competition.

Jignen Pandya

Vice President at Expert App Devs

Responsible for creating a sales funnel, attracting top-of-the-funnel customers, and converting the target market.