In an interview for AIN.Capital, the founder of Glovo, Sacha Michaud, and the director of Glovo in Ukraine, Maryna Pavlyuk, talked about the results and successes of the service in Ukraine and the CEE countries, talked about the telemedicine service, volunteer initiatives, as well as cooperation with Ukrainian startups. In addition, they discussed the PowerUp conference, which took place on June 18 in Kyiv and was attended by Sacha and Maryna, and also shared their impressions of the winners of the Glovo Startup Lab startup competition.

In June 2023, in a previous interview for AIN, you said that the company reached pre-war numbers in March 2023, and in May 2023, the company already saw growth. What are the current business figures in Ukraine percentage-wise?

Maryna Pavlyuk:

The growth has reached 23%, and by now, taking the run rate of May, it’s closer to 30%. The development is clear, the industry is not stagnating.

We have around 12,000 partners and more than 250 employees in Ukraine. Also, millions of users. Over the past years, we paid more than €20 million of taxes. Although we are not sharing the daily number of deliveries, there have been over 70,000 couriers that have done at least one delivery with us. In regards to our active fleet, we can’t really tell the number because it is not stable. In a week, we’re talking about 10,000 to 12,000 active couriers, which heavily depends on the demand of the market. Let’s say for the last half of the year, it was around 10% to 12% of growth month by month.

Of course, it depends on demand, but we still see the huge interest and the potential that we have on the market, in terms of new customers acquisition.

In the same interview, it became known that as of July 2023, Ukraine ranked in the top 5 among 25 countries where the service was present. Has this position changed?

Sacha Michaud:

Yes, it’s now the third on the list.

Compared to?

Sacha:

Compared to Spain and Italy. In that order.

And how does the Ukrainian market differ from Spain and Italy?

Sacha:

It’s a great merit to the Ukraine team to rank this high. Spain, where we were born, and Italy were the first two markets where we launched. In fact, Ukraine was the 20th market we launched. And it’s already in third place and still growing so quickly.

I think that there’s a lot more similarities between the markets than differences. In Spain and Italy we operate in more cities and a lot of smaller towns, whereas in Ukraine we’re in 37 cities. So here we’re not in so many smaller areas compared to them. And that’s the biggest difference.

We know that shortly after the start of the Russian war, Glovo launched a telemedicine service in Ukraine, the only country in the world at the time. Was this launch successful and was it possible to expand this service to other countries?

Maryna:

It is a very niche service. There was not a big business idea behind that. We were believers. At the time, we saw the need to support the community, which the telemedicine services allowed to. So we opened it nationwide and you still can access the service. Our main goal was to allow people to get very quick access to the qualified consultation online. I cannot say that it is big now. It is still quite niche, however it allowed us to expand the service to home appliances repair.

In terms of the other countries, I know that the teams tried to launch it in a few other markets. The service can be added if you have good partners and customers, as such services are heavily dependent on the people. For us, it’s super important to deliver good user experience, that’s why we don’t exaggerate the numbers. We prefer quality over quantity. 

Sacha:

The good thing about our app is that we have hundreds of thousands of users connecting every day. So it’s very easy for us to add and test out different services. I think the services that we launch in the future will primarily be related to delivery or, at least, to our partners, stores and restaurants, and digitizing retail businesses. But it doesn’t mean we can’t run services like telemedicine where they’re very useful for our customers.

Still, our core business that will drive growth will be around everything related to our restaurants, stores, and supermarkets.

Given the resilience that Glovo demonstrated in Ukraine, how did your business continuity plan evolve between the period of COVID, the first days of the war, and afterwards?

Sacha:

COVID was a big moment for us and our industry. Many of our countries initially closed down, which allowed Glovo to be an essential service to the economy. We were oxygen to restaurants and stores who couldn’t have physical customers. Still, it was difficult because timetables changed and it was a very strange situation to manage those operations. COVID also educated the market a lot on everything that wasn’t only restaurant food. I think it was a great moment for consumers to get used to other things, especially supermarket-bought items. And people continued using the supermarket delivery even when the pandemics finished. Although the time was difficult, at the same time, for certain industries, it was quite beneficial.

Moving forward to the Russian war in Ukraine. We initially closed down the app in every city across the whole country. Firstly, the team carefully assessed the situation. Seeing that our couriers were trying to do deliveries themselves using Telegram and Messenger, Maryna and the team advised us to reopen, which we did within 24, 48 hours in the cities which were safe to operate.

Secondly, we built some tech solutions which allowed us to switch off a city and cancel orders, which let the customers and couriers know immediately. And now we monitor the cities we are operating in, make sure that they’re safe and we keep them open. And if a city is in trouble [Air raid alerts and curfews — ed.], we close down the services.

Maryna:

On the one hand, operations are quite difficult, but on the other we have learned to be very agile in many ways, like adopting the global technology to the local needs and issues that we have from day to day.

Since the beginning of the war, Glovo has taken a fairly active volunteer position, helping businesses at the frontline with free shipping and investments. What volunteer initiatives do you support or endorse now?

Maryna:

We started doing these projects to make a difference. At the start of the war, we started receiving many self-volunteering ideas and programs from our team, for example, delivering critical medicine to people who couldn’t leave their homes. We also had a lot of products in our grocery stores, which we started giving away to the people in need. The same goes for our cloud kitchens across the country, which started preparing food for our soldiers, doctors, and for people in need. There have been a lot of small and big ideas.

Afterwards, this evolved into a more shaped program. We partnered with all the key funds in Ukraine, United 24 being our biggest partner, with whom we have another big project coming up. The total amount that we managed to donate to various charities and people, over the past two and a half years, is over €1 million.

Sacha:

In terms of global initiatives, we have our Impact Fund. Basically, we assign a small amount of money per order to this impact fund globally, and, doing millions of orders every week, it slowly accumulates. We can later invest these money into relief funds, like the one in Ukraine, where we help our couriers and partners if they face any problems. Ninety percent of our partners are small stores and restaurants, and we try to help with their business growth, as it can help us grow, too.

As it was said, we’ve donated over €1 million in different initiatives since the start of the war. And we’ll continue doing the good thing on an even bigger scale, because this fund grows at the same speed as the business.

In an interview for AIN.UA, Choice co-founder Volodymyr Olyanitsky said that his startup closely cooperates with Glovo within the Glovo On-Demand service. Can you tell us about how Choice or similar companies work with Glovo?

Maryna:

Basically, Choice is one of the integrators of Glovo On-Demand. Glovo provides the technology for small businesses in order to help to work smoothly finance-wise and operational-wise through a simple interface. Apart from Choice, there are lots of different brands that we are also working with through Glovo On-Demand. 

Sacha:

It takes a lot of money to create a full cycle delivery business, starting from restaurant production, lead generation, and then delivery. Sometimes it requires even bigger investment than opening a restaurant. And, as Glovo is an expert at what we do and we have an operational fleet, we decided to support these initiatives, in order to build on our loyalty channels. It’s also beneficial to us, as we get more partners and order volumes coming through the direct integrations of the Glovo On-Demand by our delivery partners.

Two years ago, Glovo announced downsizing of global teams. How is the company doing in other markets now? How did the company manage to optimize its internal processes to overcome the crisis?

Sacha:

I think similar thing happened across all tech companies. There was a phase of very high growth where we wanted to invest in the growing businesses, which meant investing in our channels, marketing, but also in people. What we’ve been doing the last year and a half, is really focusing on profitability. Many of our markets are already profitable [Ukraine is among those countries — ed.], but we still have a lot of markets which are still growing and not profitable. 

We’re also planning to become profitable in H2 this year as a company, nine and a half years after starting. This means a lot of things, but above all, it means optimizing our technology and increasing the efficiency of our teams.

In addition to Ukraine, Glovo operates in other CEE countries such as Poland, Romania, and Moldova. Can you share how the business is doing in these markets?

Sacha:

We’re extremely excited about this whole region, Central and Eastern Europe. It’s one of our fastest growing areas. We’re the market leader in the region. Of course, not all the countries are as big as Ukraine. However, Romania is also one of our top five markets, with the rest growing rapidly. We’re super excited about the results there and in the rest of the region.

Looking ahead to the second half 2024 and beyond, what are Glovo’s short and long-term goals and projections for the CEE markets and Ukraine?

Sacha:

There are two areas that we really put our focus on. The first one is growth: expanding the number of cities that we operate in. And the second is getting more partners in, for example, quick commerce, to offer our customers an even bigger choice of goods.

We’re planning to also focus on our other services, like the one we talked about, Glovo On-Demand, or, what we call it, “logistics as a service”. Being a tech enabler, helping digitalize our partners and being a great ally to them — that’s probably where growth is going to come short term.

Regarding other services, an ideal plan for us would be to start working with payment plans. Or becoming our own wallet. I think there’s great opportunities, especially in countries where we’re the market leader and we offer a lot of value. We can probably align with other local companies and do things together. And Ukraine, obviously, would be an ideal candidate.

Maryna:

There are a lot of things that are in the development stages at the moment. And Ukraine, of course, despite the current macro factors, is still the country that is great for testing new services. I don’t want to spoil anything, but there are interesting things that will definitely require more time and partners.

Sacha:

And we’ve got some cool stuff coming up in the app. You’re going to like it.

Now, let’s talk about the PowerUp conference, which took place in Kyiv on June 18. What was the motivation behind the creation of this conference? What goals did you want to achieve?

Sacha:

Helping Ukrainian startups with visibility, especially at a European level, is our main goal. I think, to have a larger impact, we should be attracting more scale-up companies to come to Ukraine. And this conference is a good opportunity to tell large international tech companies as well as investors that they can still do business and grow; that they should be investing in local startups and creating jobs for people here because it’s a really good and profitable idea. I think the kickoff event really helps with raising awareness about the real state of the Ukrainian startup ecosystem.

Can you share with us the results of the conference?

Sacha:

The first part of the conference consisted of three panels that brought together heads of Ukrainian technology companies, institutions and venture funds, representatives of state institutions, as well as industry experts in discussions on the following topics:

• How to start a company and scale it outside of Ukraine;
• How to manage a company in Ukraine despite adversity and have a successful business;
• Why is it still profitable to invest in Ukrainian companies and develop talents?

At the end of the panel discussions we were joined by the Minister of Digital Affairs of Ukraine Mykhailo Fedorov, who closed the ceremony as the final speaker. In fact, last time I met him, we talked about how we need to raise awareness outside of Ukraine about the fact that the businesses are still working here, despite many things happening. Of course, it’s difficult, there are many missile attacks every day, but people are getting on with their lives. And the most important thing right now is that we really invest in the economy.

As we know, the highlight of the conference was the Glovo Startup Lab competition, which Glovo organizes every year together with USF. Please comment on which startups took the winning places, what awards they received?

Sacha:

There were a total of nine finalists at this year’s Glovo Startup Lab [UTU, Banani, Birb, GetOrder, Getpin, Howcow, Releaf Paper, ToGether, Uspacy — ed]. At the end of the conference they presented their solutions, and we the panel judges decided on three winners:

• First place received €20,000 in funding + internship in Barcelona — Getpin, an online marketing tool that helps businesses with physical locations attract customers looking for products or services nearby.
• Second place: €10,000 funding + internship in Barcelona — Uspacy, a CRM system for small and medium-sized businesses.
• Third place: €5,000 funding + online mentoring from Glovo — Howcow, anAI system that determines the best time for cows to conceive and detects health issues.

And can you share your impression on the winners of the conference?

Sacha:

There’s huge potential in them. They’re very early on, so I do think they need guidance and help, like all other startups. I think great companies are built by great people who work hard, who just are persistent. And above all, these companies are going to grow because they have great teams, great leadership, and great ideas.They’re not going to grow because someone holds their hand. It’s super exciting and I think it’s going to be a great experience for both them and us. 

To my mind, in general, companies that are built in Ukraine have a great opportunity to expand very quickly in the region and be leaders in the region. I think entrepreneurial talent is unique in this country, while technology levels are extremely high. When I came here  three months before the invasion, I really felt that Ukraine was moving in the right direction. I think Ukrainian society has great tech awareness, how you embrace new things, which is quite unique compared to most European countries.

Based on past experience, how does Glovo plan to support startup winners after the competition? Are there plans for ongoing mentoring or partnerships that will help to, possibly, integrate their solutions with Glovo services?

Sacha:

First of all, apart from the money they also receive our mentoring. We can help them through our ecosystem, our partner network, and our data. We have big access to the venture capital network and to a pool of talented individuals. Obviously, we’ll help the winners as much as we can.

Concerning the latter part of the question. Generally, one of the things we don’t talk a lot about is the amount of local companies we end up partnering with doing such different things, like giving solutions to our couriers. As an example, we just mentioned Choice, or other similar companies, or even fintech. It can be a whole wide range of services that we can plug into our network. There’s always opportunities for great companies to work with us and us with them. I think it’s the key to success.

Also, related to startups. We have a project called Glovo House, which incentivizes our employees to start their own companies based on their ideas. This can ensure that our legacy is not just Glovo. Already, close to 100 startups have been founded by ex-Glovo employees. Most of them received good funding, so they’re already on the road to potentially get bigger than Glovo.

The project focuses on these main areas: 

• Verification of the project. If anyone presents a project, we can look at it and, based on our experience and network, help them to redefine the project a little bit better. 
• We can give them access to our network of capital, either through local funds, angels or crowdfunding within the company.
• And then of course awareness. Glovo is a well-known brand in pretty much every country we operate. So we have easy access to channels to raise awareness about any new startups our employees come up with.

Any words in conclusion?

Sacha:

Personally, it’s amazing coming here. It’s my sixth time visiting Glovo in Ukraine since we launched here. I was super energized to arrive. And also the team here is an example for the Glovo globally.

In the interview to AIN.Capital, Sacha told about how Glovo is operating in Ukraine during the full-scale war and why this market is important for the company. He also shared the details about the company’s plans for further expansion and development in the CEE region.

In which countries is Glovo currently operating? What markets are the biggest in terms of business?

Glovo operates in 25 markets across Southern and Eastern Europe, Central Asia, and Africa. We’re in over 1,500 cities with over 4,000 employees and 60,000 active couriers on the platform. And finally, we have over 170,000 partner stores and restaurants on the application, and 90% of those are small businesses.

Our largest market is Spain. Before the war, Ukraine was our third largest market and continues to be our core market.

What countries does the company consider for further expansion?

We regularly evaluate the competitive landscape and economic conditions across countries to make decisions for future expansion. Before entering a new country, we consider three main criteria. The first criterion is how developed our industry is in this country, whether there is a need for delivery services, and whether competitors are there. We also study the prevalence of smartphones in the country because no one can make an order without one.

The second thing we evaluate is the general development of the market, related sectors such as banking, and the number of partners with whom we can cooperate. The third thing is demographics. And the political situation is no less critical.

At the moment, we are focusing on growing the markets where we currently operate.

What is the share of Ukraine in Glovo’s overall business? How important is this market to the company?

Ukraine is essential to Glovo. Currently, it is one of our five largest markets and a strategic hub for regional development. In addition, Kyiv hosts one of our four global technology hubs, with the other three in Barcelona, Madrid, and Warsaw.

How did the full-scale invasion of Ukraine affect Glovo? Did you consider exiting the Ukrainian market, and why did you decide to stay? 

Well, first of all, we stopped operations here. Our priority was and remains the safety of our team, couriers, partners, and users. However, within a few days, the local team said we needed to resume business as we’re an essential service. Сouriers started using messengers to do social orders. Restaurants and shops wanted to continue working, as well. So all that made us reopen very quickly. We developed a phased recovery plan, starting with the safest areas. We also adapted our technologies. For example, we do not operate in cities when there is an air raid alarm.

What dynamic are you currently observing in Ukraine? How are things going for Glovo in this country, considering constant air raids, inflation, and consumer attitudes? Are you planning to invest in this market before the war is over?

We are proud of the Ukrainian team — they exceeded all our expectations regarding business recovery in the conditions of a full-scale war.

Despite all the challenges — shelling, blackouts, temporary suspension of the activities of some partners — as of March 2023, the Ukrainian team managed to reach 100% of the pre-war level of business and continue to grow.

All essential indicators increased, from turnover to the number of orders. In some cities, orders rose 2-3 times over the last year. For example, in Khmelnytsky, orders increased by 318%; in Vinnytsia by almost 300%; in Ternopil by 275%; in Rivne, Ivano-Frankivsk, and Lutsk by nearly 250%; and in Chernivtsi by 200%.

Moreover, the Ukrainian team started several new services for users and, at the same time, supported the development of local partners, in particular SMEs. Thanks to this, Glovo remains Ukraine’s largest multi-category delivery service, cooperating with over 8,000 partners in 35 cities. And this shows how much the team could adapt to new realities.

How is Glovo developing in the CEE? In 2021, the company acquired competitors in Bosnia-Herzegovina, Bulgaria, Croatia, Montenegro, Romania, and Serbia. How are these markets doing? Did those investments pay off? 

At the end of 2021, Delivery Hero acquired the majority stake in Glovo. Joining forces with the market leader created unique conditions to grow with a long-term vision.

We have a strong market position and are currently leading in more than ⅔ of our markets. Moreover, we see great potential for the future of on-demand delivery and continue to see strong growth in the countries mentioned above.

What cultural differences are you facing while expanding in Europe? How did you overcome them? 

Each market where we operate is unique, which is why we rely on local expertise to grow in those markets. We listen to local teams and get their feedback about the regions, countries, and cities where we operate as we strive to be a dynamic technology company that can make quick decisions, make adjustments, and have a strategic vision for the long term.

Do you have active competitors in CEE? Who are they, and what part of the market does Glovo occupy?

The on-demand delivery business is a highly competitive industry. However, Glovo is unique as we do not only focus on restaurant or grocery delivery like many of our competitors but we are truly multi-category. Having been multi-category from day 1, Glovo has witnessed this development first-hand, and consumer demand for other retail categories is getting stronger. In 2022, we saw a 120% increase in non-food orders by Glovo users across our markets.

Is Glovo profitable in the CEE markets and particularly in Ukraine and Poland? Can you share the numbers? 

Glovo has seen strong growth in both markets, and we continue to see an increase in demand from both partners and customers.

The business in Ukraine is profitable. Moreover, it is in the top 5 for Glovo not only in terms of the number of orders but also in terms of effect and contribution to the overall business in terms of profit.

What countries are the biggest markets for Glovo in CEE? What are the next steps for development in the region? 

Ukraine is one of the largest markets in the region. We also see strong growth in other countries like Poland and all across Eastern Europe. We will continue to invest in Ukraine and other markets to build our market position.

• So far, the service works in Kyiv and Lviv. It will be available in other Ukrainian cities soon.
• Glovo users can also enjoy online medical consultations in all cities of Ukraine.
• Ukraine is the first country among 25 in which Glovo operates, where the company has launched online medical consultations and call-out doctor services. Previously, the doctor’s consultation service was launched in Portugal.

How the service works

• To order the service, you need to go from the app’s home page to the ‘Health’ tab, where you can select the ‘Medical services’ option and the desired specialist.
• The app offers various doctors from Universum Clinic: therapists, pediatricians, surgeons, otolaryngologists, dermatologists, and cardiologists.
• After selecting a specialist and placing an order, the user should expect a call from the doctor shortly. During the call, the doctor will confirm the necessary details of the user, in particular, agree on the address, day, and time of the visit.
• After the visit, the user receives a medical report in the format agreed with the doctor – via convenient messenger or e-mail.
• The service cost depends on the specialist and varies from 1,300 to 1,800 UAH ($43-60).
• The user can choose a convenient payment method: in cash or by card.
• In case of any troubles during the service provision, the users can contact the Universum Clinic hotline. Also, they can reach the support service in the Glovo app in case of any troubles with the app.

Also, users can order an online doctor consultation in the Glovo app. The service is available both in Ukraine and abroad. For this purpose, the user should choose any geolocation in Ukraine and place an order.

• According to AIN.UA data, the purchase price is in the range of $60 million to $80 million.
• The parties have been preparing for the deal for several months. The editorial staff of AIN.UA first learned about potential negotiations back in the summer of 2021, but then there were no details. When asked by the editors of AIN.UA, Zakaz.ua said that initially the company considered the possibility of raising investments. Apparently, Glovo’s proposal seemed more attractive.

The financial details of the deal

The parties have not commented on the deal.

According to AIN.UA calculations, the revenue of Zakaz.ua in 2020 was $85 million, and the plan for 2021 is $128 million. According to two sources of AIN.UA, such companies are usually acquired at a price equal to 0.5-1 revenue. In Ukraine, due to the peculiarities of the market, the first option is more common — 0.5 of the revenues. Also, such companies are bought by the principle of calculation of revenues “one specific month * 12.” Based on this and the fact that the company continues to grow by tens of percent annually, the valuation of Zakaz.ua can range from $60 million to $80 million.

Another source of AIN.UA believes that the price range is lower — from $50 million to $70 million.

Interestingly, in 2020, Zakaz.ua raised €5 million in investments. At that time, the company’s valuation was not reported, but as we found out now, it was $40 million.

Reasons for selling

The parties have not commented on the details and causes of the acquisition. The editor of AIN.UA collected the opinions of several people involved in the deal and now explains the reason for this decision.

Despite the rapid growth, Zakaz.ua is still a business that requires some extra investment. According to TechCrunch, the company has officially raised about $9 million, but its lead investor CIG reported that they invested almost $15 million during the last few years. It is caused by constant additional financing. For CIG, which is now making active investments in foreign projects, it is not the most convenient startup with an opportunity for successful exit to get funds and redirect them to other projects.

There is another option that CIG will be paid partly with stocks of Glovo, not in cash. They are increasingly growing in value, so in a few years, the investor will make a good deal by selling them.

Reasons for acquiring

The purchase of Zakaz.ua is an excellent chance for Glovo to strengthen and quickly expand its business. The company develops delivery within Ukraine and has already started to open dark stores. Currently, Glovo is a market leader in restaurant food delivery, and Zakaz.ua is a market leader in supermarket goods delivery; at least they assure the public about that. The deal will help Glovo to concentrate all their pluses under one brand.

What does it mean? Opening dark stores is a long and expensive process. After the deal, Glovo will acquire a company that can deliver not from hundreds of stocks that would be a must in big cities (and also require time to build them) but from existing supermarkets using their old work patterns. One of the market insiders assumes that it will result in a monopoly in restaurant and supermarket food delivery that will be impossible to beat.

Glovo has raised $1.2 billion in investments. The company closed its last $500 million round this year. Its representatives confirmed in many interviews that Ukraine is a big and important market for them, so they are ready to invest a lot to win it.

According to one of the sources of AIN.UA, the acquisition of Zakaz.ua is an understandable strategic decision. Back in the spring of 2021, several strategic acquisitions took place across Central-Eastern Europe, and at the same time, negotiations with the Ukrainian company began. The company is targeting this still a relatively free region in order to capture as much of the market as possible. It is reasonable — not so long ago, the Finnish company Wolt was bought out for over $7 billion. The acquisition of a local player is a good decision for Glovo — the company will spend several tens of millions of euros but will receive more than a hundred in capitalization.

“We are looking for a Ukraine Engineering Site Lead to grow our engineering presence in Kyiv, Ukraine. In this role, you’ll be the first and founding member of the Ukrainian engineering team and help us rapidly build out a team in Kyiv, partnering with the Kyiv-based regional leadership team,” the job description reads.

This person will report directly to the company’s CTO, and one of his or her main tasks will be to hire developers who can work on Glovo platforms and products.

Key qualifications required:

• Experience operating large scale distributed systems and leading large engineering teams
• Experience in working with international teams
• Experience as an engineering leader in a fast-paced, product-focused, and agile development environment
• Experience working proactively
• Ability to understand the impact of changes within an engineering organization and how best to manage that impact
• Excellent spoken and written English

The company clarifies that even if candidates do not meet 100% of the requirements, they can still apply.

Uber in Ukraine did not provide comments for this article.

The order came from above

Nobody knew that Uber Eats would be closed in Ukraine. On April 14, the food delivery service was launched in Dnipro, and the management was preparing to launch in several other Ukrainian cities this year alone.

On May 4, the company’s partners in Ukraine – cafes and restaurants – began to receive messages that Uber Eats will stop working in the country on June 3. Later, users of the service started to receive the same messages.

“In this company, they do everything without ceremony,” says one of AIN.UA’s interviewees who wished to remain anonymous. “Nobody warned anyone. The local management knew nothing. Everything was prepared and done at the global office level. Ordinary employees found out that the company was closing 5 minutes before sending the newsletter to partners. At one point, they blocked computers, accounts, mail. And they fired everyone.”

According to AIN.UA, neither partners, nor agents, nor customers/users had been warned in advance. Everyone found out about the closure of the service at the same time.

The country still has the team responsible for Uber and Uber Shuttle, although the operations have been controlled for several years from Warsaw, where the region’s central office is located.

Weak performance

In addition to Ukraine, Uber has shut down the food delivery service in 6 other countries: Romania, the Czech Republic, Egypt, Saudi Arabia, Uruguay, and Honduras. Uber will redirect resources from these countries to other, more preferred markets. The company makes no secret of this.

In other words, Uber Eats in Ukraine did not manage to reach the indicators that would make the management of the IPO company continue investing resources in the development of the service. 

This is not the first such story for Uber: previously the service left, for example, from China and Russia, losing to stronger local players. 

In Ukraine, Glovo became such a strong player in the delivery market. It started earlier, receiving the benefit of the doubt from users, while the launch of Uber Eats took place after a series of delays. In addition, it provided its customers with a wider range of services: delivery from pharmacies, supermarkets, courier services, and not just restaurants and cafes. The international company Uber in Ukraine failed to beat the Glovo startup.

What went wrong

Besides the fact that Glovo started earlier, the service had another undeniable advantage – McDonald’s. According to a source from the food delivery market, only this chain of restaurants can generate from 60 to 80 percent of all orders:

“Look at the cities where Glovo was launched in Ukraine — almost every city has McDonald’s restaurants. This allows them to enter a new city and hire couriers for a single restaurant chain. But it is the coolest and generates the most leads.”

Uber Eats failed to close a deal with McDonald’s, despite almost a year of negotiations. As a result, the service was left without a major source of orders. 

Another fact is the almost complete lack of marketing, while competitors actively advertised, launched promotions, and ad campaigns. 

Besides, no one expected that Raketa, a local player, would play so hard against Uber Eats. Despite all the capabilities of Uber, in just a few months, “Raketa took off” and pushed Uber Eats from the second place: now it is Glovo and Raketa that are leading the market. What helped achieve that was also free delivery (which is no longer available) and a wider range of restaurants. 

The quarantine also made things worse for Uber Eats. The volume of deliveries, according to AIN.UA, grew only slightly: people began to order more products from Glovo and Zakaz.ua, while Uber’s food delivery service could not offer this. 

There’s still a lucrative slice of pie

Local players do not disclose their performance indicators. According to AIN.UA, by the end of 2020, the volume of orders in Ukraine may amount to 1 million units per month. The average bill is about UAH 300. As a result, this is a market of more than 3.5 billion hryvnias. Uber will no longer fight for it. 

Uber stays in Ukraine and will continue to engage in passenger transportation services Uber and Uber Shuttle. The company does not indicate whether the company’s global redundancy policy will affect the Ukrainian office, but according to AIN.UA, no major changes are expected in the local office. 

These are the districts of the city that will be covered by Glovo at the beginning:

• Kherson is the eleventh Ukrainian city to welcome Glovo. The service also operates in Kyiv, Kharkiv, Dnipro, Odesa, Lviv, Zaporizhzhia, Vinnytsia, Poltava, Mykolaiv, and Chernihiv.
• The company’s couriers can deliver anything that does not violate the rules of the service and does not exceed the size of the original backpack 40x40x30 cm and weight of 9 kg.
• Order processing time is less than an hour.

Currently, Glovo provides services just in several areas. Its area of work will be expanded in the future, as noted in the startup.

• Glovo couriers deliver almost everything that fits the size of a backpack.
• Promised delivery time is less than an hour.
• Mykolaiv is the eighth Ukrainian city to welcome Glovo. The service also was launched in Kyiv, Kharkiv, Dnipro, Odesa, Lviv, Vinnytsia, and Zaporizhzhia.

Couriers’ position

According to “Informator”, Glovo raised salaries for its couriers, but also increased the number of deliveries to receive bonuses. Now the courier needs to make more than 100 deliveries per week in order to earn decent salary. In addition, the participants of the protest noted that couriers themselves pay for fuel costs, depreciation, and insurance.

Company’s position

The company replied to the request of the editorial team of AIN.UA about the protest that starting July 20th, Glovo had changed the bonus system for the formation of the courier’s income.

“Now the income of the courier is formed as follows: there is a basic income and bonuses. An courier receives basic income for each completed order. Bonuses are counted for a number of completed orders. At the same time, their size may change, about which couriers are warned,” the company stated.

Also the company noted that couriers are always warned about such changes on weekly sessions and through other channels of communication.

We are considering cities with populations over 200,000. These can be Vinnytsia, Zaporizhzhia, and Mykolaiv. We need to go there and evaluate their potential in terms of a number of eateries.

Rasnovskiy also said that the service can be deployed in a city in about one month, and the so-called “long list” contains 15 other potential locations. Currently, Ukrainian Glovo has over 5k couriers with at least one order completed.

Glovo coverage map in Lviv

Lviv is the fifth Ukrainian city to welcome Glovo. The service also operates in Kyiv, Kharkiv, Dnipro, and Odesa.

Rami El-Refai

Why did Glovo decide to enter Ukrainian market? What was it that attracted your startup?

Now Glovo is in the phase of active expansion. For the last nine months, we have launched a new city on average every 7 days [Editor’s note: The original article was published on October 05, 2018]. We have a whole team, dealing with search and study of potential markets to launch the service.

While selecting the market, we take into consideration a multitude of indices, but the key ones are – potential size of the market and our unit-economy. We believe that Ukrainian market has a huge potential for growth and we will be able to make our unit-economy profitable in Ukraine.

Will Glovo initially operate just in Kyiv? What cities are you going to connect in future?

While expanding to new countries, at the beginning we launch the service in the largest city. Further, having studied the market specifics, we start expanding within the country. There will be no exception for Ukraine. After Kyiv, we plan to launch the service in a few more cities. Unfortunately, I am not ready to list them yet.

How do you estimate Ukrainian delivery market? What specifics does it have and what are the opportunities for Glovo?

We believe that the Ukrainian delivery market is still poorly developed. This is particularly true for food delivery.

Most of Ukrainians prefer to cook their food themselves. They visit restaurants not so much to eat, but more to have a good time.

However, we consider it as a huge opportunity. When users have a convenient way to order meals from their favorite places and get it in 30-40 minutes, we are sure that they will appreciate it and start changing their habits.

What are the key challenges that Glovo’s team faces entering the Ukrainian market?

Ukraine is some kind of unique country for Glovo. In most of the countries we rely on couriers, using two-wheeled vehicles. Unfortunately, in Ukraine two-wheeled vehicles are not so popular. Plus, here you have a cold and snowy winter. Therefore, I believe that the key challenge is to provide the platform with sufficient number of clients, particularly in wintertime. Anyway, I think that our team has sufficient experience and tools to cope with this challenge.

How much did you invest to launch a campaign on Ukrainian market?

We have invested enough and are ready to continue investing in Ukrainian market. We are very interested in the advantage of the Ukrainian market for the growth of our client’s base and delivery market as a whole. It is also critical for us to offer an outstanding user experience, and it will be our key focus during the first year. We are at the beginning of the long way and it would be incorrect to speak of numbers now.

It should also be noted that our relations with the Ukrainian market are bilateral: venture fund GR Capital, one of our investors in the last round, helped us to enter the Ukrainian market.

Are you going to open a local office? How many employees will work there?

One of the reasons of Glovo’s global success is our reliance on strong local teams. We are sure that no one can manage the service better than dwellers of the city. Therefore, we open local offices in all countries and employ local team. At the same time, central office continuously supports local teams. Thus, they achieve a synergy of global expertise and deep understanding of local realities. At the beginning, the Ukrainian office will employ 10-15 people, further the team will grow.

What are the local companies, which are your competitors? What is your advantage?

For today, there is no any service in Ukraine, which delivers the goods of different categories. However, there are the services, which compete with us in separate niches. Our advantage is that we provide a user with an opportunity to order almost anything via a single service. It can be meals from restaurants, goods from supermarket or flowers. We even have a button “whatever you need”. Having pushed this button, a user can write what he/she needs.

One more plus – you do not have to call us. You can make an order in the application Glovo. There you can also track the order in real time. In the services, where the order is made via the phone, such function is just infeasible. On the other hand, if a user wishes to clarify something, we have a first-line support. Specialists of the support service are ready to answer all questions at all stages of delivering the order and afterwards.

Is the delivery by Glovo limited by geography?

During the first two weeks, the service will be available just in the center. However, till the end of the year we are going to cover the whole Kyiv. These temporary limitations have certain reasons. We use a concentric model of expansion.

We start from a small area and increase it step-by-step. Therefore, let us say, in the area of Arsenalnaya and Kontraktovaya subway station the order can be made in the first day of Glovo’s operation, and dwellers near Levoberezhnaya and Berestetskaya stations have to wait a little bit. Such approach ensures correct distribution of operations and provides better client’s experience.

What is it that allows Glovo’s couriers to send parcels for an hour?

There are a few reasons. Firstly, the high level of “saturation” with partners: we strive for cooperation with a multitude of shops, restaurants, etc. Secondly, we actively work with couriers. The more partners and couriers we have, the faster we deliver the orders.

Technologies also play a critical role. Our IT system “learns” and gradually start optimizing logistics. On the markets where we are present for a long time (6 months is a long time for us), most of the orders are delivered for 35-45 minutes.

Glovo is an official partner of delivery from a number of places in other countries, for instance, McDonald’s. Have you already entered into any cooperation agreements in Ukraine? If so, what are these companies?

For us it is critically important that, using Glove, a user can order meals and goods from the best places and stores of the city. Therefore, now we actively invite partners to join our platform: restaurants, supermarkets, florists, etc. At the beginning, a user can have a limited choice, but, in time, it will be increased.

What income can Glovo’s couriers count on? Will the company pay bonuses like, for instance, taxi services?

Owing to the fact that we are pretty good at anticipating the demand. We can provide income security to couriers, dealing with our platform. We do not have bonuses, but we also have no delays in income payment. Incomes depend on the fact, how much time a courier spends on the platform. Couriers with a good rating have an opportunity to earn more.

Moreover, it is convenient for couriers to work with us. The courier’s mobile application is elaborated in details. It contains manuals for all stages of work on the order. We also provide couriers with full support for the whole period when they are online.

What are the goals that Glovo’s team sets on the Ukrainian market? What output does the company plan to achieve for the first year of work?

I think that we will have an uneasy, but very interesting year. Our key goal is to provide dwellers of Kyiv with easy access to their city. As time marches on, it becomes the most valuable resource of our lives. For this purpose, we will provide them with the things that they wish to receive from the city. We will bring it directly to the door of their house or office – at any time they chose.

Earlier AIN.UA posted the interview with Dmitriy Zaporozhets, the founder of Gitlab.