Deliveroo SWOT Analysis
- Strong management – Strong founder base from both a former investment banker and a software director has led to traditional star-up hurdles being avoided. Will Shu the software director co-founder has successfully coordinated with a giant technology fund to negotiate a $275m investment into the company (Klienman, 2017).
- Pricing power – Deliveroo uses its competitive power and exclusive takeaway partnerships to undercut the competition to ensure customers can order at the cheapest price (Mintel, 2016)
- Cost advantages – By controlling their own apps and operating workers as ‘gig-based’ they avoid traditional taxes and employments charges (Pooley, 2017)
- Supply chain – Through exclusive partnerships and newly launched standalone kitchens, Deliveroo doesn’t make any of its products, it contracts kitchens to make the food and self-employed workers to deliver it. The strength is the vested interest each part of the chain has with each other to help each other to succeed. This means the kitchens, delivery drivers and Deliveroo employees each support the weight of Deliveroo equally (Mintel, 2016).
- Branding issues – In 2016 Deliveroo rebranded the entire company in an effort to stand out from the emerging competition of Just Eat, UberEATS, and Amazon Restaurants. However, the critical issue for the company is the price factor where customers primarily chose an app-service based on cheapest delivery price and have very low brand loyalty (Mintel, 2016). The rebranding is aimed to signalling a new step for the company and an effort to gain legitimacy in the currently controversial online-food ordering platform market (Banks. 2016).
- PR issues – Complaints have been made regarding the company’s failure to provide cycle training and safety equipment. Furthermore, criticism towards the company’s treatment of employee’s rights have led the company to gain numerous negative headlines and bad press.
- Technical malfunctions – Deliveroo’s sole reliance on the app service has led to several crashes over the years with the latest in 2017 resulting in hundreds of customers losing their orders and money. While eventually resolved, Deliveroo faced heavy criticism for their lack of clear communications and poor customer support (Blake, 2017).
- New Technology – To capitalise on the food delivery market growing by 650% in 2016, Deliveroo are investing in a new 300 persons ‘tech-hub’ in London. The purpose of this hub is to investigate and experiment with new systems to enable the company to manage more orders and deliveries. The first product of this new hub is a partnership with the TripAdvisor app which will soon allow for customers to order directly through their app as well, increasing brand awareness for both companies (Goodfellow, 2017).
- New food trends – With an increased awareness of healthy takeaway options and a growth within the sector, customers are now viewing services like Deliveroo as a regular convenient healthy alternative to cooking (Mintel, 2016).
- New partnerships – To expand out from the highly competitive food market, in 2016 Deliveroo became the first mainstream app delivery service to offer alcohol deliveries. Partnering with Heineken in a move that marks the first time an alcohol brand has offered a direct-to-consumer retail route. Deliveroo are aiming to place the app service at the forefront of all delivery needs beyond solely meal delivery. This expansion allows for Deliveroo to gain a unique competitive advantage over other brands (Vizard, 2016).
- Bad Economy – The uncertainty of Brexit and the fall in the value of the pound has led to a decrease in takeaway orders in the UK, with many customers seeing the service as a luxury (Buttonwood, 2016).
- Intense Competition – Since the launch of Deliveroo competition has grown to include companies like Just Eat, GrubHub, UberEATS and HungryHouse. Furthermore, in 2016 Amazon have launched their new delivery service with the advantage of ‘free one-hour deliveries’ to undercut the competition (Mintel, 2016).
- Changes in food tastes – Primarily Deliveroo partner with traditional takeaway services, however with food trends moving towards healthier options, the company must be ready to adapt to changing tastes and partner with food brands that offer what customers require (Mintel, 2016).
Banks, T. (2016) Is Deliveroo rebrand about gaining global appeal or reducing controversy? Marketing Week. [Online] Available at: https://www.marketingweek.com/2016/09/05/deliveroo-hopes-new-rebrand-will-reduce-controversy/ [Accessed 22/07/17].
Blake, I. (2017) Is Deliveroo growing too quickly? Food delivery app crashes AGAIN leaving hundreds without their takeaway and a stream of complaints on Twitter, Daily Mail. [Online] Available at: http://www.dailymail.co.uk/femail/food/article-4147846/Customers-angry-Twitter-Deliveroo-crashes-again.html#ixzz4nq0GemSS [Accessed 22/07/17].
Butler, S. (2017a) Deliveroo accused of ‘painting a false picture’ at work tribunal. The Guardian. [Online] Available at: https://www.theguardian.com/business/2017/may/25/deliveroo-accused-painting-false-picture-work-tribunal-self-employment [Accessed 21/07/17].
Butler, S. (2017b) Deliveroo accused of ‘creating vocabulary’ to avoid calling couriers employees. The Guardian. [Online] Available at: https://www.theguardian.com/business/2017/apr/05/deliveroo-couriers-employees-managers [Accessed 21/07/17].
Buttonwood. (2016) Brexit means…higher prices. The Economist. [Online] Available at: https://www.economist.com/blogs/buttonwood/2016/10/economic-impact-devaluations [Accessed 21/07/17].
Deliveroo. (2016) Introduction to Deliveroo. European Commission. [Online] Available at: http://ec.europa.eu/information_society/newsroom/image/document/2016-6/deliveroo_13855.pdf [Accessed 22/07/17].
Goodfellow, J. (2017) Deliveroo to build ‘one of the UK’s largest tech hubs’ as it creates hundreds of jobs in new London office, The Drum. [Online] Available at: http://www.thedrum.com/news/2017/01/18/deliveroo-build-one-the-uk-s-largest-tech-hubs-it-creates-hundreds-jobs-new-london [Accessed 22/07/17].
Kleinman, M. (2017) Giant Apple-backed SoftBank fund in talks to buy Deliveroo stake. Sky News. [Online] Available at: http://news.sky.com/story/giant-apple-backed-softbank-fund-in-talks-to-buy-deliveroo-stake-10933348 [Accessed 22/07/17].
Mintel. (2016) Attitudes towards Home-Delivery and Takeaway Food – UK – April 2016. Mintel. [Online] Available at: http://academic.mintel.com/display/747922/ [Accessed 22/07/17].
Murgia, M. (2017) Deliveroo expands with standalone takeaway kitchens. Financial Times. [Online] Available at: https://www.ft.com/content/1e516472-1a11-11e7-a266-12672483791a [Accessed 22/07/17].
Ram, A., and Shubber, K. (2017) Deliveroo struggles to stay one hop ahead of the rest. Financial Times. [Online] Available at: https://www.ft.com/content/c61ef236-6319-11e7-91a7-502f7ee26895 [Accessed 21/07/17].
Sullivan, C. (2017) Just Eat urges changes to immigration rules to aid restaurants, Financial Times. [Online] Available at: https://www.ft.com/content/439526b2-6320-11e7-8814-0ac7eb84e5f1 [Accessed 21/07/17].
Pooley, C.R. (2017) Deliveroo faces fresh legal action over ‘worker’ rights. Financial Times. [Online] Available at: https://www.ft.com/content/7d316c90-12f9-11e7-b0c1-37e417ee6c76 [Accessed 21/07/17].
Vina, G. (2016) Importers face £1.2bn rise in costs after Brexit, says study. Financial Times. [Online] Available at: https://www.ft.com/content/b8f575f0-a9ae-11e6-809d-c9f98a0cf216 [Accessed 21/07/17].
Vizard, S. (2016) Heineken goes direct to customers with Deliveroo tie-up, Marketing Week. [Online] Available at: https://www.marketingweek.com/2016/11/18/heineken-goes-direct-customers-launch-brew-house-brand/ [Accessed 22/07/17].
Warrell, H., and O’Connor, S. (2017) UK food industry fears Brexit exodus of EU workers. Financial Times. [Online] Available at: https://www.ft.com/content/e22c9d5c-e95c-11e6-893c-082c54a7f539 [Accessed 21/07/17].