Contxto – Until recently, it looked like Spanish home delivery app Glovo was going to secure a substantial market share in Latin America. This no longer appears to be the case following some setbacks in Chile. Last week, the company announced that it will abandon the South American country due to some hefty financial losses.
The startup has been prepping for its departure over the past few days, which entails letting go of executives and taking down equipment. A complete operational shutdown will take place on Tuesday, April 30 after spending only two years in Chile.
Some may consider Glovo’s decision to leave as “radical.” However, in terms of accounting, the revenue volume missed the targets that Glovo CEO Oscar Pierre established. Originally, he expected a turnover between 90 and 100 million euros.
Glovo has lost millions of profits this past year despite plans for international expansion. Although it saw a turnover worth over 75.2 million euros (US$84 million) in 2018, it experienced losses of more than 90.4 million euros (US$101 million).
Fellow delivery startup, Delivery Hero, released these numbers since it’s a shareholder owning 15.95 percent of Glovo. The partner also works with rival companies such as Rappi that’s facing its own uncertain future in Argentina.
According to reports, Glovo attributes the lack of financial backers for these woes. Little funding allegedly prevented it from retaining its market share. One way or another, the firm’s goals and expectations didn’t match up with reality.
Some sources say that Glovo expanded too quickly. For example, the company reportedly debuted in a new city every four days in 2017. Nonetheless, Glovo’s next goal is to raise another 100 million euros to guarantee an IPO in the next 18 months.
By now, we must realize that food delivery is a saturated industry. Even though Glovo entered Chile eight months before Rappi, I imagine that competition was too fierce among other contenders like Uber Eats and PedidosYa. Who will come out on top is still unknown, but we’ll keep you updated.
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*Glovo acquires Peru’s Domicilios.com, announces US$169 million Series D