Deliveroo has announced it will leave the Dutch market. The meal delivery company cannot get a leading position there, the company announces, despite decent growth in the past six months. Or is there more going on?
No chance of leading position
Deliveroo is pulling the plug in the Netherlands. Later this month, “consultation rounds” will start to end the activities of the meal courier – the goal is having left before the end of November. The platform says it does not have a strong market position in the Netherlands, while in most of its eleven countries it has “a number 1 or 2 market position”. The Dutch market accounts for just 1 % of Deliveroo’s global gross transaction value, and improvement is not in sight.
“Achieving and maintaining a top market position in the Netherlands requires a disproportionate investment with an uncertain long-term return”, a press release states. The Netherlands is Just Eat Takeaway‘s home market, while there are also quite a few flash deliverers active. However, analysts have raised the question whether the impending ruling that Deliveroo must place its delivery staff on payroll might be an important factor in the decision.
The meal delivery company says it will continue to operate in the coming months – unless the couriers think differently, of course. Since the couriers are self-employed and have no union representation, it remains to be seen how they will be consulted in the future.
Dip in second quarter
Deliveroo may well be leaving other countries, too: only in the United Kingdom, France and Italy could the delivery company gain market share in the past six months. Like other meal platforms, the company faced a post-Covid drop as restrictions fell away and people became more frugal due to economic uncertainty.
Nevertheless, sales rose by 12 %, thanks to 10 % more orders and a 7 % increase in gross transaction value (the total value of all orders). However, the second quarter was significantly weaker: whereas gross transaction value grew by 12 % in the first quarter, it only increased by 2 % in the second quarter.
Investing only in profit
Moreover, Deliveroo is still loss-making, something that investors are starting to punish e-commerce players for. Founder Will Shu is therefore now “determined to take the company to the milestone of adjusted EBITDA profitability and then to positive cash flow”. Shu promises to be strict about investments and only invest in “the opportunities that offer the highest return”.
In the past six months, EBITDA losses have already been reduced to 68 millions pounds (80 million euros), down from 106 million pounds in the second half of last year. Deliveroo is also growing its partnerships with major supermarket chains, such as Waitrose, Asda and Auchan, with Amazon and with McDonald’s.