Letter to Glovo’s shareowners
COVID was an inflection point for us. What if in three years’ time, 10% of Glovo’s orders had a social purpose?
Building a triple marketplace (connecting couriers, businesses and users) is operationally very challenging. The exciting part is that every order delivered generates a potential triple positive impact: the courier makes an earning through a flexible job, businesses generate extra revenue in usually their first digital channel and the customer gets a great convenience service. To be clear, getting the three right is tough and we are still far from perfect! This triple impact was our biggest motivation for when we founded the company in 2015, and it still remains. Glovo has definitely beaten our expectations, and the current size of the platform means we have now a big responsibility to do things right. Our impact today includes creating more than 1,500 jobs worldwide, generating millions of euros of revenues for 30,000+ businesses and 200,000+ couriers worldwide, to name just a few. On the other hand, we emit more than 100,000 tonnes of CO2 per year throughout our entire value chain, through the vehicles used for delivery, the packaging used by partners to transport their products through our platform, and the food losses at the different stages of the production, distribution and consumption process. It is clear for us now that we must focus on our sustainability and social impact as part of Glovo’s long-term growth.
Glovo was hit right in the heart by Covid-19, with two of our core countries being the hardest impacted by coronavirus in Europe: Spain, the country where Glovo was born five years ago, and Italy, our first international expansion. In these two countries, most of the restaurants were forced to close their doors for safety reasons, due to the state of alarm imposed by the governments to protect their population. The pandemic made us aware that our platform could bring much more than we thought to society, as we naturally shifted our focus towards delivering essential goods to our customers. This role was recognised by public authorities in various countries where we operate through regulatory measures allowing our services, as well as public statements acknowledging delivery’s essential role in the response to the sanitary crisis. Another thing we have learnt during this crisis is how important Glovo has become for our restaurant partners, which were forced to close their physical locations in most of the 22 countries where we operate. In Spain, 30% of them managed to remain open thanks to delivery, in many cases doubling their online sales through our platform. As a consequence, we have seen a growing interest from new restaurants and shops to join Glovo as a way of safeguarding the continuation of their activities. The crisis also accelerated the digitalisation of other sectors that were deprived from their physical operations, from local shops and newspaper kiosks to supermarkets and electronic stores. Their integration was facilitated by the way we designed Glovo as a multi-category delivery app right from day one. Wounded but not sunk by the crisis, we have seen our value proposition become essential for our partners to stay afloat.
The structural change in the demand was another big challenge we faced during the crisis. On the one hand, the food on offer was significantly reduced, due to the closure of many restaurants, but, on the other hand, sales of grocery products climbed from 6% to 18% of our total orders. This sudden growth in groceries orders has been very complex to manage, both in terms of our retail partners capacity to respond to demand, and in terms of the operations at our own groceries warehouses (also called “dark stores” since they are not accessible to the public). Moreover, it added to the unpredictability of consumer behaviours in terms of product demand and peak hours, and to the need to simultaneously strengthen hygiene and safety measures to avoid contamination risks for our end customers. We are super proud of how our team has reacted and turned this into an opportunity to make groceries a core and sustainable vertical for us.
Another key learning from Covid-19 is that we had to put health and safety at the top of our priorities, for all the whole ecosystem of Glovo users. We protected the couriers, whose role has been as crucial as other essential workers during the crisis, by distributing them safety kits (190,000 masks, 130,000 gloves and sanitiser liquid) as efficiently as we could, and by setting up an economic support fund to cover two weeks of earnings for those who contracted the disease. We have also led the development of a sectoral safety protocol with the delivery and restaurants sector, including a set of hygiene and safety measures to avoid any risk of contamination during the delivery process (removal of the customer signature upon delivery, sanitisation of restaurants’ surfaces for orders, cleaning of delivery boxes, social distancing when queueing and delivering to customers etc.). We have always put safety first, whether that is for our staff or for our users. Nevertheless, Covid-19 did also reveal some blind spots in our operating system. It shone a light on the need for autonomous and flexible work to be more protected, and for platforms to be entitled to providing workers that protection, in a new step forward towards the digitalisation of work. Secondly, we realised the need to collaborate on a daily basis with public authorities to avoid any misuse of our platform, like the transportation of illegal products and substances through our courier service during the confinement for instance. We have established collaboration agreements with security forces leveraging our technology’s traceability capabilities to jointly restrain misuses of the platform, in order to protect couriers, customers, and the company. More than ever, close collaboration and dialogue with the public sector will be a key priority for us in the future.
Since the beginning of the crisis, we have received many requests from local organisations like food banks, social centres, and charities asking for our logistical support to maintain their operations. These organisations were unable to undertake their solidarity activities – their workforce is generally composed of volunteers who had to stay at home during the confinement. In this context, our license to operate as an essential activity was crucial for vulnerable people. In some cases, delivery of groceries was the only way for them to access basic food supplies without taking the risk to leave their homes. In just three months, we carried out more than 100,000 solidary deliveries, either funded by Glovo itself or by public or private third parties, on behalf of more than fifty organisations. Most of these efforts consisted in delivering solidary meals or reducing the digital divide by distributing electronic devices (smartphones, tablets etc.) to hospitalised patients or children forced to study from home. We also helped distribute protection materials like gloves and masks on behalf of public authorities, like the Community of Madrid. During this difficult time, we took Glovo’s full measure of potential to act as a public service, by giving support to the most vulnerable and acting as a logistic operator for social institutions. We also served as an impact-investing vehicle for private sector companies willing to do good in society. In total we have received more than 400,000 euros to date, in under three months, from a wide range of organisations, including the insurance companies Zurich and DKV, the PepsiCo Foundation, and the City of Barcelona through the Esplai Foundation, a public-private entity fighting for social inclusion. We also punctually used our marketplace technology to raise funds for organisations needing financial support, like the Spanish Federation of Food Banks that we helped to raise more than 15,000 euros in just one month. What if in three years’ time, 10% of Glovo’s orders had a social purpose? This is the direction we want to take to contribute in our own way to the 2030 Agenda.
COVID-19 was a wake-up call for us, and we believe our technology and the logistics our platform enables should keep supporting NGOs always, and not only in pandemics. In the future, they will face a growing demand in basic goods due to the economic consequences of the sanitary crisis, as well as new social distancing requirements reducing their response capacity. As it is the case for restaurants and small businesses, Glovo can help NGOs digitalize their operations to face potential disruption of their physical activities, increase their outreach by serving peripheral neighbourhoods, and reach out to individuals and communities in a situation of social exclusion because of their medical or family conditions.
This social commitment comes right after the publication of Glovo’s first Non-Financial Performance Report, an obligation derived from Spanish and European Law by which private sector companies are required to disclose their progress regarding a selection of social and environmental objectives and indicators. In 2019, most of our efforts were directed towards building stronger links with users of the platform coming from migrant communities. We launched the Glovo Citizen programme to fund projects aiming to facilitate the integration of migrants in society, through training, capacity building and micro-finance services. We also spent a lot of effort assessing Glovo’s environmental footprint. For the first time, we measured the carbon emissions of the company throughout our entire value chain, from supply chain and procurement to the end of life of products sold through the app. While our direct emissions can be considered as very low, essentially caused by the electricity consumption and waste generation from our offices, the company’s upstream and downstream indirect emissions calculations revealed how carbon intensive food production, distribution and consumption systems remain. Indeed, 30% of our carbon footprint comes from the food waste produced throughout our value chain by our partner restaurants and our end customers, another 30% comes from the packaging used by businesses to transport their products through Glovo, and, finally, 20% of emissions comes from vehicles used by couriers delivering the products. As a city-based logistics company with a high share of bicycles among our fleet, our operating model can be considered relatively carbon friendly – even though we need to keep innovating with our ecosystem of users to ensure our pathway towards zero carbon emissions. Conscious of the responsibility we have to manage our emissions – in particular those derived from our core business – we decided to make our delivery system carbon neutral, by offsetting 100% of the emissions coming from the couriers’ fleet of vehicles of Glovo worldwide, from 2020 onwards, through a partnership with Silicon Valley-based tech company Pachama. This is a necessary step before we manage to identify concrete solutions to structurally reduce these greenhouse gas emissions through zero-carbon transportation technologies.
Science is clear: climate change remains the main threat we will face in the 21st century. The current pandemic shouldn’t slow down our mitigation efforts. On the contrary, it should remind us of the need to care for the people and planet before it is too late. Henceforth, and despite the economic concern over the next months, there is no doubt we need to redouble our efforts to reduce carbon emissions across our entire value chain. We reiterate the commitment for our global value chain to reach carbon neutrality by the end of 2021 (i.e. extending our carbon neutrality strategy from emissions derived from delivery to emissions derived from packaging and food waste), by innovating together with our partners to identify the right business models for scaling up responsible consumption and production systems. In 2019, we started selling sustainable packaging solutions to pioneering restaurants, and supported some of them in the management of their food excedents. Tomorrow, we must find the right solutions to mainstream these virtuous behaviours. As a platform connecting millions of users, it is Glovo’s responsibility to promote and incentivise the most virtuous, eco-friendly practices throughout our platform, and to maximise the creation of economic value for businesses from the food sector, while supporting them to decouple their growth from negative environmental externalities. We are calling for innovators around the world to help us leverage most out of last-mile delivery for circular growth.
The Future of Glovo is a great chance for our entire ecosystem of users and the communities they belong to. More than ever, we are convinced of the potential of our company to create shared value for them all. Firstly, to provide economic value, as we have seen how relevant our technology and logistics have been to enable small businesses and restaurants to survive during the worst moments of the pandemic. Secondly, to have a social impact by playing the role of a trampoline of opportunities for couriers and businesses, but also by opening the access to our platform for NGOs and public entities. Finally, to have an environmental impact, by driving virtuous behaviours towards a more sustainable and circular economy, by being carbon neutral and resource efficient.
Oscar Pierre & Sacha Michaud