MGMT200: Business Model Deconstruction Report on Deliveroo

This report provides a comprehensive deconstruction of the Deliveroo business model, utilizing the Osterwalder and Pigneur Canvas framework. It examines key aspects such as customer segments (both consumers and restaurants), value propositions (convenience, accessibility, price), channels (website and app), customer relationships, key activities, partnerships, cost structure, key resources, and revenue streams. The analysis highlights the interrelationships between these elements, demonstrating how Deliveroo connects restaurants with customers. Furthermore, the report identifies critical success factors, including personalization, customer loyalty, and technological advancements. It also discusses potential factors that could impact Deliveroo's success, such as food damage, technological glitches, and security breaches. Finally, it suggests improvements to the business model, such as fair driver wages, expansion into non-urban areas, and international market development.

4/9/2020
Running Head: MANAGEMENT 0
BUSINESS MODEL DECONSTRUCTION

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Contents
Introduction..............................................................................................................................2
Deconstruction of Business Model..........................................................................................3
Interrelationships.....................................................................................................................6
Key Success Factors.................................................................................................................7
Factors might impact the success of the business model......................................................7
Suggestions and Changes in business model..........................................................................8
Reference List...........................................................................................................................9

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Introduction
Deliveroo is a platform developed in 2013 to bring the finest local restaurants direct to
the people's doors. The founder of Deliveroo is Will Shu who started the company as an
online food delivery where customer can track their food on their phone. At present,
Deliveroo has expanded its network in more than 12 countries and with employ nearly 800
employees (deliveroo.news, 2020). The mission of company is to change the way consumers
eat and Deliveroo is achieving this mission with constant innovation and expansion.
Deliveroo competitive
advantage lies in its great selection of standard restaurants and exporting British-born
technology around the world. The company is pacing with the digital evolution and so
develop “Frank” algorithm grounded on great projecting technology that assesses the most
effective way of delivering orders centred on the restaurant's locations, availability of riders
and customer’s approachableness (deliveroo.co.uk, 2020). This report is the deconstruction of
Deliveroo business model based on Osterwalder and Pigneur Canvas and further identified
various significant success factors help the company to move towards long term
sustainability.

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Deconstruction of Business Model
(Source: Malarkey, 2014)
Customer Segments
The business model of Deliveroo is multi-sided where it is based on two liberated
division of customer groups and it is the responsibility to fulfil the needs of both sides. The
first customer group is related to the people employed in the job or sitting at home looking
for great quality food from the different restaurant present in the city. On the other hand,
restaurants are also an indirect customer of Deliveroo that are looking for various more and
more people to book order from their place together with offering service delivery.
Value Proposition
The value proposition of Deliveroo can be divided into five areas i.e. price, brand,
accessibility, decrease in risk and convenience. Considering accessibility, Deliveroo connects
the restaurants to the customers by offering a delivery platform and therefore, benefit them to

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add a new service provision. In addition, it also benefits customers seeking to get the food to
deliver at their door rather than they have to come to the place to eat. The convenience is also
represented as value proposition as Deliveroo offering convenience by making the servicer
easier for customers. The company stake promise to the customer that they will receive
his/her food in an average 30 minutes (deliveroo.co.uk, 2020). Furthermore, restaurants are
also receiving convenience by having established delivery partners and drivers.
Price as a value proposition also presented by Deliveroo as according to Singh (2019),
the company charges a passable and little fee of just £2.50 for supply and the company also
offers it, customer, and an open credit associated to the meal when they take part in the
referral program. There is a decrease in risk with Deliveroo as the company ensure a unique
packaging for all its products that is ready to be delivered. The packaging is unique as it holds
the temperature for a greater time period and also the driver waits up to ten minutes until the
consumer not come at the definite place.
In relation with a brand element, the company have successfully boosted its brand
awareness in different locations and Deliveroo also holds high customer loyalty where more
than 80 per cent of people are using their service and delivery platform more than once.
There is also a significant growth in company revenue as in 2018, Deliveroo’s profits reached
over 476 million British pounds, nearly 200 million upper than the amount stated in the
preceding fiscal year (statista.com, 2019). Currently, the company is providing its services in
more than 12 countries and attained world-wide progressive publicity in numerous leading
magazines and newspapers such as Forbes, HBR and TechCrunch.

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Channels
There are two main channels available for the customers i.e. company website and
smartphone applications. For the restaurants, the main channel includes the business
development team. To make customer aware about new service, offers and information,
Deliveroo uses digital and online marketing channel associated to Instagram, Facebook and
Twitter.
Customer Relationships
In case of Deliveroo, the customer relationship can be seen as more automated in
nature and intended towards self-service. There is very much less interaction with the staff
from the side of customers as they either book their order from restaurants through the
company website or smartphone device. Although, the customer service helpline is there
where customer can speak about any sort of issue through phone, e-mail or live talk helper.
Key Activities
In relation with Deliveroo business model, it mainly concerns with service delivery by
developing a unique platform between customers and restaurants and this platform is in the
form of its website and smartphone application.
Key Partners
Considering partnership and association, there are no such formal agreements,
however, to boost the brand awareness, Deliveroo indulges itself into partnership with Grab
and benefits the customer through offering them free credit up to $40 on a weekly basis who
have completed minimum five trips with Grab (grab.com, 2016). In addition, Deliveroo also
works collectively with Norwich City Football Club where the club promotes branding for
Deliveroo at the ground and pitch edge.

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Cost structure
Adopting technology is one of Deliveroo way to reduce the expenses and it has helped
the company a lot. Although, one of its greatest cost drivers relates to promotion expenditure
(stated to as fix expenditure).
Key Resources
One of the main key resources of Deliveroo is their patented software platform which
helps the customers to book food from different eateries around the city. Other key resources
of the company include its delivery drivers and 800 employees. As the company established
six-year back, it is in growth phase of business cycle and therefore, seeking capital from
various stakeholders like in 2015, Deliveroo raised approximately $70 million from various
investors to push international expansion (O’Hear, 2015).
Revenue Streams
In case of Deliveroo, the company has two different revenue streams. The first is the
simple fee of £2.50 for delivery to consumers and the second is a commission taken from
restaurant and it was not revealed by company openly.
Interrelationships
Deliveroo has been successful in developing a perfect link between restaurants and its
key partners so as to present reliable services to all its consumer groups. At the end of 2018,
the company expanded its network to nearly 6 million UK consumers where more than
45,000 users are the company daily customers (Iqball, 2020). The company has also attained
loyal customer base as 80% of them do not switch to the other delivery services.
Deliveroo five key value proposition also align with its long term consumer
relationship and cost benefit due to company well reliance upon technological development.

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Furthermore, the company two sources as of revenue streams and cost structure is also well
synchronised that enable company to offers products at reasonable prices. The company has
achieved all of this based on well coordination in its different areas of value proposition.
Deliveroo key resources as patented software platform built over both on smartphone
application and website fulfilling the different necessities of consumer with proposing great
approachability and convenience. It further associates to the network which the business
delivers its services to both restaurants and consumers.
Key Success Factors
Irrespective of boom in the online food service delivery market, there are some
critical factors that Deliveroo needs to consider to maintain its long term sustainability. For
Deliveroo, the first critical success factor is personalisation while focusing mainly on
customers similar to Uber Eats, as the company has achieved great personalisation while
making it as the competitive edge. Customer loyalty is the next vital success factor for
Deliveroo and the business is doing great in this area where it was identified that 80% of
people are using their platform more than once (Iqball, 2020). Development of technology
and webpage optimisation is another critical success factor as on-demand foodservice
platform must be updated with unique features in order to retain customers over longer period
of time.
Factors might impact the success of the business
model
The success of Deliveroo business model can be impacted with three major factors where
the first is physical damage to the food and property. It is very much important for the
company to deliver the food to customer without damage and company 30 minute guarantee

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can be harmful to the company drivers. Technological glitch is another factor that represents
one of the biggest threat to its business model as Deliveroo business model is highly
dependent on its online platform to undertake necessary business activities and any point it
fails, there will be a big loss of customers. Lastly, breach in security can also be a threat to
company business model as Deliveroo is collecting various user personal information in the
background of application including customer behaviour during booking order and selecting
restaurants, history of purchase and so forth. Such actions make company at risk to data
breaches which further becomes threat for the company in form of loss of customer loyalty,
lawsuits and negative impact on goodwill.
Suggestions and Changes in business model
Deliveroo must strengthen its business model from all perspective such as developing
a fair deal for all people associated to the value chain. For instance, the driver wages should
be appropriate and as per the market demand as this will be beneficial for the company from
long term perspective. Deliveroo should also focus to connect with more restaurants in non-
urban areas and start delivering food in those areas and it offers wider access to the customer
groups with increase in further customer loyalty. The company is doing great in domestically,
however, to be recognised at world-wide level, it is recommended that the company should
follow market development strategy and expand into more developing countries such as India
and China to extend its vision one for all.

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Reference List
deliveroo.co.uk. (2020). The Story of Deliveroo. Retrieved from
https://deliveroo.co.uk/about-us
deliveroo.news. (2020). About Deliveroo. Retrieved from https://uk.deliveroo.news/about
grab.com. (2016). Grab and Deliveroo Partner to Grow On-Demand Services in Singapore.
Retrieved from https://www.grab.com/sg/press/consumers-drivers/grab-deliveroo-
partner-grow-demand-services-singapore/
Iqball, M. (2020). Deliveroo Revenue and Usage Statistics (2020). Retrieved from
https://www.businessofapps.com/data/deliveroo-statistics/
Malarkey, A. (2014). Australia: Business model innovation - Part 2: Understanding
innovation. Retrieved from
https://www.mondaq.com/australia/Strategy/313020/Business-model-innovation--
Part-2-Understanding-innovation
O’Hear, S. (2015). Restaurant Delivery Startup Deliveroo Raises $70M Series C. Retrieved
from https://techcrunch.com/2015/07/27/series-c-delivered/
Singh, A. (2019). Deliveroo Business Model | How Does Deliveroo Make Money?. Retrieved
from https://www.feedough.com/deliveroo-business-model-how-does-deliveroo-
make-money/
statista.com. (2019). Annual revenue of Roofoods (Deliveroo) worldwide from 2015 to 2019.
Retrieved from https://www.statista.com/statistics/760414/deliveroo-revenues/