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Glovo’s Quick Commerce Strategy Explained by VP Connie Kwok | The Retail Podcast · The Retail Podcast

0:00
Hello, and welcome to the Retail Podcast.
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And today we're joined by Connie Watt, Vice President of Quick
0:05
Commerce at Glovo. Before we start, for those who
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don't know what Q commerce is, I assume it's the same as quick
0:22
commerce. Very, very good question to
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begin with. So first of all, let me explain
0:27
what Globo is and audio listeners may not know.
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So Globo, we're a Spanish tech company with the mission to
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build the largest marketplace in New York City and we are able to
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send customers products whatever they want within a minute and
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we're a multi category platform. So when it comes to Q commerce,
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I think 80% of our business is food delivery from restaurants,
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probably what we're most famous for.
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But actually the fastest growing part of a business is everything
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non restaurants, which is what we call quick commerce in
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global. So customers can come to buy
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their groceries from us, but also products from a range of
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like retail partners. I'm, I'm curious from a, from an
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experience perspective, apart from speed delivery, which
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obviously is important if you're hoping to to, to use a sort of
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one line delivery platform or marketplace, what would you say
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the three primary experiences and more experience factors that
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distinguish a quick commerce separate from same day or next
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day? I think ultimately is thinking
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about what convenience means to customers and how that's really
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evolved over time because I, I spent a significant part of my
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career at Amazon and when I joined nearly 10 years ago now,
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like speed, speedy delivery was 2 day delivery.
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That's how I am. But now that I'm at Globo,
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we're, we're worrying about whether delivery times are 35
1:51
minutes versus 30 minutes. But I think, but to be clear
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though, I think what we've learned at Globo is that what
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convenience means to customers can be really different
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depending on what that shopping mission it's and what category
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of product you're looking to buy.
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So if you're buying burger and chips, obviously speed of
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delivery is absolutely what convenience meats because people
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are hungry, they want, they want their food to get cold.
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But in other categories, convenience may mean totally
2:18
different thing. Like in grocery, for example,
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you could be halfway cooking a recipe and you've realised
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you've run out of soy sauce for your stir fry, you need it as
2:26
quickly as possible. But in another use case, you
2:30
could be commuting to work, you know that you'll be home at 6:00
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that evening. So therefore, if you want your
2:37
grocery order to to come, the most convenient thing for you is
2:42
that this delivery slot and the accuracy into that delivery slot
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because you don't want it to arrive before 6 because you're
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not home yet, but you also don't want to be very much after six.
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So it's, it really depends on what customers are are really
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thinking about. And I think, I think the
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evolution of commerce has been it's not just about being
3:00
really, really fast. It's all about thinking about
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all of those different customer use cases and making sure that
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we're able to be the most convenient option for for that
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customer today. I think one of the things that
3:12
on the show we've spoken about quick commerce in India and how
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you know that is 15 minutes is the and it's like how do you do
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15 minutes in Europe or any of the other logistical nightmare
3:25
countries? But they seem to, well anyway,
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just all takes the conversation in a different way.
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And I and, and I am curious because I did interview one of
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your competitors in the UK and I asked this question.
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Do you think or from research or just from a general perspective,
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is there any, You just described 2 use cases where maybe the
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answer is yes, but do you think we need to get to 15 minute
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delivery? I think the India use case is a
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very interesting one to reference and understanding why
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it's 15 minutes in India, whereas I think in Europe
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everyone's converging on 30 minutes.
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Even 45 minutes is already pretty fast because there's
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there's a number of supply side factors that in it help India to
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do that right. Obviously, the labour cost there
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is very different, but also how densely populated, especially
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the major cities are similar to China where I spent a lot of my
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career. So there's that supply side
4:22
constraint that everyone needs to think about, but there's also
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the customer expectation. I think a lot of the use cases
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we are just talked about, yes, 30 minutes seems to be quick
4:33
enough, but we're also thinking about things like again, other
4:37
use cases where 45 minutes, 60 minutes or even 5 hours, again
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is maybe the accuracy of exactly A1 at 7:00 PM, not 7:30.
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That may be the most important things.
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And I'm curiosity will Globo get into like the the week delivery,
4:54
like the grocery you mentioned, like this, you know, a once a
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week type thing. Is that or sorry?
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Are you already doing that for grocers?
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So if right now, if you want to schedule a delivery for next
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week, it's absolutely possible. And what we're always doing is
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understanding customers, demanding customers behaviour to
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best understand how we can start them is something that I've been
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at Glover six months now. So I'm fascinated to see the
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data set that I have. One thing that I've noticed like
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Glover is in 23 different countries.
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So I've got 23 different countries of customer behaviour
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to learn from, which is fascinating.
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But for some reason the Italians are really keen to schedule
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their little race. They're the ones that have the
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highest amongst all of my countries.
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You all haven't understood clearly why that is, but I think
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this is a big, we have so much data on our hands and it's a
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combination of looking at that quant, but also talking to our
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customers more closely to see, does it make sense for us to to,
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to widen that that delivery window for them.
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That's really interesting and and I think with, with the
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spirit of you guys being a marketplace, you, you did
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mention global operates in 23 countries across Europe, Central
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Asia and Africa. So what, like, I mean, in Italy
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is an interesting one, but what approaches would you use to
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localise assortment pricing fulfilment in these different
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cities and giving the different regulations as well?
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Because there's career regulations that have making
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your life so much more complicated.
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And, and, and just quickly after that, like what once you've
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answered that, what would become an optimal merchant partnership
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under these? Because then I think, you know,
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you're a marketplace dependent on these partnerships.
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What's an optimal partnership look like?
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Yeah. So let's talk about the kind of
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how to localise for customers. You're absolutely right.
6:45
What localising for customers and tailoring that local demand
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music can mean very, very different things that first of
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all there's definitely the must haves.
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You talked about local laws and regulations.
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We have one right now going on. For example, Bulgaria is
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currently transitioning to the EU.
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So our app interface has to be showing both EUR and Bulgarian
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left in this transition period. So something we've just done
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just for Bulgaria, but there's also other basic things like
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translation at global across our 23 countries, we've got 18, I
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think 18 ish different languages.
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So making sure what looks great in Spanish also looks great in
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Georgian. But at the same time, we also
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have a lot of expat populations in all of these countries.
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I mean, I moved to Barcelona six months ago.
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My Spanish is still terrible. So we also have to think about
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what languages make sense for us to do, also translations for our
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customers. So those are the more basic
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stuff that we have to get right. But beyond that, and you talked
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about how do we tailor our selection and pricing beyond
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those basics, we also need to think about what those customer
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behaviours and expectations are. We have some very large global
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and regional players who partner with us across our whole
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footprint. Obviously the McDonald's, KFC's
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of the world, but also in the retail space, Car 4, Decathlon,
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they're global businesses, but we also need to make sure that
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we serve what customers care about are their local heroes.
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So for example, in Spain, we know that everyone loves their
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bread in the mornings. They typically have a their
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favourite local Baker, so we definitely need to make sure
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they're on board or something. My, my naughty husband does a
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lot. He loves to order from his
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independent cake shop after dinner.
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And again, my husband's very happy because that we can do
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that for him every night. OK.
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Expanding back out Q Commerce I think has surpassed 1 billion
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GMV and grocery retail segments are growing by about 48% year on
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year, which in itself is, is incredible, which operational
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elements such as order density, a batching, membership fees,
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advertising, dark stores, partnership products most
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influence contribution to margin.
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And then if you like, what are the key indicators that will
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demonstrate the, the model sustainability and and
9:14
profitability? I mean, I don't know, just to
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sort of like go back to the core business if there's any sort of
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light you can shed there. You, you just listed all of my
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headaches, Alex, that I have to think about.
9:26
I think first of all, let's talk about the differences between
9:29
that store model versus the partner model.
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I think rather than just focusing on the margin
9:35
specifically, what we really need to think about is what's
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the relative value proposition we're giving to customers.
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And I think that both models have respective pros and cons
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because the partner model is like supermarkets, that is very
9:48
well known to our customers. They don't already know and love
9:50
them. But what we typically see is
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that some supermarkets are amazing.
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They're able to give us almost livestock and price updates so
10:00
that we're able to give customers a very accurate view
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of what's in the store. Others are not quite there yet,
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let's just put it that way. So that's a big challenge and
10:08
the big con for that business. Whereas on the dot store
10:12
business we control everything that goes on in that store.
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We it is a 1P model essentially for us, right.
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So we're able to really optimise the customer experience for our
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customers. So things like out of stocks is
10:24
much more rarer on that side. And also our opening hours are
10:29
typically a lot longer than the supermarket.
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So again, coming back to Spain where on Sundays a lot of shops
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are shot and that that store model becomes very, very
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important to our customers. OK.
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In terms of them, when you mentioned earlier on of the
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categories that you're doing so, for example, because it's a
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marketplace, you can get beauty, which I think is 58%,
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electronics, which is 59% actually that doesn't add up.
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All my percentage you're breaking up, I'm like a 200%.
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How does that work? But in terms of sorry, maybe
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it's category split beauty electronics and pets.
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What, what, what, what do you see is working like from
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operationally packaging and all all these elements that come
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into that. And then obviously customer
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satisfaction, right, MPs scores in last mile delivery.
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What's working, What you see is trending and maybe where's your
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focus? Actually by focus is just to
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make sure that customers understand we have this breadth
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of offers to that they can shop from because I think for many,
11:33
many of the people who love and use Clover every day, we're
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still a restaurant food. That's historically been our
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strength and that's what they associate us with.
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But unfortunately we have all, they have a lot of people's not
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even tried groceries, which is typically the next place they
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try, let alone more retailers. So something that we're working
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a lot on is thinking about how do we make customers more aware,
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aware of those categories. But coming back to your question
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of how different those custom those categories are, there are
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some categories that definitely what are much more attuned to
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that traditional quick commerce model of 30 minute delivery.
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So, for example, we, we launch over the counter medicine in
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Madrid in Spain this year. Obviously, if you're sick and
12:17
dead, you, you really want that really, really quickly.
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But also some of the more sinful categories, let's just put it
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that way, alcohol plus the things that you don't want
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people to see you flying in the shop.
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Those, those were very, very. But there's also some of the
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other thinking about what also does very well for us at Glovo
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today is Airpods. We sell a lot of those and I
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think at the use case thinking about people lose them all the
12:44
time. And then yeah, gosh, I have, I
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have a call in 20 minutes. So there's there's yet another
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use case. So yeah, lots of lots of
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categories that that work very well for us.
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I, I think for, for those who are watching or yeah.
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And for those who are watching the podcast, because obviously
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we're live. I just want if you're not, maybe
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you're in the UK or maybe you're in a in a country that globe is
13:07
not that. Do you want to show this is the
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web web version of the site? And I know this is an app based.
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So probably I, I need to stress this is an app.
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The, the global app is where the, the money's at.
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But I just, it's really interesting in the, in the
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categories that you've got up there just just to focus on
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because like you were saying that obviously Apple Airpods or
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Airpods in general, people are losing them left, right and
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centre. So there's this use case of
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urgency because I've lost something and it's coming in.
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Do you, do you, is there any, do you see or can you comment?
13:42
Are there any other areas on this that are missing that you
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want to go into? Like I can see like clothes,
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fashion's not there, right? Fashion is a very tough one
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because with fashion I learned this lesson very, very hard at
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Amazon Fashions. Very tough because you have the
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returns and sizing as. A Oh my goodness, difficulty
14:03
getting delivered is one thing, and then how do you manage the
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process is the other. Exactly, exactly.
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So and, and right now we do actually have a few footwear and
14:13
fashion retailers testing out Globo right now what we're in,
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what we have enabled for customers is they can return
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directly to the stores themselves.
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That's one, one way to to solve that problem for now.
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But we know that it's not the most seamless way to do things.
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So we want to make sure that the UX is a lot better before we we
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go very big in that category. Yeah.
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And I think the one thing listening to you talk that sort
14:36
of challenged my perspective or perception is that it's not just
14:40
delivery, it's a marketplace in that sense because you mentioned
14:43
Amazon. So there is that sort of like,
14:45
although there's no product there, but I guess if I go into
14:48
one of the one of those categories, there'll be a
14:51
different customer or user experience.
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But we also have something what we called on demand.
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So if for whatever reason you want to I need, I'm in
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Barcelona, one end of Barcelona, you're at the other end.
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I just need to send you my notebook.
15:08
That's also possible. So all of those delivery
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services is something that Oscar, who's our CEO and
15:14
founder, even 10 years ago when he launched the app, that's what
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he that's how he imagined the app to be.
15:19
We can just deliver you anything within the serial.
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OK. So you can think about how this
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can grow in terms of does that mean if you're selling a concert
15:27
tickets second hand rather than or selling a second hand iPhone,
15:32
all of those two cases I think come to mind, Yeah.
15:35
Well, I have a fantastic one for you.
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Last week I was in an airport. I was watching a family meltdown
15:41
because they'd left the passports in the hotel and they
15:44
were like talking to the hotel bus and saying, can you put it
15:47
in an Uber? And the guy was like, no, I
15:49
can't put it in an Uber. But that's a fantastic use case.
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But it will Globo Global will bring it to the airport for you.
15:55
Exactly. Use case of the future, when you
15:58
look at shift on to technology and your sort of investments in,
16:05
I don't know, AI inventory forecasting, beefing up the ETA
16:10
announcement, what what's on the road map?
16:12
What do you think? And I know you've only been
16:14
there a short time, so it's like you're still probably looking at
16:18
those areas. But I'm curious where you feel
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which metrics are important to you and where what?
16:25
Where would you invest from a technology perspective?
16:28
Yeah. I think here it's really
16:31
appropriate to talk about Delivery Hero who is, we're part
16:34
of the Delivery Hero group and Delivery Hero also owns other
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sister brands like Foodpanda in Asia or Middle East.
16:40
So they have very, very similar businesses to Globo.
16:44
And one of the reasons why I think one of the things Delivery
16:48
Hero really recognised very quickly is that is an industry
16:52
where the best technology will win.
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How well you connect your customers to your partners, to
16:57
your couriers and they realise that there's actually a lot of
16:59
scale effects in the back end technology.
17:02
So for example, it doesn't really make sense for each of
17:05
these sister brands to have its own logistical technology and
17:09
algorithms, because ultimately how you drive operational
17:12
efficiencies that are when you talk about metrics like how many
17:16
orders can you deliver in in an hour?
17:18
How what's your delivery time? All of those metrics is
17:22
essentially the wherever you are and you're able to share
17:25
knowledge across the different brands in the group and you
17:29
probably can build 1 central system to serve lots of
17:33
different brands. So that's always been delivery
17:35
heroes philosophy. But at the same time, that's the
17:38
back end this, those metrics are important.
17:40
What other metrics that's also important is the front end, what
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customers are interacting with and this is where delivery EUR
17:47
and strategy is quite different. Recognising that Glover tell
17:50
about Foodpanda, we all understand our customers very,
17:54
very differently. How do we drive engagement
17:57
conversion a stickiness is is really different in Asia versus
18:02
in in Europe, let's just say. So at the in that time that all
18:06
of the brands still have direct control of what our app looks
18:09
like. And we based on our app
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department on basically all the things we talked about for in
18:15
terms of what customers demand, how do they behave, etc.
18:20
Some of the things I can't talk about new, new things, but some
18:23
things that recently launched on Globo, which is really exciting
18:27
for our customers is a new gifting experience.
18:29
So imagine, oh God, it's actually my husband's birthday
18:33
this month. You don't know what to buy for
18:35
him. There's now an interface where
18:37
you can put in who you're buying for, how old they are, what's
18:40
your budget. And we give you a kind of Tinder
18:43
like experience to see Obama. That's cool.
18:46
Minions for you. That was just I was saying
18:48
that's cool, but it's my wife's birthday.
18:49
I've just gone back to your website to see when.
18:53
You need to tell on the app. Is on the app, but I.
18:55
Love the app. That's really cool.
18:57
OK, final two questions. What's one question that I
19:01
haven't asked you that people normally ask you?
19:03
I think one thing that I spent a lot of time as a consultant as
19:07
well as being in in industry and having spent eight years in
19:10
Asia, I think one thing that I always get asked is what will
19:14
come from China into Europe, OK. And especially how different the
19:20
social media landscape is in China.
19:23
I think one place to really talk a lot about is social commerce
19:27
in China and very, very, very huge there, especially the rise
19:32
of Dalian or TikTok as it's known in Western Europe.
19:36
Because when I was in China, it was around 2018 when Dalian,
19:41
China's TikTok got really, really, really big.
19:44
And I remember I was at Amazon at the time, we had a visiting
19:47
VP from the Seattle headquarters and we wanted to make this silly
19:51
short born video with him feature to feature him in the
19:54
all hands. And he was totally bemused by
19:56
why do you have to do this stupid little dance to the
19:59
stupid little music? I mean, how different the world
20:02
is now, right? And obviously that is one of the
20:04
biggest exports from China that has really worked well in the
20:07
West. And you see every other platform
20:10
now from Facebook to to YouTube also focusing on short form
20:14
videos. I think one thing that hasn't
20:16
really translated quite as well is probably TikTok shop again,
20:21
looking at how Darwin has has emerged.
20:25
If depending on whose data you believe, they are now the 3rd or
20:29
the 4th biggest e-commerce player in July.
20:32
Now 1520% share is the kind of numbers that I see.
20:36
And we've seen some of the other Asian markets adopt TikTok shop
20:40
in the similarly enthusiastic fashion.
20:43
I lived in Bangkok for a while, absolutely huge traction there
20:47
and we saw a lot of significant share gain compared to some of
20:51
the e-commerce leaders there. Now, I think it remains to be
20:55
seen how big it will be in in in more western market.
20:59
There's definitely some successes.
21:01
I hear TikTok shop is now the fourth biggest beauty retailer
21:05
in the Uki can definitely believe that beauty is one of
21:09
the best and most effective categories.
21:12
But I personally have a some doubts as whether it can get as
21:16
big as China. And I think it's it's
21:18
fundamentally due to like the makeup of the Internet in China
21:22
is is quite different. I was actually listening to
21:25
another podcast recently called Search Engine.
21:27
They had a episode talking about the Dubai chocolate phenomenon.
21:31
And they actually described like the difference between Chinese
21:35
social media and Western meet social media really eloquently.
21:38
I think they said something along the lines of Americans
21:41
can't wrap their heads around how consumerist China socially
21:46
media is. And they were arguing how in
21:48
China, because of censorship, the Internet has become more
21:52
like a giant shopping mall. So every interaction is geared
21:56
towards selling you something. And I think to some extent I
22:00
agree with that thesis because again, thinking about when I was
22:04
in China and comparing the numbers with Amazon, when
22:07
customers open an e-commerce app in China, 50 to 70% of them have
22:13
no idea what they want to buy. They're just browsing compared
22:15
to 20% of American shoppers on Amazon.
22:19
So basically people in China go to shopping apps not just to
22:22
transact, they're also using it to discover new products they
22:26
never knew before, be entertained, go and play games,
22:30
go and watch videos, which I think explains why things like
22:33
live streaming is working so well in China compared to some
22:36
of the Western market. So there's, I think Amazon has
22:40
essentially trained customers in the States as well as in Western
22:44
Europe how to transact in e-commerce.
22:46
So I think as a result a bit more pessimistic on on how how
22:51
explosive that could be here. I, I, I think for, for
22:54
personally, it's entertainment. What they do really well is
22:58
entertainment, both online and in store.
23:02
Well or spaces where transactions don't need to
23:05
happen are allowed. So in Shanghai, you most of the
23:10
shops have a coffee bar. You are encouraged to dwell,
23:13
spend time there, hang out there, be on your phone, I don't
23:17
know, take social pictures where we are incredibly
23:21
transactionally LED over here. But that's why retail is failing
23:26
and that's why so many retailers in the UK have failed, because
23:29
they treat everything as the transaction, which interestingly
23:32
enough is maybe the way we've been trained by e-commerce.
23:36
So there's no delight, there's no discovery.
23:38
Sorry, I say there hasn't been delight, there hasn't been
23:41
discovery. And that's what in Asia they do
23:45
really, really well. And China, I think have
23:47
spearheaded that. And I totally agree with you
23:50
that delight and discovery are two things incredibly difficult
23:54
to do online. And so again, as I said, I will
23:57
be downloading your app and looking for some delight for
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birthday recommendations for my work whose birthday it was also
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is in December and sorry, in September.
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And to take from that, Connie, I just wanted to say thank you so
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much for giving up your time to be with us today.
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And I look forward to hopefully downloading the app and and
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buying something and using the service and seeing where it
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takes. Thank you, Alex.
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It's been wonderful to chat to you today.
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Thanks.