7 ms·

* Deliveroo lost money last year that probably provided the best possible business environment with many people willing to work for them and ordering from home

by lindig 6y ago

* Deliveroo lost money last year that probably provided the best possible business environment with many people willing to work for them and ordering from home during a pandemic. * Deliveroo has basically no assets * What is the barrier to entry for other companies? Neither riders, restaurants, or customers have any reason to stay with them. * Deliveroo heavily depends on "self employed" couriers which quite likely courts will find are workers (edited, was: "employees") which the company needs to compensate accordingly

the-dude 6y ago
> courts will find are employees which the company needs to compensate accordingly Already happened in NL, Deliveroo is appealing.
- stefan_ 6y ago
  At which point it will face back taxes for all the years they misclassified drivers, as does Uber UK: https://news.bloombergtax.com/daily-tax-report-international/ubers-u-k-court-loss-leaves-behind-2-1-billion-tax-question https://news.bloombergtax.com/daily-tax-report-international...
  - the-dude 6y ago
    Would reply with something like privatize profits, socialize losses if only there were profits ...
    - iamacyborg 6y ago
      Socialise losses by leaving retail investors holding the bag
corobo 6y ago
Going by what they use I'd say the one thing Deliveroo has going for it is the big square bag things. All my Uber Eats and Just Eat deliveries come in a Deliveroo backpack
- rozab 6y ago
  In the UK at least this equipment is not supplied, it has to be bought before you start working. That's why there's so many about, everyone who worked for them at some point has one lying around. You have to provide evidence of owning a long list of equipment as part of the application process.
  - rich_sasha 6y ago
    Wow, that’s a real kicker.
  - underwater 6y ago
    Telling someone how they must complete a task (i.e. use specific equipment) is one of the things that turns contractors into employees under AU law.
    - raverbashing 6y ago
      I think you're not mandated to use their box (you need one, but can use the one on your bike), but if you don't have one of course they'll sell you their branded one)
mytailorisrich 6y ago
It's a very appealing service to the public, and it is quite popular, indeed. But as a business it's tough because consumers are not willing to pay much for delivery, which is a very low productivity activity (a delivery 'rider' cannot do many deliveries per hour in most cases).
- lindig 6y ago
  As is any business that sells 1 dollar bills for 80 cents. Not a good business to own, though. "Making it up by volume" seems doubtful.
- another-dave 6y ago
  If you're ordering for 2, you're often paying ~10% on delivery with them. On top of that they're taking large commission from the restaurant on all sales.
joosters 6y ago
All this was true and well known prior to the IPO, so I'm not sure why should it affect the price now and not earlier?
- arcturus17 6y ago
  It is my understanding that the stock price of IPOs is often inflated through different mechanisms - maybe another commenter who knows more than I do can explain what these are. At any rate, if they really released at pricing levels determined by transparent and efficient markets we wouldn't see these pops, would we?
  - fractionalhare 6y ago
    You could actually say IPO pops (and drops) are a temporarily more extreme price discovery process when a company transitions from relatively inefficiently traded private entity to a more efficiently traded public one.
lloeki 6y ago
> Deliveroo heavily depends on "self employed" couriers which quite likely courts will find are employees which the company needs to compensate accordingly This issue has been raised in France but it turns out most couriers are "micro-entrepreneurs" and appear to be quite content with both the social benefits and the flexibility (as reported by Deliveroo and as independently assessed by the Sénat in 2020). Anecdata, I had a couple of chats with some couriers and it seems to correlate with the Sénat finding. TBH I expected it to be otherwise. https://fr.wikipedia.org/wiki/Deliveroo#Rémunération_et_statut_des_livreurs https://fr.wikipedia.org/wiki/Deliveroo#Rémunération_et_stat...
- tachion 6y ago
  You may not be aware, but recently Uber drivers have been recognised as actual employees in UK by the court.
  - throwaway3699 6y ago
    Uber drivers need to be allowed to set their own prices, but stay contractors, imo. The UK is different to the US in that you don't need health insurance, so the employee distinction is less expensive of a change.
    - chrisseaton 6y ago
      > Uber drivers need to be allowed to set their own prices Yikes this seems terrible for the drivers. There would be a race to the bottom surely with the most desperate drivers who perhaps just need to make a mortgage payment today undercutting everyone else.
      - MaxBarraclough 6y ago
        A valid point, but shouldn't this competition on price (i.e. race to bottom) also apply at the level of Uber and its competitors?
        6y ago
rvz 6y ago
And somehow this is a "tech company". The real winners in this scam are the founders, VCs and Amazon (Who will eventually acquire them) and some of the employees (Not riders). As expected the general public who got in late always lose even when the big investors warned them they would sell very early. Some did and some backed out altogether. I don't know how one could fall for this ad in the UK [0] and actually become a very late 'retail investor' in Deliveroo's IPO day in which not only the share allocation isn't guaranteed, you are now locked in to waiting until the general public can trade it. If a retail investor who bought into this pump and dump sells on the day of trading, it is at a loss. Ignore the initial hype entirely, wait for it to die down and probably buy it low. [0] https://imgur.com/a/ylLwtE8 https://imgur.com/a/ylLwtE8
- deleted 6y ago
  [deleted]
- rich_sasha 6y ago
  IPOs typically outperform in the short term. While I agree retail investors shouldn’t go anywhere near an IPO based on an ad in a food delivery app, in other ways it is rational. EDIT: also, WeWork was somehow a tech company. Until it wasn't...
ForHackernews 6y ago
Isn't all of this equally true for the variety of other Uber-for-X companies? (and hell, Uber itself) What makes Deliveroo any worse of a business than Grubhub, Door Dash or Just Eat or Uber Eats or...
- deleted 6y ago
  [deleted]
- tomalpha 6y ago
  When I order with Just Eat the food is generally delivered by a driver employed/paid directly by the restaurant. When I order with Deliveroo the food is generally delivered by a driver employed/paid by Deliveroo. (There do seem to be exceptions to the above for some restaurants) Some of the current debate touches on the commission that gets charged which I guess is similar for the two, however much seems to be about treatment of the delivery drivers which would be more of a difference if Just East don't (usually/always?) employ/pay them directly.
egwor 6y ago
The barrier to entry isn't the tech (which is why I don't think that this is really a tech firm). The barrier to entry is the relationships with the restaurants and the riders (and advertising to get people to use it)
- fakedang 6y ago
  Which means there is no barrier to entry. The riders will go to any platform which takes a lower share of commission, since they are limited by the number of workable hours. And because restaurants host themselves on all platforms, there isn't any loyalty there. And customers go to platforms only looking for deals that cheapen the prices, since otherwise they have to pay 20ish% extra.
  - Marqin 6y ago
    That’s not enteirly true. In London all my favourite places are only on Deliveroo, and not on Uber Eats (at least in my area). Maybe the have some kind of exclusive contracts?
    - fakedang 6y ago
      Well somebody else's favorite places are on Uber Eats and not on Deliveroo then ;)
    - superzamp 6y ago
      It used to be this way in Paris as well until it wasn't, now almost all these restaurants are on Uber as well. It seems Eats can just pulverize these deals anytime they decide so.
    - eptcyka 6y ago
      I find that the Deliveroo prices are heavily inflated for some of my favorite places. And that the info number listed in a restaurant's info page allows one to call the restaurant directly and order the same food for significantly less.
  - coddle-hark 6y ago
wyuenho 6y ago
1. DoorDash, GrubHub, Uber, are all massive money losing business, and all lost money last year. In fact, all of the share econ companies are massive money losers, this includes Lyft, AirBnB, and a whole bunch of others I've missed in Europe and Asia. Investors invest in them expecting growth, not dividends at IPOs. 2. You might have a very different definition of asset than everyone else's. Please explain. 3. The barrier to entry? Absolutely massive initial capital requirement. 4. Yes, just like every other sharing econ companies, unless you are operating exclusively out of California.
- rich_sasha 6y ago
  Without questioning it, I never understood how “sharing economy” companies lose money. Are they subsidising their “partners”? My base assumption was always that eg Uber passes costs and revenue to the riders. Or is it their bloated central operations, needed to justify the VC valuations?
  - fakedang 6y ago
    Most of it is marketing, fighting legal issues and attrition of goods delivered / compensation. And also the insane discounts they have to provide to stay ahead of the competition. Airbnb is somewhat immune, since their only major competitors are old school hotels.
    - rich_sasha 6y ago
      Right, so “discount” implies they subsidise drivers for the journeys? Eg Uber charges $1 per mile but driver receives $1.1 or sth? The org bloat is quite staggering for what is effectively a taxi app.
      - fakedang 6y ago
        No no. I meant that the effective cost of a ride (paying contractor + tech costs + employee costs + marketing per ride) is $1 a mile, but they give a discount that makes it effectively $0.9 a mile, and doing this on scale is effectively making them run operations at a loss unless they have market monopoly. Even a duopoly situation is unfavorable for them.
raverbashing 6y ago
I have some ideas on what it might be their "secret sauce" (though I haven't really read their IPO docs) - Matching delivery people to restaurants to deliveries (and giving them a route that serves 2, 3 people) - Their app experience is really polished (both on the buyer and delivery people side). Delivery times are usually predicted accurately and it shows when your delivery person is near you. - Network effects (obviously) Of course nothing of that is too hard to replicate, but it takes time
sumedh 6y ago
I prefer to use 2 delivery apps, I am not going to keep on installing new apps all the time. Habits are hard to change.
- chrisseaton 6y ago
  > Habits are hard to change. How hard is it to change to a new app? Three minutes maybe? That’s not hard is it, come on.
  - _Understated_ 6y ago
    >How hard is it to change to a new app? Three minutes maybe? That’s not hard is it, come on. If that's all it took, then no, it's not hard. However, they all require you to login, provide email/phone details, prove who you are etc. Also, that their Ts and Cs say that they'll share data with their partners, which you can go lookup on a massive list somewhere... That's umpteen more companies that I know nothing about with a copy of my details. It all adds up.
  - sumedh 6y ago
    > That’s not hard is it, come on. https://en.wikipedia.org/wiki/Mind_share https://en.wikipedia.org/wiki/Mind_share
    - deleted 6y ago
      [deleted]
- cblconfederate 6y ago
  The restaurants and drivers though ... they ll keep installing all of them. And demand for food will always be high, it's not like deliveroo invented hunger
hakanensari 6y ago
> What is the barrier to entry for other companies? It probably says something that Amazon failed at entering back in 2018 [0]. Then, they u-turned and invested in Deliveroo [1]. [0]: https://www.theverge.com/2018/11/26/18112620/amazon-restaurants-delivery-uk-london-cancelled https://www.theverge.com/2018/11/26/18112620/amazon-restaura... [1]: https://www.bbc.co.uk/news/business-48306172 https://www.bbc.co.uk/news/business-48306172
JohnJamesRambo 6y ago
*Deliveroo is a horrible name

by lindig 6y ago

the-dude 6y ago

> courts will find are employees which the company needs to compensate accordingly Already happened in NL, Deliveroo is appealing.

stefan_ 6y ago
At which point it will face back taxes for all the years they misclassified drivers, as does Uber UK: https://news.bloombergtax.com/daily-tax-report-international/ubers-u-k-court-loss-leaves-behind-2-1-billion-tax-question https://news.bloombergtax.com/daily-tax-report-international...
- the-dude 6y ago
  Would reply with something like privatize profits, socialize losses if only there were profits ...
  - iamacyborg 6y ago
    Socialise losses by leaving retail investors holding the bag

corobo 6y ago

Going by what they use I'd say the one thing Deliveroo has going for it is the big square bag things. All my Uber Eats and Just Eat deliveries come in a Deliveroo backpack

rozab 6y ago
In the UK at least this equipment is not supplied, it has to be bought before you start working. That's why there's so many about, everyone who worked for them at some point has one lying around. You have to provide evidence of owning a long list of equipment as part of the application process.
- rich_sasha 6y ago
  Wow, that’s a real kicker.
- underwater 6y ago
  Telling someone how they must complete a task (i.e. use specific equipment) is one of the things that turns contractors into employees under AU law.
  - raverbashing 6y ago
    I think you're not mandated to use their box (you need one, but can use the one on your bike), but if you don't have one of course they'll sell you their branded one)

mytailorisrich 6y ago

It's a very appealing service to the public, and it is quite popular, indeed. But as a business it's tough because consumers are not willing to pay much for delivery, which is a very low productivity activity (a delivery 'rider' cannot do many deliveries per hour in most cases).

lindig 6y ago
As is any business that sells 1 dollar bills for 80 cents. Not a good business to own, though. "Making it up by volume" seems doubtful.
another-dave 6y ago
If you're ordering for 2, you're often paying ~10% on delivery with them. On top of that they're taking large commission from the restaurant on all sales.

joosters 6y ago

All this was true and well known prior to the IPO, so I'm not sure why should it affect the price now and not earlier?

arcturus17 6y ago
It is my understanding that the stock price of IPOs is often inflated through different mechanisms - maybe another commenter who knows more than I do can explain what these are. At any rate, if they really released at pricing levels determined by transparent and efficient markets we wouldn't see these pops, would we?
- fractionalhare 6y ago
  You could actually say IPO pops (and drops) are a temporarily more extreme price discovery process when a company transitions from relatively inefficiently traded private entity to a more efficiently traded public one.

lloeki 6y ago

> Deliveroo heavily depends on "self employed" couriers which quite likely courts will find are employees which the company needs to compensate accordingly This issue has been raised in France but it turns out most couriers are "micro-entrepreneurs" and appear to be quite content with both the social benefits and the flexibility (as reported by Deliveroo and as independently assessed by the Sénat in 2020). Anecdata, I had a couple of chats with some couriers and it seems to correlate with the Sénat finding. TBH I expected it to be otherwise. https://fr.wikipedia.org/wiki/Deliveroo#Rémunération_et_statut_des_livreurs https://fr.wikipedia.org/wiki/Deliveroo#Rémunération_et_stat...

tachion 6y ago
You may not be aware, but recently Uber drivers have been recognised as actual employees in UK by the court.
- throwaway3699 6y ago
  Uber drivers need to be allowed to set their own prices, but stay contractors, imo. The UK is different to the US in that you don't need health insurance, so the employee distinction is less expensive of a change.
  - chrisseaton 6y ago
    > Uber drivers need to be allowed to set their own prices Yikes this seems terrible for the drivers. There would be a race to the bottom surely with the most desperate drivers who perhaps just need to make a mortgage payment today undercutting everyone else.
    - MaxBarraclough 6y ago
      A valid point, but shouldn't this competition on price (i.e. race to bottom) also apply at the level of Uber and its competitors?
      - 6y ago

rvz 6y ago

And somehow this is a "tech company". The real winners in this scam are the founders, VCs and Amazon (Who will eventually acquire them) and some of the employees (Not riders). As expected the general public who got in late always lose even when the big investors warned them they would sell very early. Some did and some backed out altogether. I don't know how one could fall for this ad in the UK [0] and actually become a very late 'retail investor' in Deliveroo's IPO day in which not only the share allocation isn't guaranteed, you are now locked in to waiting until the general public can trade it. If a retail investor who bought into this pump and dump sells on the day of trading, it is at a loss. Ignore the initial hype entirely, wait for it to die down and probably buy it low. [0] https://imgur.com/a/ylLwtE8 https://imgur.com/a/ylLwtE8

deleted 6y ago
[deleted]
rich_sasha 6y ago
IPOs typically outperform in the short term. While I agree retail investors shouldn’t go anywhere near an IPO based on an ad in a food delivery app, in other ways it is rational. EDIT: also, WeWork was somehow a tech company. Until it wasn't...

ForHackernews 6y ago

Isn't all of this equally true for the variety of other Uber-for-X companies? (and hell, Uber itself) What makes Deliveroo any worse of a business than Grubhub, Door Dash or Just Eat or Uber Eats or...

deleted 6y ago
[deleted]
tomalpha 6y ago
When I order with Just Eat the food is generally delivered by a driver employed/paid directly by the restaurant. When I order with Deliveroo the food is generally delivered by a driver employed/paid by Deliveroo. (There do seem to be exceptions to the above for some restaurants) Some of the current debate touches on the commission that gets charged which I guess is similar for the two, however much seems to be about treatment of the delivery drivers which would be more of a difference if Just East don't (usually/always?) employ/pay them directly.

egwor 6y ago

The barrier to entry isn't the tech (which is why I don't think that this is really a tech firm). The barrier to entry is the relationships with the restaurants and the riders (and advertising to get people to use it)

fakedang 6y ago
Which means there is no barrier to entry. The riders will go to any platform which takes a lower share of commission, since they are limited by the number of workable hours. And because restaurants host themselves on all platforms, there isn't any loyalty there. And customers go to platforms only looking for deals that cheapen the prices, since otherwise they have to pay 20ish% extra.
- Marqin 6y ago
  That’s not enteirly true. In London all my favourite places are only on Deliveroo, and not on Uber Eats (at least in my area). Maybe the have some kind of exclusive contracts?
  - fakedang 6y ago
    Well somebody else's favorite places are on Uber Eats and not on Deliveroo then ;)
  - superzamp 6y ago
    It used to be this way in Paris as well until it wasn't, now almost all these restaurants are on Uber as well. It seems Eats can just pulverize these deals anytime they decide so.
  - eptcyka 6y ago
    I find that the Deliveroo prices are heavily inflated for some of my favorite places. And that the info number listed in a restaurant's info page allows one to call the restaurant directly and order the same food for significantly less.
- coddle-hark 6y ago

wyuenho 6y ago

1. DoorDash, GrubHub, Uber, are all massive money losing business, and all lost money last year. In fact, all of the share econ companies are massive money losers, this includes Lyft, AirBnB, and a whole bunch of others I've missed in Europe and Asia. Investors invest in them expecting growth, not dividends at IPOs. 2. You might have a very different definition of asset than everyone else's. Please explain. 3. The barrier to entry? Absolutely massive initial capital requirement. 4. Yes, just like every other sharing econ companies, unless you are operating exclusively out of California.

rich_sasha 6y ago
Without questioning it, I never understood how “sharing economy” companies lose money. Are they subsidising their “partners”? My base assumption was always that eg Uber passes costs and revenue to the riders. Or is it their bloated central operations, needed to justify the VC valuations?
- fakedang 6y ago
  Most of it is marketing, fighting legal issues and attrition of goods delivered / compensation. And also the insane discounts they have to provide to stay ahead of the competition. Airbnb is somewhat immune, since their only major competitors are old school hotels.
  - rich_sasha 6y ago
    Right, so “discount” implies they subsidise drivers for the journeys? Eg Uber charges $1 per mile but driver receives $1.1 or sth? The org bloat is quite staggering for what is effectively a taxi app.
    - fakedang 6y ago
      No no. I meant that the effective cost of a ride (paying contractor + tech costs + employee costs + marketing per ride) is $1 a mile, but they give a discount that makes it effectively $0.9 a mile, and doing this on scale is effectively making them run operations at a loss unless they have market monopoly. Even a duopoly situation is unfavorable for them.

raverbashing 6y ago

I have some ideas on what it might be their "secret sauce" (though I haven't really read their IPO docs) - Matching delivery people to restaurants to deliveries (and giving them a route that serves 2, 3 people) - Their app experience is really polished (both on the buyer and delivery people side). Delivery times are usually predicted accurately and it shows when your delivery person is near you. - Network effects (obviously) Of course nothing of that is too hard to replicate, but it takes time

sumedh 6y ago

I prefer to use 2 delivery apps, I am not going to keep on installing new apps all the time. Habits are hard to change.

chrisseaton 6y ago
> Habits are hard to change. How hard is it to change to a new app? Three minutes maybe? That’s not hard is it, come on.
- _Understated_ 6y ago
  >How hard is it to change to a new app? Three minutes maybe? That’s not hard is it, come on. If that's all it took, then no, it's not hard. However, they all require you to login, provide email/phone details, prove who you are etc. Also, that their Ts and Cs say that they'll share data with their partners, which you can go lookup on a massive list somewhere... That's umpteen more companies that I know nothing about with a copy of my details. It all adds up.
- sumedh 6y ago
  > That’s not hard is it, come on. https://en.wikipedia.org/wiki/Mind_share https://en.wikipedia.org/wiki/Mind_share
  - deleted 6y ago
    [deleted]
cblconfederate 6y ago
The restaurants and drivers though ... they ll keep installing all of them. And demand for food will always be high, it's not like deliveroo invented hunger

hakanensari 6y ago

> What is the barrier to entry for other companies? It probably says something that Amazon failed at entering back in 2018 [0]. Then, they u-turned and invested in Deliveroo [1]. [0]: https://www.theverge.com/2018/11/26/18112620/amazon-restaurants-delivery-uk-london-cancelled https://www.theverge.com/2018/11/26/18112620/amazon-restaura... [1]: https://www.bbc.co.uk/news/business-48306172 https://www.bbc.co.uk/news/business-48306172

JohnJamesRambo 6y ago

*Deliveroo is a horrible name